Long reads

How we spent our apprenticeship levy

24 Jan 2019 By Jo Faragher

With time running out to cash in the first tranche of funding, firms that have already been through the process share their pearls of wisdom

Insurance giant Aviva offered its first apprenticeship in 1919, so it is no stranger to bringing people in to earn while they learn. Yet despite its heritage, the introduction of the levy two years ago prompted a rethink in how it delivered training. 

“Historically, apprenticeships have been about bringing in young people and developing their skills. When the levy was introduced, we rethought where we offer apprenticeships,” says Sophie Gray, UK apprenticeship lead at the business. “The removal of the age cap is a great part of the policy, so now it’s not just about training new people. We wanted to bust the myth that apprenticeships are just for school leavers.” Aviva now offers more than 300 apprenticeships across multiple functions and locations, right up to master’s degree level. All of them are funded in some way by the levy. 

Not every employer welcomed the introduction of the apprenticeship levy in 2017 with such open arms. It requires businesses with an annual wage bill of £3 million or more to pay 0.5 per cent of it into a fund to be spent on apprenticeships and other eligible training – an obligation around a third of these firms still consider a ‘tax’, according to a recent survey by Alliance Manchester Business School. 

Yet with a matter of weeks until the first tranche of money runs out (the funds last 24 months from when they are credited to an employer’s account, so money from April 2017 would expire in April 2019), it’s a case of ‘use it or lose it’ for a huge number of employers. 

In fact, a survey of People Management readers between December 2018 and January 2019 (see below) found that just under a quarter plan to use up their levy funding before the April deadline, while half will not use it all. One in 10 say they have no plans to spend any of the money in their digital account. 

View the full results

While that may represent a waste, it also reflects the complexity and disruption the levy has entailed for some. Ben Rowland, co-founder of Arch Apprentices, which specialises in digital and IT apprenticeships, argues that the entire landscape around apprenticeships has changed, so even long-standing proponents have had to relearn the ropes. “It’s been different for everyone, not just because of the levy, but the structure of the programmes themselves,” he says. 

“Anyone can now go on a programme, there are new standards, there’s an end-point assessment rather than ticking boxes along the way. But those that have got their heads around these changes are feeling confident about apprenticeships.” 

Employers that have got the best out of their levy investment so far have “got the right people on the right programme”, aligned their apprentices’ day-to-day activities with what they’re learning “rather than falling into the trap of outsourcing it to someone else” and coached line managers to support apprentices in their goals, he adds. 

Specsavers is one of a number of companies using apprenticeships as a way to plug skills gaps, both now and for the future. It developed its own apprenticeship in spectacle-making, and now has almost 300 apprentices training to be optical assistants across its stores, an achievement that made it overall winner at the 2018 CIPD People Management Awards. 

“Apprenticeships give us a way to fill these roles and find those skills,” says Mark Corden, Specsavers’ head of apprenticeships. Its internal expert manufacturers deliver the training – the company uses its levy funding not just for the apprenticeships themselves but also to train the trainers. Lab managers are freed up for a day, or day and a half, each week to understand how to deliver the apprenticeship content. Specsavers uses external providers for many of the other apprenticeships it offers, which are being used across a range of roles including accountants, project managers and property surveyors. 

One of the key benefits has been retention – 90 per cent of apprentices stay on with the company once they’ve completed their apprenticeship and 65 per cent have either been promoted into store management or completed professional qualifications. 

It means apprenticeships now have a more central role in long-term workforce planning. “The positive benefit is the advocacy we’re now getting, particularly from finance and IT teams, about what someone who is younger, willing and able can give to the business,” adds Corden. “We are now seeing the business itself – the people who make decisions on head count – moving in that direction.” 

This level of advocacy doesn’t happen without a considerable investment of time and money from apprenticeship employers, however. Louise Doyle, client services director at education quality consultancy Mesma, has been involved in the redevelopment of apprenticeships from the start. She believes that too often, they are simply handed to HR or another department without much thought. “Building your apprenticeship strategy takes time and there’s a lot of cost involved in resourcing it,” she says. “Too often, apprenticeships are put in the ‘too difficult’ box. The default should be that a role is assigned to an apprentice unless you can prove otherwise.” 

One of the main barriers can be line managers, who worry about the 20 per cent of time they ‘lose’ the staff member to training – a core requirement of all apprenticeship programmes. 

Direct Line Group offers around 300 apprenticeships and while most are populated by new hires, many existing staff now follow apprenticeship courses for professional qualifications. This is where the 20 per cent ‘off the job’ time can be challenging because managers are used to that individual being available, plus employees must find time to fit in their day job. “We encourage managers to brief their team that someone will be out for a day a week,” says Jason Gowlett, head of HR operations. 

Vicky Wallis, chief HR officer at Santander UK, argues that line managers are “critical” to apprentices’ success. The bank supports managers in a number of ways, including induction sessions, an internal website full of resources and FAQs, as well as the support of a business champion who liaises between the manager and the emerging talent team. Santander also offers sessions to help line managers develop skills such as coaching and to break down preconceptions around managing different generations. 

Aligning the training closely to both roles and values helps ensure managers are on board. “We work with our training providers to make sure the learning is aligned to the job, embeds what they learn as they progress and, where possible, is bespoke to Santander,” says Wallis. One example is a scheme called ‘Jury Day’, where apprentices develop decision-making skills in front of a mock judge, barristers, witnesses and jury. 

