From education to employment

Is ignorance to blame for the lack of an apprenticeship surge post-Levy?

Despite the slow growth in apprenticeship starts since the introduction of the apprenticeship Levy, this new funding mechanism is precisely what the UK needs to bridge its widening skills gap.

The suggestion of a new tax was never likely to be welcomed with open arms, but it is important to consider the long term benefits that apprenticeships bring to UK businesses of all sizes.

The long term benefits of putting this tax to effective and well considered use far outweigh the inconvenience of having to shell out what is essentially loose change in the short-term.

We recently conducted a survey of both Levy paying, those employers with a pay bill over £3m each year, and SME employers, to learn more about their experiences with apprentices.

Our findings showed that of the nearly 50% of employers playing an active role in facilitating apprenticeship learning in their business there is an overwhelmingly positive response to the benefits that apprentices have had.

For the remaining 50% of firms that have failed to adopt the programme, their resistance seems to be based on the counter argument; that apprentices will not add any value to their business.

This is clearly an area for the government to intervene and ensure the market receives the boost it requires to have a fighting chance of meeting the 3m apprenticeships target set for 2020.

In today’s political and economic climate it is more important than ever to ensure the security of the economy by closing the skills gap. One way of achieving this is to allow SME businesses the resources to afford the on-boarding of apprentices. In the long-term, businesses will reap the benefits on a national scale.

Theresa May, when setting out her election manifesto, suggested that the Levy could be introduced as a way to subsidise apprentices’ wages, but with the interruption of Brexit negotiations, this has been left by the wayside.

A quicker fix could be found in the form of an apprenticeship mandate for businesses depending on their size.

SMEs are not likely to welcome this regulatory intervention in the short term, but it might just trigger them to see the tangible benefits that their competitors have enjoyed.

Not only would this mandatory engagement with apprenticeships result in zero cost the Treasury, but would immediately help to accelerate the apprenticeship market and thus achieve a much needed shot in the arm for providers.

The Levy has received a lot of scrutiny both before and after its implementation, however not all criticisms have necessarily been just.

The negative press around the Levy has led to damaging preconceptions, hindering the way it has been received among UK businesses.

It is important to take an objective view of what this Levy means for both the British economy and workforce, particularly with long term solutions in mind.

Ignorance, of both the options for onboarding apprentices, and the benefits that apprentices could bring to businesses, should no longer be an excuse.

Phillip Speed, Education Finance Specialist, Nucleus Commercial Finance

About Nucleus: Nucleus Commercial Finance provides alternative finance for businesses. The experienced team takes a solutions-based approach to structure finance deals that fit each individual business. This tailored and transparent approach combines the flexibility of an alternative lender with the stability and product range of bank finance, spanning overdrafts,  cash flow finance, invoice finance, property finance, asset funding and construction finance. Click here for more details.

Related Articles