Liza Andersin gives TJ her insight into everything you need to know about apprenticeships with a detailed explanation on how the levy works.
Reading time: 5m 30s.
Attitudes towards apprenticeships today
Apprenticeships are widely beneficial from each angle you look at them. They firstly can be used to train existing staff by increasing their engagement and motivation in the workplace and on the other hand they bring in new employees and develop them internally, increasing loyalty and bringing an expanded knowledge and wider talent pool.
To meet the government’s ambitious plan to train 3m new apprentices in England by 2020, the apprenticeship system has come a long way. The entire funding system has been redesigned, training standards are being rewritten which has resulted in the entire value of apprenticeships being questioned and rethought.
With more focus and funding being placed on apprenticeships, young people and their parents alike have changed their perceptions on the subject. Even in 2019, there is a stigma attached to apprenticeship demographics and challenges in culture over who should undertake an apprenticeship.
There is still a connation attached to the name – some people still refrain from applying for an apprenticeship because they don’t want to be perceived as inexperienced or they feel too ‘old’. The main preconception is still that apprentices can only be entry-level school leavers, which is a myth – apprenticeships are open to people of any age.
Some people still refrain from applying for an apprenticeship because they don’t want to be perceived as inexperienced or they feel too ‘old’
There are a wealth of apprenticeships at bachelor’s and master’s level aimed at training every level of the workforce, which can help benefit the overall productivity of the workforce.
The government understands some employers need to take on apprentices with more experience in the workplace, bu there is now also the introduction of additional funding for companies who take on 16-18-year olds to help maintain the balance.
From the UK L&D Report 2019, only 53% viewed apprenticeships as an important part of their L&D strategy for 2019, despite the UK’s potential talent pipeline shortage and ageing workforce.
Apprenticeship starts were down 28% between August 2017 and March 2018 compared with the same period in 2016/17, leaving teachers and parents with the belief that vocational training is still second best to higher education.
Apprenticeship trends 2019
Degrees are not the only route you need to take to get to the top of your career ladder – senior management comes from both ends in terms of qualification. The highest proportion of senior managers have a Level 3 academic qualification but there is a similar percentage of managers with a level 2 vocation qualification.
This is paving the way for degrees and apprenticeships to be viewed equally tier as employers are beginning to nurture the significance of on the job training.
A study conducted by the Social Mobility Commission found that academic qualifications isn’t necessarily the most important factor when it comes to your earning potential.
Choosing a vocational or academic course that’s near your current or future field is the way to ensure higher earnings. The study also revealed that men benefited more through vocational studies such as apprenticeships, they reap greater rewards in the long term as theory-based courses have allowed them to enter the higher levels of the workforce.
The levy explained
The levy applies to employers in England who have an annual pay bill above £3m, and is set at 0.5% of the annual pay bill whether they choose to employ apprentices or not. All employers will receive a £15k annual allowance to be offset against the bill. This does mean that employers with an annual pay bill of £3m or less pay no levy.
The thinking behind the tax was straightforward: to help boost the UK’s increasingly low productivity output by investing in human capital and thus committing to creating 3m new apprenticeships by 2020.
As announced on the 1 October 2018, by the Chancellor of the Exchequer Phillip Hammond, there will be an allocation of £90m for Apprenticeship Levy funding which will come into place next month, two years after the levy was first introduced.
Elizabeth Curran, owner of Funding Solutions 4 Business believes that adult apprenticeships still face a branding issue even with the levy implementation, “The Apprenticeship Levy and policy supports internal workforce development for employers, but employers still don’t understand the word apprenticeship, the government need to do more to help people understand it’s about learning new skills and enriching your talent pool, regardless of your age.”
Apprenticeship schemes offer an alternative option which is far better suited to those who are set against attending university. But this opens up the question: why are the number of apprenticeship starters still so low?
It has been suggested this is due to retailers being forced to invest in apprenticeship schemes which adds more value to potential apprentices. Some employers are now being adversely picky on who they take on, rather than a lack of interest shown from potential starters.
The Open University recently conduced a study that found two out of five employers want significant changes to the levy. The statistics tail end the fact that £3bn in apprenticeship levy funding in the UK remains unused despite the ongoing support from employers, so a significant change is necessary for employers to work together in hiring new talent.
They also revealed that employers have earned back just £480m of the total funding available since May 2017. Currently only one in five (19%) levy-paying employers have made apprenticeship commitments with many reporting an ongoing frustration with the levy scheme.
The frustration surrounding the levy system is influencing employers’ perceptions. They are being left unable to make long term and strategic decisions about training and skills.
The process of developing an apprenticeship strategy can be a lengthy process for employers with 66% finding the system confusing and as a result more than 36% wanting more guidance with 35% hoping the process can get simplified.
What does the future hold for apprenticeships?
The priority is now to fix the Apprenticeship Levy. For the next 18-24 months we will see close monitoring of apprenticeship participation figures post reform of the levy. Ideally, the levy is there to help create a highly skilled workforce, greater social mobility and higher British productivity.
The levy has been designed to push the message that apprenticeships are for all ages, for those who don’t wish to harbour student debt and a chance to gain employable skills whilst earning and stepping up the career ladder. In reality since the levy has been introduced, there has been no specific focus of accelerating the application of apprenticeships.
A chance to revise the levy is an opportunity that employers should be the forefront of, it has the force to make the change everyone has been ready to see for years.
About the author
Liza Andersin is HR director at findcourses.co.uk.