The Apprenticeship Levy, a 0.5% payroll tax on large UK businesses, is now just over six months old. My organisation, Corndel, has been delivering specialist, employer-led training under the Levy since its inception. We are working closely with scores of businesses to help them get the best value out of their Levy tax. We specialise in Software Engineering training, very high-level Data Analytics courses and Leadership and Management programmes. Our experience with employers and learners to date has informed this article in which we make some observations based on our experience and follow-up with some tentative recommendations based on those lessons.
1. Giving employers control of how they spend their Levy is driving a huge increase in the quality of training provision on offer. Many employers are taking their time to work with providers to ensure that courses are designed to meet their specific business needs. We recommend continuing to give employers the power, freedom and flexibility to purchase the training that they know will improve productivity and performance in their organisations.
2. Many employers are still unclear as to what they can spend the Levy on. The rules are confusing and not well understood throughout organisations. There may be Levy specialists in a business but it is Heads of Departments and Functional Directors that really need to understand the Levy. The level of Levy-knowledge is increasing but this is taking time. We recommend avoiding major policy changes to the Levy in the short-term to give organisations time to comprehend the Levy.
3. There is a misunderstanding of what an apprenticeship is, what it involves and who is eligible to participate. Most employers still think of apprenticeships as for younger, less educated people. Government advertising and comment in this space tends to reinforce this misconception. We recommend that Government starts to use more inclusive imagery and language when describing and advertising apprenticeships. There are good examples of this from some major employers – for example Barclays narrative around apprenticeships tells a holistic story about who apprenticeships are for and what they can be.
4. Most employers want to engage with the Levy. HR and Learning and Development teams are seeing the Levy as an opportunity to increase training investment in their staff. The Levy is having the desired effect of forcing businesses that have traditionally spent little or no money on training to think creatively about how a higher skilled workforce could lead to greater productivity and profitability. We recommend working with providers and employers to build a robust evidence base evidencing the link between utilisation of the Levy and increased profitability.
5. It is taking employers a long time to work out what they want to do with their Levy. This is not surprising given the complexity of large organisations and the complexity of the Levy itself. Where businesses have seven-figure levy pots the decision where to spend that money is highly significant and involves multiple departments and stakeholders. It is not at all surprising that apprenticeship numbers have dropped in the short-term – particularly as organisations have been told that they have two years to spend the Levy. We recommend that government sticks to its guns with the Apprenticeship Levy and waits to see what the medium-term effects are. We strongly believe, based on our conversations with hundreds of employers, that the dip in apprenticeship starts is temporary and will be reversed.
6. It is possible to make a big positive organisational impact using the Apprenticeship Levy very quickly. There is a huge appetite for learning from employees undertaking the new apprenticeships. Employee satisfaction and well-being can quickly be increased. Immediate measures like absenteeism and attrition can be improved. We recommend measuring, recording and publicising early successes for businesses from Levy implementation to encourage other organisations to follow suit.
7. There is more than enough money in the kitty to deliver training to new and existing employees, at entry-level and at higher levels, across a broad range of areas. There have been some false dichotomies suggested. For example, that organisations will spend the money on existing employees or new employees. Or that organisations will spend the money on management training instead of Level 2 training. These dichotomies are false. Employers are engaging with the Levy at all levels and are taking advantage of the 10% rule (where 90% of training costs are funded by the Government even if a business’s Levy funds have run out). We recommend continuing with the Apprenticeship Levy as it is currently constructed. Once all £3 billion is being spent then there may be a need to look at the balance of that spend. While far less is being spent there is, a priori, no displacement effect and, acting as if there were, would be actively harmful.
8. The bureaucratic requirements of the Education and Skills Funding Agency are exacting and are not always aligned with quality. Employers (and many providers) are confused by the 20% off-the-job-training rule. The rules can seem to focus on process rather than outcomes and seem built for the old world of apprenticeships rather than the new. Employers cannot understand why their employees who live in Scotland and Wales are not eligible for training when their English counterparts are. We recommend a thorough review of the funding rules with a view to making them simpler so that programmes can be even more employer-led.
The Apprenticeship Levy is a good policy. It is making the government-funded training world more responsive to employer needs driving quality for students and employers alike. The real measure of the success of the policy will be its impact on productivity in the UK. The early signs are encouraging.