On Wednesday we gathered a group of HR leaders from across the Midlands and, along with Kate Temple -Brown from Aequalis Consulting, we discussed the Apprenticeship Levy, sharing experiences, ideas and thoughts on what is still a confusing subject.
With skills shortages becoming an increasingly serious issue across many industries, the Government has pledged to create 3 million apprenticeships by 2020 in a bid to rectify the problem. In April 2017 the Levy will come into effect for those firms that spend £3 million + on PAYE and despite Brexit the Apprenticeship Levy is still happening.
There is still much confusion and many myths associated with them and these can often be off putting for current employees, young adults and school leavers’ parents when looking at a potential job routes.
The Government is keen to address this skills shortage and increase the number of apprenticeships. George Osborne referred to apprenticeships as the ‘cornerstone of the skills system.’ And now, with the introduction of the Apprenticeship Levy set for April 2017, the government will be working with UK businesses closer than ever before to help deliver the additional high quality apprenticeships that our economy needs.
Here we have brought together information about the Levy and tried to explain some of the myths and confusion surrounding it:
- Employers will not automatically get £15,000 worth of vouchers to spend on training -The £15,000 is an allowance – and more accurately viewed as a deduction to your levy contribution and works in the same way as a personal tax allowance. It is easier to think of the levy as a 0.5% tax that applies to all firms but with a £15,000 allowance.
- How do the Vouchers work – Employers can’t choose how and when they spend the vouchers on apprenticeships – There are restrictions – Vouchers will be made available in your account on a monthly basis but they will expire after 18 months. The government’s guidance also strongly suggests that payments will be made for training over the lifetime of the apprenticeship, potentially on a monthly basis. Under the current proposals, it does not look like employers will be able to agree their own payment schedules with providers. Vouchers can only be used on apprenticeship training provision. They cannot be used on wages or wider costs of recruiting and training the apprentice.
- The purpose of the levy is the “develop vocational skills, and increase the quality and quantity of apprenticeships”. The levy will affect all employers in the UK, and not just those who the Levy applies to. To achieve its objectives the government needs to generate considerable revenue to distribute to SMEs in particular to encourage the hiring of Apprentices. It also needs to encourage bigger companies to look sympathetically at Apprenticeships.
- The government has expanded eligibility for apprenticeships – transitional programmes can be made into Apprenticeships – they are not just for school leavers. Even if you hire school levers, the market will be so much more competitive for high performing school leavers, organisations will need to re-evaluate their engagement strategy and proposition. It is important from businesses perspective not to knee jerk react – hiring 300+ school leavers will be challenging – who will on-board them, development them and what you will you do with them in 4 years? Often the case that school leavers are not given the right careers advice and details of all options that are available to them.
- Apprenticeships offer poor pay – The National minimum wage for apprentices was just recently increased (October). The current minimum wage is now £3.30 per hour, but many employers are willing to pay a lot more than that, so it’s worth seeing what is out there. Like with any job, employers want the best people possible, so are happy to pay more if it secures young talent. Apprenticeships are not a real job – Most apprenticeships are full-time, and apprentices are treated like any other employee. After all, in an ever changing world, especially when it comes to digital, young individuals are full of ideas, and enthusiastic. Employers really do value this, so apprentices play a vital role in any company.
- Apprenticeships are for people who aren’t bright – Major UK companies from all sectors are all creating apprenticeship schemes. In August the Office for National Statistics (ONS) announced digital apprenticeships as the key to rapid business growth. Apprenticeships are an excellent career route. Will doing an Apprenticeship be good for my future career – Work experience is valued very highly amongst many employers and having experience in the real world really provides an excellent start. It is better to go to University or do an apprenticeship – Higher education is currently still the most popular choice for school leavers, however this also means greater competition for jobs when it comes to graduation. University and Apprenticeships are different, but equally valid choices. However, with an apprenticeship participants are being paid to learn and there are excellent opportunities to find a full-time job when completed.
There is a 24 months’ time limit to spend the vouchers and this will give you time to understand your strategy, understand your proposition and by September 2017 you will be able to run a pilot. Pick an area in your business and pilot a school leaver programme. This will create a good news story to attract the very best school leavers in the future.
The government recommends that each company should have an individual to manage the levy internally or outsource it – see the Register of Apprenticeship Providers https://www.gov.uk/government/collections/register-of-apprenticeship-training-providers
And why not consider being Trailblazer – This is made up of a group of employers who work together to design new apprenticeship standards for occupations within their sectors. Employers are now at the forefront of the development of Apprenticeships and learning; creating people with workplace skills that are relevant to business and industry.
The reforms in Apprenticeships will empower HR professionals to have board level conversations on how to holistically approach the Levy, Schools Leavers and the development of existing employees. Apprenticeships will create pathways for individuals to move across career divides and for businesses to retain and develop their very best talent.
Oakleaf will be hosting a follow up seminar in Birmingham on the Apprenticeship Levy in March 2017. If you are interested in joining us please feel free to contact me Sarahwestwood@oakleafpartnership.com