Apprenticeships and the Levy – Opportunity & Challenge

Rachel Burnham writes: As you are probably aware, from April 2017, the government will be introducing the apprenticeship levy on all employers with a pay bill of more than £3 million per year.  The levy, set at 0.5% of the pay bill, will be paid through PAYE.  Employers, including those too small to pay the levy, will then be able to access funding to pay for apprenticeships through the new digital apprenticeship service.

Back in June 2016, CIPD reported on employer views of the proposals for the apprenticeship levy – my take on the research is broadly that the more employers knew about the proposals for the levy, the less they liked them!   However, the government is pressing ahead, so employers need to work out how to get the most benefit out of this new system for their organisation and for apprentices.

It was in that spirit that CIPD Manchester’s Public Policy Panel last week hosted three employers all with existing apprenticeship schemes to come and share this experience, plus their thoughts on the levy, with other HR professionals.   Our speakers were from Eurocell, AO and the General Medical Council and included two schemes with 25-30 apprentices and one scheme with 5 apprentices from the private and charitable sectors.   The range of apprenticeships offered was very varied from including engineering, HR, IT and digital marketing.  Here is a link to the Storify from that evening.

Effective apprenticeship programmes

Our speakers identified a number of elements that contributed to an effective apprenticeship programme.  These included:

·       A genuine business need for apprentices

·       Senior management sponsorship of the programme and local line management sponsorship of individual apprentices.  Line managers will benefit from preparation, clarifying their expectations of the apprentice role and how they will need to work with them, plus acknowledgement that they will need to invest time in supporting the apprentice.

·       A responsibly agreed salary.  

·       Good quality, relevant training and long term development opportunities.   This training could be provided internally with suitable accreditation or delivered by an external provider depending upon what best meets the needs of the organisation and fits within the Apprenticeship Levy requirements. One of the speakers identified that they needed to constantly work with their external training providers to ensure that the training meets their needs. It is essential that the training provided meets both the needs of the organisation and also the individual’s needs – this can mean tailoring the length of a programme to ensure that the pace fits these needs.  One of the employers was exploring the possibility of introducing degree level apprenticeships to meet organisational requirements, but also to stretch and reward individuals appropriately.

·       We heard about a range of exciting component parts of the programmes such as: including achieving a Duke of Edinburgh award; opportunities for volunteering/charity work; parents evenings to share with parents what the programme involves and the benefits to participants; and  possibilities for international links where organisations have international operations eg with Germany.   All of which help to build the confidence of apprenticeships, provide opportunities for team working and increasing responsibility plus times to celebrate these gains.

Benefits from apprenticeships

All the employers described the growth in confidence and skills shown by the apprentices – one said you can see them striding out across the workplace ‘with a sense of purpose’. 

But they also identified the benefits to the organisation particularly in relation to providing access to high quality candidates for junior roles. For example, one of the organisations described how the apprentices, when applying for roles within the organisation on completion of their apprenticeship, scored much higher than candidates from other sources and described how they had moved into much higher level roles than expected.  Another of the employers identified one of the challenges as being to remember that they are apprentices because they start adding value so quickly within their teams and they need to have their time protected to enable them to have the time to complete all their studies as well as their work.

Thoughts on the Levy

From the discussions at the session there are many different ways that organisations are approaching the levy:

·       For some it is business as usual – the organisation has already decided to invest in apprenticeships and nothing will fundamentally change.

·       Some organisations have considered the levy, but have decided not to bother with it and just pay the levy, seeing it as another tax, even though as a large organisation this will leave them with a large bill.  In an example shared during the meeting, the levy had been studied, but the organisation decided that it was not worthwhile them putting things in place to enable them to make use of the funding from the Levy. Interestingly, prior to the meeting, I had assumed that this was more likely to be the approach of small organisations, but this seems to be the case also for some large organisations.

·       Some organisations fear that the apprenticeship levy will absorb all the resources for training and that therefore all funding for learning & development will need to come through programmes supported by the Levy.  This view wasn’t expressed in the meeting, but I have heard it elsewhere.

·       A number of organisations in the meeting were identifying that they will only be able to spend a proportion (eg two thirds) of the funding for apprentices that their organisation will be eligible for, because not all costs are recoverable such as apprentice salaries.

·       Some organisations were still working out how they will approach the Levy and how this will affect their work with apprentices.

·       One of the opportunities touched on is the potential for organisations to work together  to deliver apprenticeships eg organisations from a similar sector either in partnership or perhaps a larger organisation opening up their scheme in some way to smaller organisations in the same field or within their supply chain particularly where this is in a specialist field.

Challenges with the Levy

One of the key challenges with the Levy for organisations is that there is still a lot of uncertainty about how various elements will work in practice.  A particular aspect of this is whether the relevant qualification frameworks for your organisation will be available in time – a large number of new frameworks are being developed quite quickly and there are some questions about whether the process for developing these has been sufficiently robust to ensure that each framework meets the needs of a sector and not just an individual organisation.   One of the employers shared how the Level 4 qualification that some of their apprentices need to move on to during the year is unlikely to be ready in time and what the implications of this are for those individuals.

A different issue was the opportunity to have apprenticeships not just for young people, but also for people of all ages, including apprenticeships to support career changes later in life.  Two specific challenges were mentioned in this connection, paying the right level of salary for this to be feasible and the issue of English and Maths qualifications in the final assessment process - older apprentices qualifications may be regarded as earned too long ago to be counted, meaning they may need to requalify in order to complete the apprenticeship.  This will need to be handled sensitively in order for this not to become a barrier.


The overall public perception of apprenticeships was discussed and whether the branding of apprenticeships needs to be changed or just our perceptions – the parents evenings mentioned previously and similar events could play a part in this.   Interestingly one of the employers describes their apprenticeship work under the banner of ‘emerging talent’, whilst other people suggested a broader skills development or grassroots programme as better labels.

Finally, we touched on a specific challenge in the public sector following on from the requirement placed by the government to have 2.3% of staff as apprentices, year on year.  This may contradict the advice that apprenticeships are most effective when they meet a real need within the organisation. 

There are clearly a great many benefits to be gained from a positive engagement with apprenticeships both for organisations and for individual apprenticeships.  However, there are many challenges to making the Apprenticeship Levy work both for individual organisations and in terms of its overall impact on the UK workforce and economy.   We are only at the start of identifying the what these challenges are, never mind finding the answers.

What issues has your organisation identified with the Levy?  How prepared is your organisation for April 2017?  Why not share your thoughts on this topic?

Rachel Burnham

12/12/16

Rachel is CIPD Manchester’s Public Policy Adviser in a voluntary capacity and is the Director of Burnham L&D Consultancy.

Burnham L & D Consultancy helps L&D professionals update and refresh their skills.  I am particularly interested in blended learning, the uses of social media for learning, evaluation and anything that improves the impact of learning on performance.