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Now’s the time to capitalise on the levy

Daniel Lally
generation z

British businesses continue to look to apprenticeship schemes to build momentum ahead of the first anniversary of the Levy. Contributor Daniel Lally, Seetec – Consultant.

Issues with strategic planning of company wide learning, staff engagement, development policy and confusion over legislation have caused a failure to maximise employer levy spend to date but Lally feels 2018 has already started to see a huge change in the market.

 The Levy offers businesses with a payroll of over £3m the option of getting training back in return for the money they pay into the Levy, any unspent money will be wasted as it is returned to the treasury after 24 months. The levy funds, accumulated at 0.5 percent of a companies payroll (less a £15,000 allowance), can be used to fund apprenticeships for all levels of employees within a business, from new starters to up-skilling existing more experienced employees to achieve higher levels of  skills.

So What’s Happened So Far?
Daniel doesn’t think that business leaders are likely to waste this opportunity – businesses just want to get it right but in some instances they are finding certain red tape challenging, he says; “Common issues that large Levy payers have are that the reforms, most importantly the bottom line costs, have forced them to think strategically, this takes time. The majority of businesses are having to re-evaluate their talent management and their learning and development approach and need to take a very strategic view of the Levy to maximise its benefit – this is a process that can’t be rushed.”

Levy payers are often large, complex organisations and have the added challenge of trying to align their business’s internal practices, culture and requirements within the context of an appropriate apprenticeship standard whilst showing a return on investment.   For some this even means having to align a new programme to global strategies and competency frameworks – something that might require buy-in across multiple time zones.

The great news is that apprenticeship schemes are gaining momentum. In March, The Department for Education revealed that the national achievement rate for apprenticeships had risen to 67.7 percent overall for the 2016/17 period. From this, higher-level apprenticeships saw the largest increase, jumping from 58.3 percent to 61.9 percent.

2018 looks to be even more promising, and Seetec has certainly played a part in becoming a driving force behind these schemes, as they have continued to champion the benefits of apprenticeships in the workplace. Their work during National Apprenticeship Week (5 – 9 March) saw them team up with a number of large companies who were celebrating their valued apprentices by taking part in a job swap initiative, which saw executives and senior managers swap roles with apprentices within their businesses for a day.

“At Seetec, we worked very closely with Trinity Mirror and Southend United Football Club to orchestrate the campaign. Manchester based Cresta Cars and Liverpool care provider PSS were also key drivers of the scheme and more than willing to showcase their commitment and take part in the campaign.”

“It’s inspiring to see some of the UK’s leading companies take part in such a unique event that will no doubt make a huge difference to the careers of some of these younger apprentices. Seetec’s Managing Director, John Baumback, also took part in a job swap having started out as an apprentice himself. Demonstrating the success of these types of schemes and raising awareness of their benefits is what we continue to strive for at Seetec, and the Levy could prove to be a great advantage to other companies interested in taking part.”

What’s Next?
Employers now have just one year before funds begin to expire. This stops the immediate panic for businesses but mathematically there comes a point where the accrual outstrips the possible spend, meaning that they need to get going now or they will end up handing funds back to the treasury.

Daniel’s experience is that businesses are at times having difficulties engaging potential or existing staff on Apprenticeship Programmes due to the association with the apprenticeship brand and a long held perception that apprenticeships are just for certain age groups or certain career paths.

It is estimated that studying a three year undergraduate degree now costs just under £30k in fees alone in the UK, an apprenticeship enables a learner to earn whilst they learn  and not rack up thousands of pounds of debt.  This is an excellent opportunity which will see some great candidates, who couldn’t otherwise afford or wish to undertake the University route to join the job market.

Lally continues; “As a provider, a key area of focus for us is social mobility, we really see an opportunity for people who have the potential, but not the financial backing or particular learning style required or the will, to go to University to get into skilled careers in a way they have never been able to before.

There is a chance for British businesses to up skill their workforce and deliver real returns by taking advantage of the Levy.  Whether our apprentices are new starters or existing employees who have been working for some time and want to go on to the next stage, we hope to see people moving up the career ladder and in turn creating new opportunities for others.”

Businesses looking to get on board will have to think seriously about the next steps towards progression and do their research, as the upcoming quarter is a critical time for the Levy. The good news is that from April, the government is allowing organisations to transfer up to 10 percent of their Levy fund to other organisations, meaning that smaller companies don’t necessarily have to miss out.

“We’re now seeing the highest level of Levy stats so far this year. The impending deadline coupled with strong, strategic planning has boosted employee communications and engagement. The idea of losing out financially has meant that the number of companies taking advantage of the Levy has increased and we anticipate that the second quarter will be our busiest for starts ever.”

Don’t Be Levy Led
Communicating to your staff that your strategy  is about meeting the future skills requirements of your business, not “because the government has introduced a new tax”, but because you understand what your business needs to achieve and how your employees can help you achieve it, ensures the workforce takes it as seriously as you do. Communicating what this means for individuals and their teams will help with engagement.

Think About Progression
Where will the learners go next? Where are the skills shortages within the business? What do your future skills requirements look like? These are quite standard questions but coupled with the possible bureaucracy of government funding (eligibility, progression rules, emerging standards) it is critical to lay this out at the outset – your chosen partner should be able to fill in the gaps here.

Choose The Right Partner
As with all relationships, finding the right partner is much more than the ‘offer’, matching culture, ethos, direction and skill sets will enable a fruitful long-term relationship. All stakeholders in the partnership need to buy into the strategy, understand it and own it.

Keep Up To Date
There is now the option for larger organisations to pay their levy funds down to smaller businesses both within their supply chain and outside of it. This will help them to up skill and improve the services they offer and could have a huge impact on the whole market. There will continue to be developments in the proposition and its guidance so in order to maximise any changes, keep yourself updated or work with a specialist provider who can keep you informed.

Lally continues; “The introduction of complicated new rules and lack of preparation and consideration have created the perfect storm which has had a massive impact on the sector. There is still a lot of change ahead and the market, and its supply base, will continue to evolve over the coming months.

“However we have started to see the execution of the planning that began in 2017 in the first quarter of this year and we have multiple programmes which have been months in the making that are starting to launch now and will, we hope, lead businesses focus on the real benefits the Levy can offer them and their workforces.  So 2018 should see new jobs, reduced skills gaps and developing workforces that can only help our British businesses thrive.”

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