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Ignorance, apathy, inconvenience – why the disappointing take up of the apprenticeship levy?

Stuart Cameron
apprenticeship

Apprenticeships are not a new phenomenon. In fact they’ve actually been around in various forms since the 12th century. The benefits of apprenticeship programmes to both the employer and the apprentice are widely publicised and include access to skilled workers, greater retention of staff, provision of a different kind of more practical learning, and a valuable return on investment for the employer across both private and public sectors. Article by Stuart Cameron, Managing Director of commercial operations – University Centre Quayside (UCQ).

Having recognised these benefits, the Government made substantial changes to the way apprenticeship programmes in the UK are funded in April 2017, aimed at encouraging greater take up. Since then, funding has been via a new corporate hypothecated tax called the ‘Apprenticeship Levy’ (the Levy).

As a result of the Levy, all UK companies are in line to pay an additional 0.5 percent tax on top of their payroll fees. However, an off-set allowance of £15,000 was introduced, which means that, for now, only employers with a wage bill above £3m per year (or to be precise, £250,000 in any one month) will actually make payment.

Employers calculate the amount of Levy to be paid, based upon the previous month’s payroll bill and then declare it to HMRC who collect it via the monthly payroll process (PAYE) whereupon it is paid into the Apprenticeship Levy, at which point it becomes ‘public money’.

In the first year of operation, approximately 50,000 organisations paid a total of £1.39billion into the fund, but only eight per cent of it was withdrawn, which in monetary terms equates to £108million. Worryingly for those paying the Levy, time is running out as funds generated by it are available on a ‘use it or lose it’ basis with a two year deadline on each monthly payment.

 So is ignorance about the Levy, or the complexity about drawing down the money, proving to be a stumbling block? At UCQ we are supporting the Government’s efforts by encouraging companies and organisations to use the Levy before it’s too late to access the first year’s funds.  By working closely with employers wishing to offer our recently launched the Chartered Manager Degree Apprenticeship (CMDA) to their employees, we can help them access the funds and discuss how they can use the money to their benefit by upskilling their workforce.

Although there has been talk about it being difficult to draw down the funds, navigating through the process is straightforward. In simple terms, employers wishing to use their Levy payments to fund approved apprenticeship programmes need to set up an “apprenticeship service account”, which is normally done by someone within the payroll department using the employer’s Government Gateway account; the Government will then top up any funds paid into the account by 10 percent. 

So is it apathy?

This could well be the case as there has been a distinct lack of investment by UK companies in the development and training of managers, leading to us falling behind all the other G7 nations in terms of productivity. With only 20 percent of British managers having a formal qualification in management, employers really do need to address the situation quickly if we are going to compete in the future, especially after Brexit.

Some employers are still unaware of degree apprenticeships, which were launched in 2015, following years of development by the Trailblazer groups.  One of the earliest approved degree apprenticeships was the Chartered Manager Degree Apprenticeship (CMDA), offered by UCQ, which includes a full UK management honours degree and Chartered Manager status.

However, crucial to the success of the new degree apprenticeships, is the response and commitment of both learners and employers to ensure academic integrity and quality assurance. With funding from the Levy, together with a management degree programme designed to suit the business, there should be no reason for apathy.

Perhaps it’s inconvenience?

I can understand why some companies may be reluctant to send an employee on a traditional management degree course, due to the disruption it can cause in the workplace while they are studying. We therefore knew UCQ had to be innovative and move away from the schedules of more established programmes. By drawing on our own previous employer experience, we designed a work-based programme that suits the business by providing far greater flexibility.

Attending courses has to be convenient; having six city centre-based regional offices in England’s major cities certainly makes it easier for students to attend UCQ. Alternatively, subject to numbers, sessions can be held at the employees’ offices.

To minimise disruption further, students can participate in live webinars or mix and match according to work commitments. In addition, each one will also have a mentor who will work alongside them and their employer for the duration of the course to ensure the most suitable programme for both parties is arranged.

Time to act

At UCQ, we believe it’s important for employers to actively explore how they can maximise the return on the money they are paying into the Levy by considering the different apprenticeship programmes. They can provide business improvements; upskill the workforce; and deliver social mobility by providing a solution to staff who may not have followed a traditional academic route, but excel at contextualised work-based and experiential learning.

The CMDA programme provides all of this by enabling managers to become fully qualified to degree level and, as such, increase both their and the company’s effectiveness and productivity. However with Brexit fast approaching and with less than a year to use the initial monies paid into the Apprenticeship Levy, the clock is ticking.


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