Launched in 2017, the Apprenticeship Levy was created as a means to provide vital funding to help upskill employees.
Whilst the intentions and logic behind the initiative made sense, in 2017-18 alone, there was a £400m underspend which suggests that the scheme may not be reaching its full potential.
Stacey Allen, Head of Corporate Partnerships at Arden University, delves deeper into the reasons why:
What is the apprenticeship levy?
According to GOV.uk, the general description of the apprenticeship levy is as follows:
“The Apprenticeship Levy will be a levy on UK employers to fund new apprenticeships. In England, control of apprenticeship funding will be put in the hands of employers through the Digital Apprenticeship Service. The levy will be charged at a rate of 0.5% of an employer’s pay bill. Each employer will receive an allowance of £15,000 to offset against their levy payment.”
Officially, any company in the UK who has a pay bill over £3million will pay 0.5% of its total figure into the levy fund.
With the government pledging to increase the number of apprenticeships to three million by 2020, it’s vital that companies understand how they can benefit, and how employees can benefit from this training.
Firstly, we want to understand why companies and employees might be at odds with the levy:
- Is there a misconception as to who can be an apprentice?
- Is it a 16-year-old school leaver wishing to gain skills in carpentry?
- Is it an employee in their current role looking to take the next step into a management role?
The answer – all of the above!
So, why are companies not taking advantage?
Apprenticeships come in many shapes and forms. They are very different now to what they were 10-15 years ago, and they have evolved into an effective way of learning whilst you earn.
There’s a whole host of courses out there that are adaptable for a range of businesses regardless of industry.
Every company needs leadership, every company needs effective management or digital skills. The courses combine academic learning with practical application of the knowledge and skills the students acquire.
With the help of the levy, qualifications are funded by employers and the Government, meaning that for the apprentice, it is free of charge.
In particular, Arden University currently offers three different types of degree apprenticeships:
- Postgraduate Master’s Degree MBA Apprenticeship
- Undergraduate Degree Apprenticeships in Business Management
- Digital & Technology Solutions.
You might be asking yourself “how does this apply specifically to my business?”
In a nutshell, the overarching aim of the levy is to enhance skills in the workplace by offering approved professional development courses and qualifications.
Thereby increasing staff engagement, development, retention and ultimately helping your business to flourish. The employee would be given the necessary skills to help climb the career ladder for free but of course, the company benefits from this too, therefore it’s a win-win situation!
What can we do to change perceptions and bring companies on board?
According to a poll by People Management, it is estimated that over half of businesses will not spend the levy. If we look at a company who does have a pay bill of £3 million per year, they will be paying £15,000 into the levy annually.
This means that thousands of pounds are potentially being absorbed into the levy (which companies do not get back) and businesses are missing out.
Putting it simply, your company is paying another business tax. These figures are at the lower end of the spectrum with many businesses paying much more into the levy on a monthly basis.
If this money is not utilised, it will ultimately help fund and upskill the employees of other organisations. This is of course for the common good, however I would also urge levy paying organisations to ensure they have used the money to aid their own employees develop.
We need to bring all of the facts together and help businesses understand how the apprenticeship levy could revolutionise the way apprenticeships are viewed.
If you or your company is thinking of looking into this further, make sure you’re armed with the right facts:
1. The path isn’t linear – didn’t get your A-Levels?
Universities like Arden consider your work experience as well as qualifications. Not only this, today you can also get a degree via an apprenticeship route without taking three years out to attend a traditional university.
2. The educational possibilities are endless
There are a variety of apprenticeships available in the form of MBAs and degree apprenticeships. These courses are geared around delivering the skills that are most in demand in the workplace.
3. Career progression
If you are looking to upskill in your current role and progress to a higher level this could result in a more senior position and responsibility, which inevitably equals a salary increase!
4. Non levy payers now only have a 5% fee
All employers in England are incentivised to engage and develop their employees through apprenticeships. For large levy paying organisations the incentive is to use their own levy money to develop new or existing staff members before this money is lost.
For smaller organisations (those who do not pay the levy), the company will only be required to cover 5% of the apprenticeship cost of training – fee dependent on programme provider.
5. Companies are always looking for a return on their investment.
Putting the money in will not only give the apprentice valuable skills in return, it could also increase employee productivity and give businesses better access to skilled workers.
6. A degree apprenticeship won’t leave you in personal debt.
The total average cost of studying in the UK is estimated to be at least £22,200 per year, with studying in London likely to be significantly more expensive. In 2017 the Institute of Fiscal Studies calculated that students in England are going to graduate with average debts of £50,800 (the NUS recently estimated that the more disadvantaged will leave university with debts of around £57K), after interest rates are raised on student loans to 6.1%. Three quarters of students will never repay those debts.
7. Degree apprenticeships come in many shapes and forms
Digital, management, and senior leadership, most forms of senior management are eligible, whether you work in manufacturing, transport, software development or the healthcare industry.
8. Plug internal skills shortages
If the Apprenticeship levy is to reach its full potential for both company and employee, it’s essential that more companies take advantage of the money they’ve paid out to plug internal skills shortages and that employees use the opportunity to upskill and improve their career and earning potential, for free.
Stacey Allen, Head of Corporate Partnerships, Arden University
About Stacey: As Head of Corporate Partnerships at Arden University, she is responsible for placing degree apprenticeships in companies across the UK. Stacey has tremendous insight into the schemes teething problems, and understands what steps can be taken to help employers make the most of the initiative.