Why the apprenticeship levy needs leniency – for now

7 Feb 2018 By Jake Tween

The system is not even a year old, so we shouldn’t write it off just yet, says Jake Tween

Apprenticeships have been a vital part of tackling the UK’s skills shortage for many decades and provide a steady pipeline of talent entering the workforce.

Thanks to recent reforms, they are also a topic of fierce debate. New research from the CIPD suggests that employers are failing to fully embrace the new levy, with one in five writing it off as a tax and more than half calling for it to be scrapped.

Figures from Ofsted also suggest that the number of students undertaking inadequate apprenticeships rose to 20 per cent last year. This means 37,000 apprentices are undertaking poor-quality training because of new schemes, and a lack of appropriate policing.

Amid these grim statistics, business owners and HR professionals are increasingly unclear about the levy. What can be done?

Give the levy time

First, it’s important to look past the headlines. The levy is not yet a year old and any new system needs time to bed in and be refined before it has a chance of success. The Institute for Apprenticeships has already started this process, undertaking a review of apprenticeship standards to make sure they are fit for purpose. But this too needs patience, coordination and collaboration. Once systems are established to ensure effective quality control and proper management of apprenticeships, we will start to see the rewards from the levy.

Increase awareness

The next vital step to the levy reaching its potential is increasing awareness of what it can offer businesses of all sizes. For small companies, it’s a win-win situation. If a business has fewer than 50 employees then they don’t pay the levy, but 100 per cent of apprenticeship training is covered by the government.

For medium-sized businesses, those that pay the levy can claim the funding to start or improve apprenticeships, while those that don’t pay the levy can access the new funding pot and will only pay 10 per cent of training fees for apprentices.

Big companies can use the money they pay into the levy to fund staff training, and the government will top up their budgets by 10 per cent – a significant boost for training budgets.

It is the responsibility of governments and training bodies to educate and engage with employers about the levy, the new standards and apprenticeships more widely, so that they can be used as effectively as possible in line with their specific needs.

Apprentices to fill skills gap

Much of the discussion on apprenticeships focuses on young people. However, apprenticeships are a valuable training option for a much wider range of people in a much broader range of roles.

This is where a huge opportunity lies – the levy can be used to plug gaps in Britain’s businesses, whether that’s a lack of vital vocational skills, or a shortage of the appropriate leadership and management skills. For example, we know that many companies are experiencing a skills gap at middle management level, which is proving highly detrimental to their productivity. For those organisations, higher-level apprenticeships that focus on leadership and management can be used to increase skills in the existing workforce, where they need it the most.

To do this, the stigma around apprenticeships has to be overcome, so that the value they bring can be truly appreciated. That’s not an easy task, but one that the levy finally has the scope to overcome.

What’s next?

For the foreseeable future, the levy is here to stay, and the bottom line is that employers should adapt to take full advantage of it.

The immediate priority for employers should be looking at the knowledge and skills gaps in their business and considering how apprenticeships can be used to upskill their workforce.

Providers and the government must work with employers to help them use the levy, while the industry must have an unwavering commitment to creating apprenticeships that are of the highest quality and meet the needs of employers.

Given time, there’s plenty of reason to believe that the industry will stabilise, and apprenticeships can become established as a well-known training route for all levels.

Jake Tween is head of apprenticeships at ILM

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