Apprenticeship levy: look beyond shaky start to see the skills opportunity

By James Hill, professional services manager, Tribal

James Hill, Professional Services Manager TribalIt came, it saw costs rise, but if truth be told… it hasn’t quite conquered.

We’re talking, of course, about the Apprenticeship Levy, a vital part of the government’s plan to solve the UK’s skills shortages that sees employers with an annual wage bill of more than £3 million paying 0.5 per cent as a levy to boost training.

Its aims were initially lofty, to hit three million apprenticeship starts by 2020, building on the recent popularity of this “learn and earn” form of vocational learning. New frameworks were also being set – with direct input from employers – so the groundwork all seemed to be set for a great response.

But it hasn’t been an encouraging start. Official data shows that in the first quarter of the new scheme, May to July 2017, 59 per cent fewer apprenticeships were started compared to a year earlier. The next quarter was the first of the new academic year, the busiest time for scheme providers. Yet new apprenticeships were down 26.5 per cent versus the report at the same time in the previous year. That means in the first six months of the scheme more than 111,000 places have been “lost”.

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Evidently, this was never the way it was meant to be. But while the inevitable clarion calls have already been sounded – the Confederation of British Industry says the data proves “a fresh approach is needed” while the Association of Employment and Learning Providers expressed “concern” – it’s also worth taking stock. That’s because employers are taking stock too. Their “digital wallets” ― what firms pay their levy into ― take time to set up and employers have quite rightly needed time to assess the market and establish who are the most appropriate training partners. Others are waiting for their courses to be certified, while some are in the process of turning their existing training into an apprenticeship-level qualification.

We believe the figures for the next six months that will show whether the levy could be a success

All of this preparation takes time. So while it’s easy to admonish employers for not starting sooner, now that the levy is here, we believe it will be the figures for the next six months that will really show whether the levy has the potential to be a success. This will be when most levy-paying firms will have had the proper time they need to either demonstrate they are willing to support it, or demonstrate they are happy throwing money down the drain.

Not using their levy payments really is like throwing money away. Under current rules firms have two years to start using the money put into their “digital wallet” for apprenticeships, which also gets a 10 per cent government top-up. Those that don’t use it will lose it. The challenge for 2018 is for employers to start using their own money to train staff for the future businesses they want to have.

For some employers, the slow start has been due to red tape not reticence

In industry, we all know just how quickly two years can pass ― so the message for fee-paying employers is to act before it’s too late.

But there’s another reason too. It’s been well-documented that for some employers, the slow start has been due to red tape rather than reticence.

Without doubt, this is a worrying trend and we see it clearly. It’s why our apprentice management solution Maytas is designed to remove administration strain. Available in both cloud or software versions, it provides the oversights employers need. It doesn’t just deal with payments to government, then to training providers, but automatically creates and collates all the necessary audit trails (such as training hours taken and absences) needed by oversight bodies such as the Skills Funding Agency and Ofsted. Any errors are spotted and easily diagnosed.

The good news is that clients tell us what we’ve long suspected ― once apprenticeships become straightforward to manage, and the levy becomes simple to use, running an apprenticeship scheme is not the stumbling block they once feared.

Research shows employers have strong support for apprenticeships, which now cover 1,500 occupations across 170 industries. Most firms welcome the design input from their trade associations, ensuring learners will acquire the skills employers need for the future. Firms realise too that they’re tapping into a growing understanding among young people that vocational learning is a viable substitute to university study that doesn’t leave them with a mountain of debt.

So, we’re at a crossroads. Like or loathe it, the levy is here. But, those big enough to pay it shouldn’t see it as a tax, money to be written off because it’s too complex to spend. With the right support, running an apprenticeship scheme can be straightforward. Don’t waste the opportunity the levy actually presents.

James Hill is professional services manager, vocational learning, at Tribal

Tribal’s software and services empowers the apprenticeship provision of employers, training  providers and colleges. Get your free guide on how your business can make the most of apprenticeships. Click here


Three myths about apprenticeships

Myth one: apprentices are usually male
Reality: 54 per cent of apprentices in England in 2016/17 were female

Myth two: apprentices are typically making and fixing things
Reality: the top three areas for apprentices in England are health and social care, business/law and retail

Myth three: apprentices are teenagers
Reality: apprenticeships help retrain older workers; in England 25 per cent of people starting an apprenticeship are 35 or over