over 2 years ago by Meg Fenner Jamieson

A Year on from The Apprentice Levy

Apprentice Levy blog

The apprentice levy has been in place for one year now, and the number of apprenticeships is down by 65,000.  

But how did this happen? Surely the levy was to fund new apprenticeships, so that should mean more apprenticeships not less? We put some questions to Lesley Price, CMD Recruitment expert, who has over ten years’ experience in the skills and employment sector: 

What’s happening with the Apprentice levy, one year on?

It’s fair to say it hasn’t been an unqualified success. The apprentice levy has affected employers, training providers and apprentices alike, and it initially caused a 40% drop in the numbers of apprenticeships. This huge fall was not the outcome anyone wanted from the levy.

So what exactly is it?

For anyone unsure what the apprenticeship levy actually is, this is the official line from the Government: The Apprenticeship Levy is a levy on UK employers to fund new apprenticeships. If you’re an employer with a pay bill over £3 million each year, you must pay the apprenticeship levy…

For the last year, employers have to put money aside to fund apprenticeship training. There are rules and regulations about what sort of apprenticeship training is appropriate and can be funded within the scheme. 

So why are there fewer apprenticeships since the levy was introduced?

The number of people in apprenticeships is most likely down because change is never easy! Introducing new systems can lead to confusion, doing things differently can be daunting, and it’s a bit like turning the Titanic - it doesn’t happen overnight! 

Part of the reason is the requirement to offer 20 % off the job training  (which is costly) and partly it’s down to there being no standards written for some of the apprenticeships that employers want and need.

So how do employers maximise the potential of the levy?

Whilst some Levy paying employers - those who were quick to recognise the full training potential for their organisations - are fully engaged and maximising their Levy spend, others are still unsure.

Reports from last year showed that almost a third of employers have not registered to spend their Levy pot, which is growing while they are still “getting their heads around it“. They are beginning to look at it now but it has been slow while they are seeking advice in the market and looking for the best route. My Director posted a request for help with how to access the Levy and received 20,000 comments!

What help is there for smaller businesses seeking apprentices?

It’s worth mentioning that smaller employers make a 10% contribution to apprenticeships whilst the government funds the remaining 90%.

There’s also a £1,000 employer incentive for starting an apprentice aged 16 to 18 and micro employers – those with ten staff or fewer – can benefit from 100% funding for apprentices of this age. So, the levy affects businesses of all sizes, not just the large organisations

Do training providers have to adapt?

Yes - the training providers must adapt their approach to training as now the emphasis is on business-to-business relationships. For training providers to continue running apprenticeship training programmes they need to work more closely with levy-paying employers, who are becoming employer training providers as they see this bringing a greater autonomy. 

Not only that, but the training providers have had to upskill their trainer assessors to transition from the old apprenticeship framework to the new standards. This has been costly and some assessors have left the market altogether.

Have we reached ‘parity of esteem’ for apprenticeships and other routes to work?

I hope so! The great thing about the changes means it opens up opportunities for alland not just young people. So many people I talk to think that apprentices are “only for school leavers“. Graduate level apprenticeships are being made readily available and they are being well received.

And FINALLY, apprenticeships are being seen as a valid route way to work by schools and equal to the traditional University route rather than being seen as a poor alternative or worse “for underachievers.

Apprenticeships are for people of all ages and abilities. They offer people an exciting career path with opportunities for progression and give employers the chance to bridge skills gaps and grow their business.

Can you spot any promising signs for the future?

Employers have two years to spend their levy and in the first year, the majority of Levy paying employers have chosen to upskill their current workforce to gain the best return on their investment. 

As a recruiter, I have seen a huge surge in level 3 and level 5 apprenticeships in leadership and management, for example. There’s genuine optimism that take-up of apprenticeships will become more widespread in the coming months with employers extending their programmes as they use up this year’s levy and plan for the coming year. 

Do you think the Apprentice levy will result in more workplace training? 

The Levy has had mixed reviews, and it certainly has its critics but in its purest form has one simple aim which is to “incentivise employers to recruit, train and upskill their workforce to become more productive and to increase opportunity in the workplace and in the long term aid mobility of labour.

I think it’s essential that business and government support professional development and workplace-based training. So let me leave you with a saying I read somewhere which I think sums it all up on investing in training programmes…