The new Apprenticeship Levy announced in the Chancellor’s Autumn Statement in 2015 will come into effect in April 2017. George Osborne hailed it as a “flagship” reform that will boost skills in the UK economy, yet the reaction from business has so far been cool.
But the chorus of grumbles from boardrooms about “a tax on jobs” is rightly countered by those in the training sector who argue that the Levy will redress an historical underinvestment in professional skills development across business. HR directors should recognise that rather than a threat, the Levy represents an opportunity to rebalance training budgets and a welcome opportunity to upskill an existing workforce and attract the talent they need to succeed. High quality professionals don’t come for free so it’s time for businesses to put their hands in their pockets and invest for the future.
Hatching a new generation of professionals
One opportunity is the Chartered Manager Degree Apprenticeship. Developed by a group of 40 employers and universities, led by Serco and supported by CMI, the new Chartered Manager Degree Apprenticeship combines on-the-job training with world-class academic tuition. Once completed, the apprentices achieve a degree and Chartered Manager status. Such programmes equip apprentices with a broad range of skills to make them ‘work ready’ in a way a traditional degree does not. High-profile employers including Barclays, Serco, Boots and Nestlé have already started their own Chartered Manager Degree Programmes. Dame Fiona Kendrick, Chairman and CEO of Nestlé UK and Ireland has spoken of their own apprenticeship programme as “part of our commitment to growing and developing our future business leaders.” She credits the combination of practical, commercial experience with academic excellence for providing “young people the skills that they need to become the successful business leaders of the future.”
Attracting and developing talent is crucial to long-term business success, but in many organisations training for managers is overlooked. 71 percent of firms fail to offer management training to first-time managers. This is a huge mistake given that an estimated £19bn is lost in the UK each year as a result of bad management. Smart organisations should look for training solutions to professionalise their management to increase productivity and growth. Apprenticeships are providing young people with alternative entry routes for those keen for continuing their educational development at the same time as working in a professional environment. Barclays have bridged together their entry-level programme with the Chartered Manager Degree Apprenticeships. Mike Thompson, Head of Barclays’ Apprenticeship Programme believes degree apprenticeships provide apprentices with “rich, on-the-job experience that they can’t get simply going through the normal university pathway”. The responsibilities and exposure to business are invaluable to apprentices developing skills, such as “learning how to lead people” every day as part of their training.
The benefits of apprenticeships and degree apprenticeships are not just for large firms such as Barclays and Nestlé. By setting the Apprenticeship Levy at 0.5 percent of an employer’s wage bill, with a £15,000 allowance to offset the cost, the Chancellor was keen to emphasise that smaller companies (with payrolls under £3m) will pay nothing. Large employers, meanwhile, can recoup their Levy payments by employing apprentices and benefitting from a 10 percent top up from the government, which has committed to spending twice as much per place on apprentices as when it came into office.
The Levy is just that, a levy, not a tax. All funds can be reinvested back into organisation’s own workforce, and can be aligned to existing talent development schemes. Many employers are holding back from starting their apprenticeship programmes while we await clarity from Government on funding caps and whether smaller employers will benefit from the 10 percent uplift. But we won’t have these answers until the end of June, at the very earliest. And even then there’s no guarantee employers will receive the clarity they are demanding. This does not mean businesses should stall on investing in their staff. The current funding regime for trailblazers is very attractive with plenty of money in the pot all up for grabs. Now is the time for businesses to support the development of their employees by hiring a management apprentice, or using the apprenticeship route to upskill existing managers.