What on earth is going on with the apprenticeship levy?
Ben Rowland urges businesses to support the Apprenticeship Levy - because it's here to stay.
Essential reform? Stealth tax? Confusion? All of the above??
As it reaches its first birthday, discussion about the Apprenticeship Levy is generating lots of heat but not much light. For those responsible for learning and development in organisations there are two key questions that seem hard to answer: 'should I be spending any more time on the levy?' And, if so, 'how do I maximise my chances of extracting benefit from it for my organisation?'
Here are a few helpful pointers to answer these two questions.
Question 1: 'Should I be spending any more time on the levy?'
According to the latest data, apprenticeship starts are 40% down from the same time last year. Plenty of employers are also voicing their dissatisfaction with the levy, seemingly because of the complexity that goes with it: either the compliance and paperwork is seen as disproportionate or the standards that have to be adhered to in order to use levy funding are too constraining.
Does this mean the levy might disappear? Is there a risk that any time spent on it now will be wasted? The levy’s not going anywhere in my view, so organisations need to invest the time now.
The most recent numbers may be down 40% year on year, but that gap is narrowing and a growing number of levy payers are starting to figure out how best to use it.
The Government believes that the underlying rationale for the levy is hard to argue against: as a country, our corporate spending on training is lower than our OECD peers and so too is our productivity.
Something in the equation had to change to break the log-jam of low training, low skills and low productivity, and as no one has suggested any serious alternatives (including opposition politicians) to achieve the same goals, it looks like the levy is the Government’s only option.
Add to that the fact that it would be an enormous amount of work for the Government to try to undo the levy and the U-turn it would represent for the politicians involved, I don’t think the levy is going to go away (though there may be tweaks to it along the way).
It's also worth noting that, despite the negative headlines, the levy is beginning to gain traction. The most recent numbers may be down 40% year on year, but that gap is narrowing (it was 60% last summer immediately after the introduction of the levy), and a growing number of levy payers are starting to figure out how best to use it.
This is matched by tentative data from training providers in high demand skill areas such as IT and data, who are reporting growth in their numbers.
So, in answer to the question, 'Should I be spending any more time on the levy?' It’s a resounding yes. It’s not going anywhere, organisations are starting to see success, and there’s plenty of benefit to be had by investing the right level of time and effort into making it work.
Question 2: 'How do I get maximum benefit from the levy for my organisation?'
There are two things companies need to get right.
- The organisation needs to have the right mindset and expectations.
- There is a set of steps an organisation need to take to maximise their chances of success.
On mindset and expectations, it is important that a critical mass of people in your organisation establish two things. First, any apprenticeship training programme is focused on the occupation, not on the specific job role the person is in.
This may seem like an arcane matter of terminology, but if a line manager or employee thinks the training programme is all about their current job then they will both miss out on the broader benefit (of getting the breadth and depth of a formal occupationally based programme) and risk being disappointed because the training may not be directly about what they are doing here and now.
The second thing to get right in people’s minds is that the apprenticeship ‘market’ is going through huge upheaval, and training providers are also in the process of making big investments and changes that are still ‘in train’.
Add to that the fact that lots of new standards are still works in progress, what is possible now will not be as broad or as good as what will be available in six months, a year and so on. On the practical steps to take, the employers who are getting most benefit from their levy have followed a version of the following action plan:
- Start to get the organisational mindset right (see above): lots of conversations with the key decision makers and influencers
- Get familiar with the apprenticeship standards that look like they are most relevant
- Start conversations with training providers and begin to gauge the market
- Begin to link apprenticeship training programmes to areas where skills and recruitment are an issue
- Ensure the conversation stays broad, about using the levy for existing employees as well as for new hires
- Start somewhere: there is nothing like actual practice to begin to test and learn about your organisational assumptions
- Have a bold plan to achieve scale which will capture the attention of the organisation.
- Choose a big hairy goal – could the levy represent a change in the diversity of your organisation? Could it be the catalyst for digital transformation in your middle management? Pick a big purpose and let the levy get you there.
Organisations that are following these steps are effectively using their levy to upskill existing employees and bring new, digitally native talent into their businesses. For those organisations the answers are clear: the levy represents a chance for real, tangible organisational change – and they are grabbing it with both hands.
About the author
Ben Rowland is co-founder of Arch Apprentices
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