How are Employers Approaching the Apprenticeship Levy?
Employers are still trying to get their heads around the Apprenticeship Levy; the Government's initiative to try to improve UK apprenticeships and increase the quantity in England by 2020. For some, the levy is already transforming their staff development strategy - and for others, it's just another tax they have to pay.
We spoke with Ian Taylor, Managing Director of apprenticeship specialist The Education and Skills Partnership (ESP), to find out what companies are looking for, problems they are facing, and how they can get the most from the levy.
An overview of ESP's apprenticeships offering:
ESP started delivering apprenticeships in 2016, having formed a strategic partnership with Hemsley Fraser (HF), who released their excellent content for our use within the ‘funded’ arena.
We are now recruiting apprentices from a whole raft of levy paying organisations, but have decided to focus purely on our provision of management programmes. We spend the majority of our time at present mapping current programmes to the standards, planning levy spend, and helping develop delivery models that meet the standards but that the business can support.
How does the process work?
We have a dedicated telesales executive as well as a Business Development function, these engage with organisations and ascertain their training needs, as well as analysing their levy contributions. Most organisations have key areas they want to develop and L&D departments see this as an excellent means of filling those skills gaps. We provide advice and guidance in matching skills needs with the new standards and this often involves mapping internal programmes to the standards, so that the business can continue to provide its key messages throughout the apprenticeship. We utilise this material, as well as Hemsley Fraser's, to provide a rounded and fit for purpose program.
What about clients looking for more training besides management programmes?
We deliver the majority of the training ourselves utilising the resources HF offer us. As a small organisation, when we started to engage with large multinationals, we soon realized that most of these were looking for a ‘one call’ solution, and we only provided management programmes. So in March 2017 we founded an organisation called The Learning Network (TLN). Its founding members were; ESP Commercial, Education and Skills Improvement Service, Spaghetti Junction and Strode College, and we are actively seeking an HE provider to join the board as well. TLN started to build a network of providers that wanted to work together in their own specialist fields, in a non-competitive way, with the client company and its interests as a priority. This allows each of them to engage with large organisations, knowing that through the network, all their needs can be met by the specialist providers.
Can you give an example of how this works?
If we went to company A and they required business and management, but also finance, engineering and business admin, The Education and Skills Partnership would put the finance, engineering and business admin out to the network, whilst delivering the management element themselves and arrange direct contracts with the employer for that provision. TLN would allocate a central point of contact for the company and they would then manage all the provision – providing the ‘one call’ solution.
This approach also enables us to provide for the ones and twos as TLN would recruit local specialist providers, so the providers resources are not over-stretched.
Who are your clients? And how are they approaching the levy?
All of our current new clients are levy paying customers, and therefore have a minimum of £15-20k p.a. to spend on apprenticeships. Our largest client has a £12m levy. We are delivering across all sectors, but as previously outlined, just the management element, with other partners delivering other key sectors through TLN.
As we speak to companies, the approach is varied. Many have taken a cost-benefit approach, with some saying that because of the 20% off the job rule, it makes it impossible financially to deliver apprenticeships and therefore they are just viewing the levy as a tax, and passing on this cost to customers. Others are embracing the levy and utilising it for staff development and a recruitment tool.
Which apprenticeships are the most popular?
In our experience, many organisations are focusing on their management programmes in the first year, as they know where their managers are, and can monitor its impact more rigorously. Outside of that, it’s the specialist areas that companies are requesting like data analysts and cyber security for their businesses.
How do you think the levy will impact the training industry in general?
I think it has changed the landscape dramatically, however I don’t think we have seen industry as a whole wake up yet to what this means for them. I think graduate programmes will suffer the most, with many organisations replacing these now with apprenticeship programmes, simply because it makes economic sense to do so. I think a lot of high-volume, low-margin businesses will suffer, because they simply cannot afford the 20% off-line time, so those low skilled low pay sectors will have little or no benefit from the levy.
The biggest challenge by far is the 20% rule. Most businesses can see this being applicable to new starts, but NOT to current employees.
Do you have any advice for companies looking to spend the levy in the most effective way?
It has to be business driven. Analyse your business and identify the skills gaps, then your aspirational needs, then your ‘like to have’s’ – and utilise your levy in order of those priorities. Look at where your company has historically had to spend money on staff development, and ask a provider to match this requirement to an apprenticeship standard, and utilise your levy instead.
What do you see for the future of apprenticeships?
I think apprenticeships have a bright future BUT as businesses wake up to what is happening, I think there will be a call for much more flexibility over how they can utilise this funding. Are apprenticeships the only worthwhile people development tool? No. Many of the businesses I work with feel the government has changed the rules of apprenticeships to meet its own agenda. Apprenticeships they feel are for new people entering their business – not for people upskilling.
Many of our blue chip companies have internal management programmes that have been successful for many years, that are delivered over 8-9 months, now they are being told it has to be between 2-3 years. Because of the horror stories of 16-18 year olds being put on an apprenticeship program for 4-5 months, the government rightly introduced a minimum length of program, to ensure these youngsters get the time they needed to develop. However the Government has gone onto impose the same criteria to mature seasoned professionals. In the commercial world, people are expected to train intensively and be fit for their new role in a matter of months – not years. Employers want the flexibility to use their levy on shorter programmes that deliver the results they want more quickly.
Anything else you think people should know?
The levy pot is for apprenticeships ONLY – to utilise your levy it must be an approved program, delivered by an approved supplier – this is the only way you can access your monies.
Download your free guide to apprenticeships for employers!
- Essential information on the government’s apprenticeship reform
- A clear explanation of government funding – for both levy- and non-levy-payers
- How to formulate a winning apprenticeships strategy
- Guidance on finding the right training for your apprentices
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