The majority of employers are planning to rebrand their graduate schemes as apprenticeship programmes in response to the introduction of the apprenticeship levy, according to a new survey.
BPP Professional Education’s poll of leading organisations – most of them in the engineering, financial services, law and accountancy sectors – found that 53 per cent were in the process of switching graduates into apprenticeships to ensure they can reclaim the payroll tax that funds the levy, and benefit from additional government financial support.
But the move, if replicated more widely, raises questions about whether the levy will achieve its aim of opening new routes into the workforce for those who opt not to go to university, and whether it is being misused to rebadge existing training and development schemes rather than create new apprenticeships.
Elizabeth Crowley, skills adviser at the CIPD, said: “We’re very concerned about the rebranding approach that these employers are wanting to adopt. Graduate recruitment schemes form a very particular function in the labour market in terms of giving young people access to professional-level jobs. The schemes are not, in our view, something that should be converted to apprenticeship schemes unless they were changed considerably.”
She added that it was understandable that employers were seeking ways to recoup the payments they make through the apprenticeship levy, but that this shouldn’t be done by cannibalising existing schemes. “It’s very concerning that the levy as it stands may drive some employers to this type of behaviour. It could devalue apprenticeship brand, and there’s no added value for businesses that do it aside from recouping the money that they’ve paid into the levy,” she said.
Alison Maskell, UK early careers manager at insurance firm Zurich, told The Times that graduates would be forming a “small but significant part of our overall apprenticeship strategy”.
The survey also revealed that 30 per cent of employers would switch some existing management training into degree-level apprenticeships schemes, while 78 per cent said they would consider candidates of any age for apprenticeships.
Crowley said the UK labour market needed “much stronger vocational and technical routes”. She said: “Apprenticeships should be a way for people to gain high-level technical skills. The idea that someone with a degree, who has therefore already invested considerably in their education, would want to do an apprenticeship at a potentially lower level than what they already have isn’t the way we believe apprenticeships should be used.”
The new regime comes into force in April, when employers in both the public and private sectors with an employee payroll of more than £3m will be required to pay a levy to HMRC through PAYE of 0.5 per cent of the payroll bill (less an allowance of £15,000) into a digital account. For every £1 paid in by the business, the government will contribute 10p to this account. For organisations with a payroll of less than £3m, the government will continue to contribute towards apprenticeships using a system of co-investment.
Research from the Association of Graduate Recruiters suggests that the number of apprenticeship opportunities rose by 24 per cent last year, while graduate vacancies went up just 2 per cent. People Management reported last month that the introduction of the levy was encouraging employers to think again about the relevance of traditional graduate recruitment programmes and the annual ‘milkround’ of universities.