Apprenticeships - and the new levy - need time and support from all employers, argues Kirstie Donnelly.
Just under a year on from the introduction of radical reforms to the UK’s apprenticeship system, some seemingly worrying statistics have started to emerge.
In January, official figures highlighted a significant drop in the number of new apprentice sign-ups; a year-on-year reduction of some 41,000 new apprentices were registered between August and October.
But the question is, does this drop really signal a failure in the system, or is there more behind the numbers than first appears?
Firstly, we know that many employers remain confused about the way apprenticeships are now funded and what they need to do in response, which may go some way to explaining this.
Are employers aware of the levy?
City & Guilds research released less than two months ahead of the introduction of the new apprenticeship levy, which came into force in April last year, found that a third of employers who are required to pay into this were simply not aware of its existence. This was echoed by the CIPD just a few months ago.
We need to make sure all employers understand that the apprenticeship system is for them. That it spans multiple industries, encapsulates a wide array of different jobs roles and can be used to train staff at every career stage from entry level through to degree and leadership and management apprenticeships.
We also need to explain the funding process better so employers aren't turned off by perceived complexity and red tape.
How the apprenticeship levy works
Most HR teams in large companies will know that employers with a pay bill of over £3 million must now invest 0.5% of that bill into a central apprenticeships fund, which they can then reclaim to fund apprenticeships for their staff. However, they might not necessarily understand exactly how to do this yet.
What is often not understood is that, despite not having to pay into the levy, small businesses are also able to benefit; only having to fund 10% of the cost of training an apprentice, with the remainder being paid by the government.
Unfortunately, some smaller businesses who were already using apprenticeships pre-levy see this 10% payment as off-putting; previously, they didn't have to make any contribution at all.
Better awareness of these changes, and the huge benefits apprenticeships can bring for a relatively small investment, is urgently required – especially amongst SMEs, who make up 93% of UK businesses and are likely to be key users of the system if they are properly engaged.
Recent research from the Federation of Small Businesses found that just 24% of SMEs already offered apprenticeships but a further 24% would consider taking one on in the future. Harnessing this enthusiasm and doubling the number of apprentices used by SMEs would have huge benefits for everyone from the apprentices themselves to businesses and the wider UK economy.
Key to rebuilding productivity
It’s a well-known fact that productivity in the UK is the lowest of the G7 economies and that a key contributing factor to this poor output is the lack of investment in training. Unsurprisingly perhaps, UK workers receive less employer-provided training than any other EU country except Poland, Greece and Romania.
The levy presents a valuable opportunity for organisations to re-think the way they fund training and development for employees at every level of their business. That employers appear to be taking their time to strategically think through how they spend their levy effectively, is to be welcomed – even if it results in a temporary drop in numbers.
Once the new system has had time to become properly established and employers have been given the opportunity to see how apprenticeships can benefit their business at every level, the government should consider extending the remit of the levy to ensure that employers get best value from it – potentially allowing funds to be used for careers advice and guidance and work placement activities or even a broader ‘skills levy’.
Brexit may be the biggest upheaval to the availability of skilled and talented employees for a generation – up-skilling and training existing staff is going to be critical to plugging this gap.
Apprenticeships and the levy have the potential to help create a workforce that is fit for the future. I hope that when we are looking at the apprenticeship numbers this time next year we will see that the momentum has grown and employers are taking control of their levy investment.