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Apprenticeship levy is changing the face of workplace learning

Article by: Steve Hill | Published: 19 May 2017
levy

The apprenticeship landscape is shifting and these perceptions are out of date and quite frankly, wrong. Gone are the days of entry-level, trade-based schemes for people just starting their career, apprenticeships have been transformed in a bid to drive highly sought after workforce skills – and astute employers are using apprenticeships to strengthen their business resilience. Article by Steve Hill, External Engagement Director – Open University.

Apprenticeships have developed fast, and with the recent introduction of degree and higher apprenticeships in England, and the access to higher skills that brings, we believe they’re set to change the face of workplace learning forever and bring real organisational benefits.

The changing face of apprenticeships
The transformation of apprenticeships is due in part to the apprenticeship levy, which came into force on 6 April 2017 – where UK organisations with an annual wage bill of over £3 million now have to contribute 0.5 percent of that bill towards apprenticeship training. And since 1 May, employers in England have been able to start drawing down from the levy pot to fund apprenticeship-training programmes for their staff. The UK is in the grips of a skills crisis lagging behind its competitors in Europe, and it is a key policy within the UK Government’s plan to create three million new apprenticeships by 2020, bringing benefits for individuals, organisations and the economy as a whole. This is encouraging many employers to look at apprenticeships for the first time and realise the opportunity the levy is offering.

In the past, common criticisms of apprenticeships among employers have centred on lack of government investment[1] and not being pitched at a high enough standard[2]. But in recent years these issues have been addressed, and the new standards for apprenticeship training in England are now being driven by employer-led trailblazer groups, working closely with professional bodies, higher education institutions and other providers.

This means that the needs of employers are at the heart of the new apprenticeship programmes. As a result, many reputable universities have developed new degree apprenticeships that provide higher skills and level the playing field between apprenticeships and academic routes – this can only be a good thing for organisations and staff.

This along with the arrival of the apprenticeship levy and the new degree apprentices standards in England are a real game-changer, demanding continuous dialogue between training providers and industry and making sure employers’ objectives are always at the fore.

With many organisations now paying the levy, and the UK Government further incentivising apprenticeship training with a 10 percent top up to eligible levy-payers’ training funds, huge growth in apprenticeship take up is anticipated – according to a report by Universities UK, a 658 percent increase in degree apprentice entrants is expected from 2015/16 (when they started) to 2017/18 (a year into the levy)[3].

And the study shows that current growth is being driven by management, digital and technology, and engineer-related degree apprenticeships – reflecting areas where the UK lacks skills the most. While a big part of the skills gap is a shortage of people skilled in STEM (science, technology, engineering, maths) areas, management and soft skills such as communication and advanced leadership skills are also lagging[4] – affecting every employer, whatever their size or field.

Real organisational benefits
The starting point for any employer is ensuring that they look at the immediate and future strategic needs of their organisation and think more broadly that an “apprenticeship” is not just something for young people. Levy funding provides an opportunity to train and develop new and existing staff of any age – enabling employers to review their learning and development budgets, how they are spent and how graduate programmes are built and delivered, especially with the introduction of higher and degree apprenticeships. The levy should help to ensure people of all ages and backgrounds have a chance to get on in life. Apprenticeships will give all people, especially older workers and those from disadvantaged backgrounds, a ladder of opportunity and in many cases a chance to retrain. This means businesses can use experienced staff to fill skills gaps, particularly if they use a provider that can offer flexible apprenticeship delivery through blended learning. Specifically, making effective use of the apprenticeship levy through higher and degree apprenticeships will help employers:

Address business needs and higher skills shortages
Bring positive organisational impacts through work-based training
Increase organisational agility, skills and flexibility
Motivate and retain talent
Provide opportunity to identify and upskill high-potential staff
Improve workforce diversity through social mobility

Furthermore, employers who run apprenticeship programmes tell us that apprentices increase productivity, bring fresh ideas into the workplace and boost employee morale.  When employed long term, this productivity has been estimated to be worth an average of £214 per week[5], showing that there are tangible financial rewards for those who take on apprentices. They also bring operational benefits, with 70 percent of employers seeing improvements in the goods and services they offer[6].

And for the apprentices – they are equipped with work-related knowledge, skills and experience and provided a pathway to career progression while they ‘earn and learn.’

Don’t get left behind
Apprenticeships are set to transform workplace learning and with organisations with staff in England now able to draw from the levy pot (1st May onwards), there has never been a greater time to embrace all that they bring. If you haven’t already, now is the time to explore ways to maximise the financial opportunity the levy presents and shape your L&D strategy. By taking advantage of the funding, you can begin to drive high-level skills capability and strengthen your business resilience in a challenging economy, giving you a competitive edge. Ultimately, those who view the levy as an investment will reap the returns, but those who see it as a tax will lose out – because remember, if you don’t use it, you will lose it.

www.open.ac.uk

[1] Cuts in lower-level apprenticeship funding criticised in 2015, says Association of Colleges (AOC)

[2] Apprenticeships low quality and too short, according to Boston Consulting Group

[3] Universities UK Future Growth of Degree Apprenticeships, March 2017

[4] UKCES Skills Survey 2015 reveals the skills gaps by sector (p59-60). It shows that while there are large skills shortages in occupations such as management and sales, indicating that soft skills are required, as well as STEM skills.

[5] UK businesses could gain additional £18bn revenue from apprenticeships. Skills Funding Agency 2015