For employers still looking to spend their levy investment, the first step is to work out where apprentices would add value in the organisation. “You can move at different speeds – the sooner you start spending your levy, the more time you buy for yourself,” says Rowland. “It may seem too daunting to put all your front-line staff onto an apprenticeship immediately, so go for the more generic white-collar ones in functions such as HR or finance. Lots of these qualifications are delivered by recognised industry bodies such as AAT and the CIPD. IT is another good one.” 

He adds that many employers began their apprenticeship journeys with an HR apprenticeship for this reason: “They know what the skills are, it’s got industry backing, and it means HR can prove the value of apprenticeships to the rest of the organisation.” 

And as funding begins to expire from April, it is likely first-time apprenticeship movers will need the support of an external provider to deliver the training. It’s important for businesses to treat this process just like any other procurement exercise, advises Lizzie Crowley, skills policy adviser at the CIPD. 

“It can be daunting selecting the right provider, so do your due diligence. Have they delivered apprenticeships before and can you discuss potential schemes with other businesses in your sector?” 

Don’t assume the programme needs to be bought off-the-shelf (although this may work well for some of the more basic qualifications), as many providers will be up for co-designing a programme, she adds. 

For employers that are unlikely to spend all of their levy, there are options available. Last October, the government announced a package of levy reforms that include the ability to invest up to a quarter of apprenticeship funds on employees in the supply chain. 

Aviva already has two of its connected companies signed up to its digital account, and Adrian Rowley, learning and development manager at builders’ merchant Buildbase, is certainly considering this option. “We’ve identified that we will have an underspend by May, so we’re talking to the board about whether we can pass that on,” he says. “It’s not just about the money either: can we share our expertise in delivering apprenticeships with them?” 

One of the further advantages of apprenticeships for Buildbase is that they have helped increase diversity in an ageing workforce. Rowley adds: “Apprenticeships are hugely important to us; apprenticeships at entry level help us bring in fresh blood. We now have a competitive training offer, which means we can increase the calibre of people we bring in.” 

The future means more employers working together to get the best out of apprenticeships – whether that’s through new talent streams, increasing social mobility or protecting against skills shortages, argues Lady Penny Cobham, director general of the 5% Club – a group of employers that aspires to employ one in 20 of its workforce as apprentices. 

“I hope we will get to the point where employers can come together to develop programmes for niche skills or roles,” she says. One trend driving this will be the adoption of artificial intelligence and the impact it is likely to have on current roles – with many slipping out of existence and new ones emerging to replace them. She adds: “The training you’re buying in needs to be fit for purpose tomorrow as well as today.” 

Two years into the levy, however, there’s some way to go. “I think there’s still some education to be done with employers,” says Doyle. “They’re positive about the levy and it’s created a conversation that hasn’t happened on this scale before. 

“But we have to look at what the spirit of an apprenticeship is: trying to get around the rules might be right from a financial perspective, but could do damage to the apprenticeship brand in the long term. There’s enormous value in the right programme.” 

How they spend it

Greene King

The pub chain and brewer started delivering apprenticeships in 2011 and in 2016 pledged to offer 10,000 more over three years. One of its brewers has just begun the first Level 4 brewing standard, an industry-specific qualification it developed in partnership with some fellow employers. 

Managers are supported through an online system where they can upload evidence to support learners’ qualifications, and Level 3 and 4 management programmes are co-delivered with a training provider. “Our general managers play an important role in training and are responsible for ensuring their apprentices implement what they have learned,” says group HR director Andrew Bush. “This ensures our learners meet the requirements of the programme and can relate the training back to their job.”  

Direct Line Group

To get the best value out of its levy investment, Direct Line chose to work with managed service provider Babington Group to offer around 300 apprenticeships across multiple areas. As well as delivering training and managing a network of training providers, Babington screens candidates, measures their progress and provides a “single version of the truth” so there is a consistent experience for apprentices. “Managing 30 or 40 different training suppliers ourselves would mean everyone had a different experience,” says HR operations director Jason Gowlett.

Gowlett believes the company is on track to spend its levy money before it runs out and tracks this on a rolling basis – 2019 will see greater investment in higher apprenticeships in order to make more use of the levy funding. He adds: “We decided to start with the basic qualifications at level 2 and 3 and get good at delivering those, rather than go straight in for the higher apprenticeships to use up the money.” 

Santander

Santander has more than 700 apprentices on schemes across the organisation covering levels 2 to 6. These range from core financial services qualifications to degree-level digital and technology qualifications and programmes in data analysis and compliance. The bank works with a number of external partners and each programme has a blended delivery model, which includes an online learning platform, face-to-face sessions and study time. Each apprentice also has a dedicated coach and line managers to support them.

Global HR Manager

Global HR Manager

Abingdon, England

£50000.00 - £65000.00 per annum

Hays

Learning & Development Manager

Learning & Development Manager

Southampton, England

£50000.00 - £60000.00 per annum

Hays

Employee Relations Manager - Full or Part Time

Employee Relations Manager - Full or Part Time

Birmingham, England

£40188 - £44208 per annum

Hays

View More Jobs

Explore related articles