T-minus 30 – and counting

 In Blog, CEO's blog, Community

It is 30 business days until the Apprenticeship Levy starts. From the 1st April employers who have a payroll of £3m or more per year will be liable to pay the Levy. It has been coming for some time and ELBA and our partners have been running events and briefing sessions for businesses, some of whom are among the UK’s largest employers. Whether you think it is a good idea or not, the Levy is coming and every employer needs to be ready.

It was therefore worrying this week to read about a poll of businesses by City and Guilds. The City and Guilds skills group polled 500 senior decision makers from a range of organisations about the impact of the impending changes to the apprenticeship system. The results showed that only 33% felt fully informed about the new rules and 28% were not sure whether it would affect their business.  This confirms our informal intelligence that even some very major businesses have not fully recognised that the Levy will be collected by HMRC automatically in May and that for some it could be very substantial sums. And for those that have recognised that financial impact, many of them are still unclear how they will fully redeem their digital Apprenticeship accounts in pursuit of skills development in their organisations.

For me it sparks thoughts in three sets of three. Firstly, there are three misconceptions – that the Levy can only be used for new recruits to the business – but it can be used for existing employees. That apprenticeships are only for young people, but the new system can be applied to older workers – though there is a debate about how older people will feel about following an apprenticeship route, and indeed whether such a widening of the age population will muddy the understanding of what an apprenticeship confers. And thirdly, that apprenticeships are confined to lower level training, whereas the new standards will allow for progression all the way to degree level.

My next set of three are hopes for what the new Levy system will lead to. There have been so many changes to apprenticeships in the last two decades, without much seemingly actually really changing. But now that business will be funding the system via a compulsory levy, I think this time we will see a real difference – money talks. My hopes are that firstly, it will lead to a significant overall increase in the volume and quality of skills training. The C&G survey showed that 87% of employers were struggling to fill vacancies, so there continues to be a productivity gap arising from lack of availability of skills. The C&G survey supports this hope – 47% felt the levy was a good way to get employers to pay for training, 43% said it gave them more control and 34% believed it would improve quality.

Secondly, I hope that the ability to use the Levy for exiting employees will lead to employers re-examining how they develop and promote their people. There is evidence that people from less well-off backgrounds hit the promotion ceiling quite quickly, and as well as choking off talent for the business, this acts as a brake on social mobility and increasing earnings.

My final hope is that the ability to progress via the apprenticeship route to degree level will in time be seen as an attractive and equal route to conventional university education. Too often we see that young people from disadvantaged backgrounds are less likely to get graduate level jobs following university and achieve lower earnings than their more well-to-do counterparts. Being employed from the start in an apprenticeship which can take them all the way through to a higher level qualification may well be a better route – but parents and schools will need to adjust their ambitions and aspirations as well as young people.

Finally three fears – that the system will get bogged down in rules and petty restrictions. We really need to allow for flexibility and to let employers have some room to tailor the system. Which leads to my second fear, that in-house training will be discouraged, leading to it becoming an external provider driven system. And finally, that we all fail to show some imagination and grasp the opportunity for change.  The post-war drive to increase universities and the numbers of people in higher education was excellent, but it was right for its time.  Maybe now is time for another significant shift of the dial? T-minus 29 and counting….

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