Insights The Apprenticeship Levy: One Year on
20 April 2018

The Apprenticeship Levy: One Year on

The Apprenticeship Levy - One Year On

It’s been a year since the apprenticeship levy was first introduced in England. Designed to help the government reach its target of creating 3 million apprenticeship starts by 2020, businesses have now had time to adjust to the new funding structure and start investing their levy funds in apprenticeship training. But what has been the real impact of the levy on businesses in England? And is it likely to achieve what it set out to do?

The apprenticeship levy: tax or opportunity?

The number of apprenticeship starts in England fell by almost 27% in the final quarter of 2017 compared to the same period in 2016. And research conducted recently by the Open University has revealed that just 8% of funds paid into the apprenticeship levy since April 2017 have so far been withdrawn. This suggests that many businesses are not yet making use of the funds available to them.

Indeed the apprenticeship levy has been met with mixed reactions from employers. Some have chosen to write it off as another tax, finding the new funding structure too complex or that the apprenticeship standards currently available don’t meet their training needs. Many are calling for greater flexibility around how they spend their levy.

Others, however, have embraced the opportunity to invest in training for existing staff as well as talented new recruits, benefiting from the additional 10% government top up to funds and programmes that complement existing learning and development (L&D) provision.

Some have themselves become employer providers, keeping training in house and bringing levy funds back into the business, although many have found that this presents an entirely new set of challenges.

The introduction of the apprenticeship levy coincides with the wider apprenticeship reforms and the introduction of standards to replace frameworks. These new apprenticeship standards have been designed by employers to ensure they meet latest industry needs. So businesses can benefit from training that’s highly relevant and delivers real value.

Overcoming challenges

Most businesses would acknowledge that developing an effective levy strategy is not without challenges, however many have done so successfully.

Some have expressed concern at the 20% off the job requirement, but working closely with their training providers they can usually tailor programmes in a way that minimises any disruption to ‘business as usual’. Off the job training doesn’t have to be mean off site. It can include a variety of approaches such as work shadowing, coaching and mentoring, industry visits or online learning.

Where apprenticeship standards don’t currently exist to meet specific training requirements, groups of employers – trailblazers – are coming together to develop new standards that are wholly relevant to their industry. The range of programmes available will soon widen to ensure the levy can be used to plug any skills gaps.

It’s important to note, however, that most of the apprenticeship standards currently approved for delivery are at levels 3 and above. Developing more level 2 apprenticeships will help to ensure greater entry level access to industries and widen participation.

The future of the levy

With funds expiring after 24 months, time is running out for businesses that have not yet implemented a levy strategy. And we’re likely to see a significant rise in the number of levy-funded apprenticeship starts over the coming months as the deadline draws nearer.

As employers become more familiar with the new funding structure – and the range of available programmes continues to grow – it will become easier to invest levy funds in training and development that brings real benefits to business.

From April this year, it will also be possible for levy payers to transfer up to 10% of their funds to other employers. This could help to widen the availability of training, with larger organisations sharing funds with smaller companies in their supply chain so they don’t miss out.

Companies that have already begun to roll out levy-funded apprenticeship training will build on the initial programme launches to further develop career pathways mapped to competency frameworks, maximising the funds available to them.

And as businesses begin to review their levy strategy – assessing the return on their investment and whether current programmes are meeting learning and development needs - we’re increasingly likely to see training providers working in partnership with one another to create a truly employer-responsive model.

We work with employers across England to help them get the most out of the apprenticeship levy. Our consultants are on hand to answer any questions you have and discuss your organisation’s training and development needs. Contact us today for a no-obligation discussion.