The Apprenticeship Levy: Headache or solution?

Ben Rowland

Is the Apprenticeship Levy yet another headache for Finance Directors? Another irritating distraction that ‘has to be dealt with’, draining valuable time and energy from the ‘real work’? Or could it be the long term productivity solution employers and the economy needs? Ben Rowland, Co- Founder Arch Apprentices discusses how to take full advantage of the Levy

The bad news is that there is, sadly, no fast acting pain relief equivalent to get rid of the ‘headache’. But the good news is that if you take a medium term approach, you can begin to get to grips with the Levy in a way that will contribute to your business objectives and cure the headache.

First, the key facts: the Apprenticeship Levy requires employers with annual paybills of £3 million or more to put 0.5% of that paybill into an online account every month. The money can then only be used to fund approved apprenticeship programmes with approved apprenticeship providers. Crucially, each month’s contribution has a two year ‘sunset’: if the money has been in the account for two years, the Government will take it from the account.
Secondly, here is why I think now is a good time for Finance Directors to get to grips with the Levy.

The first is that, belatedly, the system has caught up with itself: there are now available 400 Apprenticeship Standards, a number that has grown from 200 in September 2018 and is growing all the time (out of an estimated 600 that could be developed). It is very unlikely that there aren’t several Standards that cover functions in your business where you want greater levels of skill and capability, whether that’s in front line operational roles, HR, finance, digital or data.

Secondly, the provider market is settling down. Providers have gone through their trial and error phase and as a result, have more settled delivery models. There is now two years of track record for employers to judge and a healthy list of other employers to talk to in order to find out who is able to do what. Investments by providers in systems, processes and people are now beginning to bear fruit.

There is now an emerging feeling amongst employers who have been using the Levy and the new Apprenticeship Standards, that the programmes do deliver value for money, whether that is to upskill existing employees or to provide a ‘safe’ way of recruiting someone new to the workforce. Confidence is growing. We have seen this first hand at AVADO through our Arch Apprentices programme and through our growing customer base of those who want apprenticeship programmes.

Productivity, reflected in the pay that people receive, is expected to show significant increases for those who have done apprenticeships (the Government is in the process of compiling this data for the first time).

Finally, here’s how to take advantage of your Levy. Confirm your current skills and capability requirements. Look at the Institute for Apprenticeships and Technical Education’s website to see if there is a Standard in place that fits. Identify a long list of potential providers and investigate their appetite and ability to work with you on the Standards you want. Decide whether you will ask existing employees whether they want to go on the programme or whether you will hire new people. Start small so you can move fast and feel confident learning. As you get more comfortable you will quickly be able to grow your programme in order to take full advantage of your Levy.

Pictured: Ben Rowland, Co-Founder Arch Apprentices