The start of 2018 has seen renewed criticism of the apprenticeship levy, with last year’s fall in apprenticeship starts being widely cited as evidence that it has become another business tax.
In fact, the levy represents a milestone in transforming the way employers access talent and how the post-18 education system operates for young people.
Larger organizations have argued that the £27,000 training allowance per apprentice falls short of covering the costs of higher level technical apprenticeship programmes. Others point to a lag in the certification of new training standards, coupled with the sheer size of the financial contribution required of the very largest companies, as barriers to any effective use of the 0.5 percent levy pot.
As always, there are two sides to this story. For one, the decline in the number of apprenticeship starts follows a marked spike in apprentice hires at the same time the year before, as employers readied themselves for the levy’s introduction in April 2017.
Two additional factors have fuelled initial falls in apprenticeship numbers, alongside a natural teething period as companies assess which apprenticeships will be most effective given their long-term plans.
First, employers are now far more discerning around which providers they work with, and what programmes they introduce, given they are spending their own money, rather than the government’s, on apprenticeships.
Second, smaller, non-levy paying companies, who used to benefit from fully government-funded apprenticeship training and do not pay the levy, are now obligated to cover 10 percent of the training costs.
Neither of these factors on their own is necessarily a bad thing. Employers taking time to plan and actively seek value for money around their apprenticeships will drive better quality programmes. And, by forcing smaller employers to co-invest in the qualification costs, competition for quality and innovation in a historically underwhelming training industry is stimulated. Further, it will help to stop the spread of apprentice roles that essentially amount to cheap labor, thinly veiled as qualifications.
True, the speed with which the legislation was introduced last April left providers playing catch-up to secure certification of new assessment standards in some areas. But there is real scope for innovation in the apprenticeship landscape, and a dose of creativity in the application of ring-fenced funds is resulting in genuinely life-changing opportunities for young people who want a viable alternative to university education.
Google is using the levy to recruit their next cohort of software engineers, with a real emphasis on their hiring process on promoting diversity and inclusion. Selecting entry-level talent based on potential, rather than experience, opens the door to candidates who might never otherwise have been considered.
Elsewhere, companies are using the levy to support personal development outside of their usual business functions and existing graduate schemes. Top law firm Mishcon de Reya, for example, has taken on accounting apprentices in their finance department, providing a new pipeline of fresh talent into the firm. This use of the levy to fund an apprenticeship scheme in the operational side of the business evidences the scope of implementation for all levy-paying employers.
The apprenticeship levy was introduced with precisely the objective of empowering employers to play a valuable role in addressing the growing UK skills gap. It is easy to criticise the realisation of a new policy, and there are certainly issues still to be resolved.
But the levy provides employers with a golden opportunity to diversify their entry-level talent and mould the kind of leaders they want driving their business in the future. It’s time that this positive potential was given equal recognition alongside the inevitable challenges faced in the levy’s application.
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