Don’t let levy criticism eclipse apprenticeship opportunities

It’s been a bad news week for apprenticeships. But Dr Susan Laing, Dean of Teesside University Business School, argues that getting too wrapped up in the spending and adoption figures could mean employers miss out on the potential benefits.

In the annual week where we celebrate the importance of apprenticeships on the UK economy, criticism over the shortcomings of the new levy-based system is getting as much air-time as the good news stories about those ‘blazing a trail’ with apprenticeships (this year’s chosen theme).

At the front of the queue calling for wholesale reform are influential employer groups such as the CBI and Make UK, who claim that the new scheme has been cumbersome for employers either dissuading or preventing them from spending their funds.

The voice of training providers, the AELP, says that smaller businesses are losing out on apprenticeship opportunities under the new funding system.

Meanwhile, reports from the National Audit Office and City & Guilds show low take up of apprenticeship funding among businesses since the levy was introduced in 2017, a drop in overall apprenticeship starts and a long way to go before the target of three million new apprenticeships by 2020 is met.

Apprenticeships are working

As an institution which has experienced the teething difficulties of the levy scheme first hand, we can see the need for change.

But as we move towards the third year of the levy, we also believe that criticism of the scheme is in danger of deterring the employers who stand to gain the most from the new opportunities for training and skills development offered by apprenticeships: those who already think that the scheme is not for them and those who have yet to find out about it.

There is no doubt that it takes effort to navigate the new levy system but it can be done. This is evidenced by the headlines around large scale new apprenticeship schemes from the likes of Amazon as well as the dozens of smaller businesses that we have worked with in our region, the Tees Valley.

So rather than focusing solely on the shortcomings of the system it’s vital that employers are encouraged to step up and look for themselves at the opportunity that apprenticeships can offer – there are plenty of reasons to do so.

Employers step forward

One compelling reason is the amount of money which is sat waiting for organisations who want to use apprenticeships as a way of developing their people.

The NAO says that only 9% of the funding was taken up by eligible employers in 2017/8. This kind of money won’t always be there. That’s partly because if left unused within two years, it is lost.

More importantly employers need to get a move on because there are already signs that more employers have now worked out how they can use their share of the pot and, as the NAO says, there may not be enough funding for all those who want it as demand rises.

A second reason for employers to look at apprenticeships is the kind of training and development on offer has changed dramatically in scope over recent years. Although they remain important, apprenticeships are no longer just about developing technical or vocational skills for a specific profession.

At Teesside University Business School, we currently have around 100 learners on our Chartered Management Degree Apprenticeship and another 69 on our MBA-based apprenticeship courses. These higher-level degrees provide management training which is vital to commercial success of the organisations they work for.

According to the Chartered Management Institute, management training doesn’t just help boost financial growth in companies that invest in it. It also helps eliminate the drag in performance caused by the ranks of ‘accidental managers’ who have never been trained to manage and are linked to the overall poor productivity of UK plc.

Access to talent

A third driver for interest in apprenticeships should be the access to diverse talent that they offer.

The current high level of employment in the UK means that our labour market is already tight. When you add to that the skills shortages projected by the professional bodies in engineering, technology, hospitality and healthcare (and the potential and as yet unknown impact of Brexit), employers have no choice but to diversify the way they attract, retain and develop the people they need for the future.

Apprenticeships are the ideal way for employers to do this as they provide the opportunity to recruit and train people with the skills their business needs, right across the lifetime of people’s careers.

A final reason for employers to engage with the apprenticeship system now is that the levy is not only likely to be around for a while but that incremental reforms are already reducing some of the barriers cited by the levy critics.

For example, from April the amount small firms will have to contribute to apprenticeships will half to 5%; larger employers will be able to give 25% of levy funds in apprenticeships for businesses in their supply chain.

As more reform comes online – as it surely will in response to some of the issues that have emerged since the levy launched – there will be even greater opportunity for businesses to make apprenticeships part of the way they do business.

So, while it is hard to argue that the new apprenticeship levy is perfect, even as it stands today, the scheme still provides a significant opportunity for employers to bring in new skills and talent to their organisations.

Those who step forward and take time to understand how they can work with this system are certain to reap these benefits.

Those who continue to see the levy as no more than a payroll tax and fail to look behind the critical headlines may not just regret surrendering the money they have paid into the scheme but also the competitive advantage they will have handed to other businesses.

Dr Susan Laing

About Dr Susan Laing

Dr Susan Laing is Dean of Teeside University Business School
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