Is the apprenticeship levy really a step in the dark?

David Allison

The April 2017 apprenticeship levy is predicted to make one of the biggest waves within the apprentice landscape for decades. 

Despite the fact that the levy has yet to come into effect, it is already having a chilling effect on many businesses. While some have welcomed the levy as a means of incorporating apprentices into the business plan, others have voiced their concerns on its potentially adverse effects.

Of the 20,000 companies expected to fall within the sphere of its influence, many have argued that the levy, in its current form, threatens to damage existing training schemes, force quantity over quality and add an unnecessary financial burden to businesses. As the levy’s implementation gets closer, it is getting closer to the top of HR and Finance agendas, with companies trying to work out how to get a reasonable return on investments. The Confederation of British Industry (CBI) has consequently called for the government to delay the implementation of the levy and undertake a “radical re-think” of policy.

Some of these fears have a degree of rationale behind them.

The levy’s ambitious time scale, for instance, is leaving employers with little time to get their heads around the scheme, or to make necessary preparations for it. In this sense, the Strategic Development Network (SDN) is correct that the levy is a ‘step in the dark’ for many businesses. Moreover, the government has left little time to prove to businesses that the system is fit for purpose, which is unlikely to fill subjected companies with confidence. While the levy’s publicity has been fantastic for apprenticeship awareness, there are problems with the scheme as far as businesses and young people are concerned.

But the issue actually has less to do with the levy’s fine print and more to do with uncertainty, confusion and a lack of clarity of its impact. Indeed, the biggest threat to the levy is the fact that many of its potential benefits are being poorly promoted to businesses.

According to a survey by the British Chambers of Commerce (BCC), many businesses aim to shy away from an investment in apprenticeship schemes out of fear that they will no longer be resource or cost efficient. Even more worrying are the reports of employers scaling back successful training schemes in order to deal with the potential burden of the levy. It therefore seems that the majority of subjected businesses are currently focused on getting their money back from the levy, rather than engaging with the scheme and integrating apprenticeships into their overall HR strategy.

Frustratingly, most SMEs actually agree that apprentices add immense benefit to businesses. Last year, at GetMyFirstJob, we asked our database of SMEs whether apprentices had added value to their companies since joining and 90% said yes. The reasons ranged from the energy the apprentices brought to the workforce, to a rise in productivity and a positive contribution to growth in the long term. It is therefore time to break the stigma surrounding apprentices, along with the assumption that they only benefit industries such as administration and plumbing, rather than accounting or law.

To get businesses on side, there must be far greater clarity on how the scheme will benefit affluence and profitability. The cost of each apprenticeship, how many apprentices a single employer could have and how much of each employer’s levy contribution a single apprentice will use, for instance, must be more transparent. Governmental guidelines on how to support young people once they have been recruited, for instance, would be beneficial to businesses that are new to apprenticeship recruitment.

Finally, the fear of ‘quantity over quality’ must be addressed. As it stands, one of the biggest criticisms facing the levy is the claim that the government’s aim to create another three million apprentices by 2020 threatens to lower the overall standard of apprenticeship candidates. Consequently, more must be done to highlight the importance of finding the right training provider, in order to ensure that the training provided is highly relevant and delivered by a partner that understands – and underpins – that values of each individual employer.

The other element that can be misunderstood is the recruitment process. Recruiting an apprentice is the first step in a relationship that will last for years. For the young person, choosing an employer is far more than just selecting a college or university. From the employer’s perspective, recruiting the right person in the right way, and ensuring they are a good fit is crucial. The biggest payback on an investment in an apprentice will take place in the years after they finish their programme; they will only last that long if they are a good employee and work well with the rest of their colleagues.

At GetMyFirstJob, we have a pool of over 250,000 candidates registered on our site and work with over 150 training providers and employers to help provide assistance with the recruitment process. We see the incredible achievements of companies and their apprentices when recruitment and training has been carried out effectively. Increasingly, we are finding that our experience enables us to provide support on how to plan organisations’ response to the levy, identify the right training partner, promote employers’ brand to candidates and career advisors and set the foundations for future success.

On a personal reflection, I believe that the apprenticeship levy has the potential to amend some of the limitations in the current system and to provide real benefit to British businesses. Yet, the foundation of any effective apprenticeship programme rests upon all public and private organisations involved to be clear on exactly why apprentices are beneficial and what they wish to achieve through them. This may be to address skill gaps, to develop skills for supply chains or to develop a future skilled work force or their business.

While all these reasons are crucial, the main goal must be clearly identified to ensure the correct recruitment and delivery decisions. Certainly then, there is reason to be optimistic about the levy’s ability to benefit UK businesses.

David Allison is Founder and MD of GetMyFirstJob, an innovative web platform that improves the speed and quality of matching young people to the right training provider and employer.