With Brexit on everyone’s minds, there’s lots of concerned chat amongst business leaders about addressing skills shortages. But at the same time, fewer businesses are taking on apprentices – in fact, the latest figures show a 34 percent drop in apprenticeship starts.
This lack of engagement from businesses comes down to confusion around the Apprenticeship Levy – part of the government’s plan to increase the quality of apprenticeships and fund three million places for apprentices by 2020.
There were mixed reactions when it was announced, and over a year later, it’s still causing confusion. Businesses aren’t sure how to make the system work for them, and it’s overshadowing the many benefits of hiring apprentices.
People think the system is overcomplicated and an upheaval, consider it as a further tax on business, and think it will take away funds from other workplace training – but this is not necessarily the case.
If you’re an employer with an annual wage bill of over £3 million, then you’re required to contribute 0.5% of that bill to the cost of training, and if your annual wage bill is less than £3 million, then you’re not liable to pay the levy at all. All firms are eligible for government funding that can offset the costs, and the levy can in fact be used to train existing employees, not just to hire new ones. You can find further detail about the levy here.
Don’t be daunted
Business leaders have been arguing that changes need to be made, and the government does appear to be listening. They’ve announced more flexibility for large employers (now able to transfer 10 per cent of apprenticeship funds to other businesses), and in the West Midlands, they’ve recently made a ‘skills deal’, which could unlock as much as £69 million for training, including hundreds of new apprenticeships.
Reforms to the apprenticeships system are an ongoing and lively issue, but in the meantime it’s crucial not to be put off. When you’re busy running a business, trying to navigate the system might feel overwhelming, but there are companies that have been able to make the levy work for them, and have really benefited as a result. So, if you truly value learning and development, then it’s well worth pursuing.
Yes, you may need to contribute, but it’s a worthwhile investment, representing value for money when you consider the benefits of taking on apprentices, and the cost of alternative forms of recruitment.
Apprenticeships are clearly good for apprentices, giving them knowledge, skills and experience and the opportunity to earn while they learn. But it’s not a one-way street.
It’s cost-effective as a form of training, it addresses skills shortages (a definite concern with Brexit on the mind), and it’s good for staff retention, as there’s a tendency amongst apprentices to stay committed to the company they’ve trained with. Companies I’ve worked with have also cited staff morale as a plus point, with other team members able to see first-hand that the company is investing in its future.
Taking on apprentices can give you the chance to diversify your workforce, get a fresh perspective from new blood, and by supporting local talent, you’re also boosting the reputation of your business. It’s a win-win.
Don’t assume that apprenticeships aren’t right for you, or that they cost too much – if you haven’t got the time to get your head around how it works, then we’re here to help.