Why businesses should embrace the apprenticeship levy

Many British businesses are still unfamiliar with the ins and outs of the new scheme set to launch in April. But more companies taking on apprentices will have untold benefits

Why businesses should embrace the apprenticeship levy

Announced in the Spring Budget as a means of bolstering vocational training qualifications, the government’s introduction of T-Levels is an encouraging step. However, according to a recent City & Guilds survey, a staggering third of UK businesses are unaware of the full implications of the apprenticeship levy set to come into force in April this year. Clearly if apprenticeships and vocational training are to overcome public perceptions and find themselves on a par with academic qualifications, there is more work to be done.

Evidently action needs to be taken on apprenticeships. While at 15% Germany has the highest proportion of apprentices in its workforces, other G20 countries fall short: Australia and France have just 5% apprenticeship participation, while the UK’s is a paltry 2%. While many countries are realising the benefits of apprenticeship schemes, with the likes of Italy and Korea reforming their apprenticeship schemes to reflect German and British models, more needs to be done. 

Seeking to address this issue, the apprenticeship levy will require all companies with a payroll totalling £3m or more to invest 0.5% into the government’s apprenticeship scheme. Once fully rolled out, the aim is to generate three million new apprenticeships by 2020. Employers will then receive vouchers from the government – who will add 10% to each pound spent – that can be used to pay external training providers. 

Unfortunately there is still a lot of snobbery around apprenticeships. In part, it’s due to Tony Blair’s insistence upon attaining his target of 50% of young people going to university, which created a stigma that apprenticeships are not as good as degrees. Research by Interserve last year found significantly fewer parents would rather their teenage children enter into apprenticeships than universities. But as the 943,000 young people aged 16-24 not in education, employment or training (NEETs) demonstrate, we can’t afford to turn our noses up at apprenticeships any longer. 

And there are plenty of reasons for us to embrace the apprenticeship levy. Apprentices have shown to be among the most motivated and productive workers, which justifies the government’s position that for every £1 spent between £26 and £28 will be generated for the economy. But the benefits of apprenticeships don’t stop at the economy: there are also societal benefits. Apprentices are now more likely to be women than men: between 2015 and 2016, 53% of apprenticeships starts were by women, marking the fifth year in a row where women have led in apprenticeship starts. Boosting the number of young people enrolled in apprenticeships is a win-win situation.

This is why I personally welcome the government’s commitment to ensuring all public sector organisations allocate 2.3% of their workforce to apprenticeships. The NHS is a great starting point, with an estimated target of 28,000 apprenticeship to begin in 2017 / 2018 – a 75% increase on 2016 / 2017. And plenty of large corporates, such as EY, Unilever, JP Morgan and Boots, are following suit. C4 deserves special mention for its £18,500 salaried year-long 4Talent apprenticeship. It offers a whole array of different types of apprenticeships – from business administration to social media – all with the end goal of apprentices achieving an NVQ level 3.

But a word of warning on the apprenticeship levy: whilst it’s a step in the right direction, it needs to be managed carefully, otherwise it risks damaging public perceptions of apprenticeships further. The fact is that 1,850 apprentices with institutions are underachieving by 10% – although it’s worth noting that some institutions, like Mitie Group PLC, achieve rates of 98.6%. Moreover, there’s a risk that companies will lower salaries to avoid paying the levy. And, most importantly, quantity must not trump quality.

Fortunately, the Institute for Apprenticeships has been set up to oversee this very issue. It will be charged with developing and maintaining quality criteria for approval of apprenticeship standards and assessments, identifying gaps and maintaining a public database of apprenticeship standards. Being an employer-led body with an independent chair makes this a great step forward for apprenticeships.

While there are potential issues around apprenticeships, none of these are insurmountable problems. They shouldn’t prevent us from seeing the implementation of the apprenticeship levy, which, however imperfect, is a massive step in the right direction for addressing our skills, productivity and apprenticeship crisis. The levy will go a long way to increasing the number of apprenticeship schemes available but there must be a focus on quality over quantity or we’ll never be able to shake off the stigma that still currently surrounds them. 

Frances Dickens
Frances Dickens

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