Achieving 3 million new apprenticeships by 2020 was never going to be an easy task for the government. In a time of austerity with cuts consistently on the horizon, there was inevitably going to be a funding shortfall. To compensate for this, the Apprenticeship Levy was introduced on the 6th April 2017, which has completely transformed the way that apprenticeships are funded, placing a large amount of the responsibility on companies rather than the government.
However, early research from the Chartered Institute of Personnel and Development (CIPD) shows that employers are still confused about the Apprenticeship Levy, with 56% of levy-paying organisations not expecting to recover all or most of their costs. Additional research from Evolve Learning Group and West London College indicates that only 37% of employers feel that they fully understand the levy. Consequently, many employers are not realising just how they can use the levy to develop both new and existing staff and distinguish themselves as an employer of choice in an increasingly competitive marketplace.
The Apprenticeship Levy applies to all employers in England who have an annual pay bill of over £3m. The levy of 0.5% of the pay bill, minus a £15,000 allowance from the government, is collected by HMRC through PAYE. Employers can access the funds through a digital account and use these to pay for apprenticeship training. Unspent funds expire after 24 months.
At NJC, engaging with and gaining an understanding of the Apprenticeship Levy has been a key priority for 2017. NJC is passionate about the continuous professional development of employees and we were keen to understand how the levy can be used to fulfil this commitment. What we discovered turned out to be key in the development of our learning and development strategy for the foreseeable future.
The new Apprenticeship Standards cover a broad range of professional development courses which have previously not been funded through governmental schemes and the number of people eligible for these places has increased dramatically. For instance, in previous years, any employees with a degree would not be eligible for an apprenticeship whereas now employees with a degree can embark on an apprenticeship course, providing that it allows them to gain substantive new skills and the subject is materially different from their degree.
So why are many companies not seeing the levy as an opportunity to upskill their current employees? Is it because most employees generally have the qualifications needed to do their jobs? Well, not according to the latest research this year from the CIPD which stated that only 57% of the UK workforce was described as well-matched to their job by qualification (by comparison Germany and the US score 66% and 67% respectively). This research would indicate that employers are missing out on a big opportunity to match their employees' skill development needs with the apprenticeships that are available for funding under the levy.
At NJC we were keen to embrace this opportunity and to understand any barriers to entry or completion of these courses. One barrier that we quickly encountered was the word ‘apprentice’ itself and its connotations – a word typically designated to a school leaver learning a trade at reduced wages. Many employees assumed that all apprenticeship programmes were designed for young workers or for those new in their careers and that these would not be appropriate for them. This is quite simply not the case. A better way to view these courses is as a type of professional development upskilling for employees to perform their roles more effectively or preparing them for a higher role.
Initiating a change always has to start with the business leaders and that is why our management team at NJC has been the first in the business to enrol in courses under the Apprenticeship Levy. We have matched all managers within NJC with an appropriate management course for their role, starting from supervisors at A-level equivalent Team Leadership courses, all the way up to senior management Masters equivalent Senior Leader courses. These courses have all been accredited by either The Institute of Leadership and Management (ILM) or The Chartered Management Institute (CMI). Following on from this roll-out will be a focus on other roles within the business so we can continue our tradition of offering entry-level apprenticeship schemes for our operatives and ensure we have a highly trained support team at our Head Office.
So how can you start to make the Apprenticeship Levy work within your business? Fundamentally, there are a few key steps required to get this process underway.
- Join some free webinars hosted by training providers and colleges. These are widely available as providers are keen to promote their services. Alternatively, videos of previous webinars are available on Youtube. These videos are useful tools for learning about how the levy is paid and what it can be used for.
- Conduct a skill gap analysis. Learning where the development needs and priorities are within your business will provide you with the information you need to match your employees to the available development courses.
- Consider setting up a link with a nominated training provider. This will allow you to select one provider with access to your levy who will be able to recommend the most suitable courses for your skills gaps and take on much of the administration for you. Alternatively you could decide to use multiple providers, but this is likely to entail more administration for your in-house learning and development team.
The Apprenticeship Levy may be the biggest unrecognised opportunity in recent years that you have to improve the productivity of your business and to demonstrate to your employees that you are committed to their development. Don’t waste it.
NJC Learning and Development Advisor