The Apprenticeship Levy: Turning a tax into a talent strategy

Tim Campbell sees the Apprenticeship Levy as less a tax and more of a talent strategy. 

While it’s no secret that the introduction of the Apprenticeship Levy was met with resistance from some in business, particularly at consultation stage, today organisations are harnessing opportunities to transform what was widely viewed as an unwanted tax into robust talent strategies.  

From a Government perspective, the Apprenticeship Levy is seen as an instrument of significant social and economic change, helping to provide the next generation of skilled workers within the UK while accelerating social mobility.

However, businesses are by no means agents of Government, and some are already planning strategies around the levy which are aligned to wider business objectives rather than hitting headcount targets.

That said, a recent survey conducted of more than 3,000 senior HR leaders found that over half (52%) are planning to use new funds to bring on board new talent, with the majority of respondents (71%) saying that they see the levy creating a new route into the workplace to rival graduate intake. So it seems that the initiative is fulfilling its objectives, at least to an extent.    

The fact that budgets will be automatically moved to the L&D arena through legislation is allowing HR to spend less time trying to convince, and more time effectively engaging with the C-Suite on talent strategies.

If nothing else, the introduction of the levy has offered organisations an opportunity to ‘galvanise’ thinking around the sourcing and development of talent, by presenting HR and training leaders a rare opportunity to engage in meaningful conversations with both finance and general management teams about what is needed for future talent sourcing and development.

The fact that budgets will be automatically moved to the L&D arena through legislation is allowing HR to spend less time trying to convince, and more time engaging with the C-Suite on talent strategies.

The findings of a recent white paper, The Apprenticeship Levy – How to turn a major social change (or an unwanted tax) into a robust talent strategy, which is based on in-depth interviews with senior HR professionals within blue-chip companies, confirm how attitudes are shifting. 

As one participant points out, “Because there will be money in the pot we don’t have to think about how things will get funded. It’s more about our workforce challenges and how we might use Apprenticeship Levy money to solve workforce problems. Because of the levy we can start to look at our skills and development needs more strategically.”

Instead of being bound by traditional perceptions, organisations are creating models that meet their specific needs now and in the future. Businesses are resetting their perceptions around apprenticeships – no longer just for entry-level talent, funds are being directed towards upskilling existing employees to aid productivity and retention.    

The research has also revealed further opportunities around improving the inclusion of individuals from under-represented groups, with the majority of contributors agreeing that the new round of apprenticeships have the potential to tap into underused pools of talent and generate significant workplace diversity benefits.

As John Morewood, former head of emerging talent for Europe at HSBC, said, “We want to bring new people into the organisation in ways that will help us to improve diversity as well as tackling skills gap issues and ensure we have a good pipeline of young people.”

While employers are celebrating the benefits that the levy has created, the implementation of new strategies to respond to the new landscape is not without its challenges. One of the most significant changes brought about by the introduction of the levy is a dramatic shift in power in the supplier/ consumer relationship.

Employers are now in full control of funding and training and this may lead many to take a long, hard look at the quality of service they are receiving. Employers are using their new-found financial muscle to make sure that both FE and HE providers deliver exactly what the purchasing organisation needs.

Looking at degree level apprenticeships specifically, the education supply situation is in a state of flux, with many higher education institutions keen to take full advantage of the opportunities that the levy is creating – but not yet fully succeeding in doing so. 

As another interviewee points out, although the organisation is keen to set up more degree-level provisions to boost diversity, “The challenge is that the programmes are hard to set up. In theory the supply is there and universities are more than capable of developing good programmes.

“However, not all have got their heads around apprenticeship programmes yet, and their own inflexibilities such as hours of work and lack of provision for evening teaching can be difficult barriers to overcome.”

It’s true that apprenticeships are not a ‘silver bullet’, but just one key part of a wide ranging solution to talent challenges. But, the levy has put a spotlight on sourcing and the development of talent and how it can be more closely aligned with the real needs of organisations both now and in the foreseeable future. 

And the result has already been a set of innovative and imaginative strategies, which, while still in their early stages, seem set to revolutionise the way we attract, engage and retain our people – not only with regards to emerging talent, but also wider teams.


About the author

Tim Campbell is head of client services, emerging talent at Alexander Mann Solutions


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