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What does the Apprenticeship Levy mean for Employers?

Unless you have been hiding under the proverbial rock for the past year, you are probably aware that some sweeping changes are about to be made to the UK’s apprenticeship system. The Government aims to increase both the quality and quantity of apprenticeships, with the goal of creating three million new starts by 2020.

From April, businesses with an annual pay bill of over £3 million will need to pay 0.5 per cent of their payroll as a levy to fund new apprentices and train existing staff. Smaller businesses will not be required to pay the levy – but will be obligated to contribute in other ways.  

Helen Hawxwell, Programme Development and Delivery Manager for the Greater Manchester Apprenticeship Company (GMAC), explains how this new, innovative collaboration is working to meet the needs of the region’s businesses. 

Fancy being a solicitor? Do an apprenticeship

Helen says the reforms aim to make apprenticeships more flexible and attractive to a wider range of people, while giving employers more control over training. Funding is not limited to training for teenagers straight out of school; apprentices can be any age, may be part of your existing workforce, or even university graduates.

“It really is an opportunity to invest in the current workforce and the future talent pipeline, while addressing skills shortages across a number of sectors and on a number of levels,” Helen adds.

The key change is that more than ever, employers are the customers; they have the purchasing power and can choose which training providers they wish to work with, so it should encourage training providers to become even more employer responsive. It puts employers in control in a way that we have never seen before. If an organisation is large enough, they may already be a training provider, so they can effectively pay themselves to deliver their own training.”

Another significant change is that apprenticeships are now available up to Level 7, the equivalent of a masters’ degree, and apply to an increasing number of careers which used to be accessible only through university. For example, it is now possible to become a solicitor or a certified accountant through an on-the-job apprenticeship.

“Apprenticeships aren’t only for the manual or more traditional trades anymore – they extend across a huge range of sectors from law and legal services to manufacturing, hairdressing to engineering, digital media to science and technology,” Helen says. “For example, I know of at least two major organisations in the financial services sector considering reducing their graduate program or scrapping it entirely in favour of apprenticeships, as they have seen how quickly apprentices can gain real life skills and add value to their company.”

GMAC: Changing Perceptions

In order to encourage learners aged from 16 to 24 to consider the range of apprenticeships open to them, the Greater Manchester Apprenticeship Company (GMAC) was launched in June. It’s a not-for-profit collaboration between nine Greater Manchester colleges and The Skills Company, one of the largest business support organisations in the North West and a unit within the broader Manchester Growth Company.

The partnership aims to generate more than 500 new apprenticeship starts by October through collaboration, pooling resources, sharing expertise and disseminating information through its impressive network of over 20,000 businesses and 120,000 learners.

GMAC is funded through the Greater Manchester Apprenticeship Hub City Deal programme on behalf of the Greater Manchester Combined Authority and works on a number of levels.

One key plank is educating the educators: the project has trained 150 staff across the partnership to date.

GMAC has also developed an exclusive online portal for learners within its network that links in to the systems they are already using. Called ‘This is Me’, the portal provides 24-7 support, one-to-one advice and access to interactive, online content relating to apprenticeships, including live vacancies, video tips from employers and advice on building a CV. There’s a timed mock interview: learners answer typical employer questions by typing their responses or videoing themselves, and then get feedback on their performance from their tutor. “The portal has a huge range of content in one place, much of it video-based and interactive, which gives learners a real insight into the working world,” Helen says.  

While it is too early to publish take-up rates, the early signs are encouraging. More than 4000 learners have logged in to the portal since it went live in September and there is anecdotal evidence that both tutors and students are becoming more aware of the possibilities.

“Tutors are telling me that that this year, for the first time ever, there are almost equal numbers of people asking them about apprenticeships as there are asking about university,” Helen says.

“The partnership isn’t targeting specific sectors, it’s about growing apprenticeships across the economy. However, we are of course interested in the priority sectors in Greater Manchester: construction, STEM (science, technology, engineering and maths), creative and digital, and the public sector. Another key focus is the development of new apprenticeship standards to help providers within our partnership to support employers in their sectors.”

“We are also prioritising higher level apprenticeships, those for Level 3 and above, as those are where there is the greatest shortage as well as the greatest benefit to the economy.”

Key Tips for Employers

As every apprenticeship is a three-way agreement between an employer, an apprentice and a training provider, it is vitally important that each member of the triumvirate has a solid understanding of their role and responsibilities.

Employers should ensure their chosen training provider has a good track record in their sector, bearing in mind that the provider is there to support the employer, and should provide flexibility when necessary.

“Twenty per cent of the apprentice’s time needs to be spent in off-the-job training, but that doesn’t mean that they must go to college one day a week,” Helen says. “Talk to the provider and work with them to find the best model that works for you.”

Helen says industry feedback indicates that quality apprenticeship programs have several things in common: a comprehensive induction, access to mentoring and buddying, a well-ordered process of rotation, and opportunities for the apprentice to be visible and add value as early as possible.

“It might seem like employers need to invest a lot of time, but there is a great deal of evidence that shows apprentices are really good for business,” Helen says, pointing to data compiled by the National Apprenticeship Service that found four out of five companies which invested in apprentices reported a significant increase in employee retention. 

A similar percentage of employers believed apprenticeships made them more competitive and their workplaces more productive.

“Higher apprenticeships can be a really excellent alternative route to university that can take learners all the way up to masters’ level,” Helen says. “We are encouraging more people to consider gaining qualifications while they work, earning money and learning new skills without accumulating debt. By encouraging those higher level apprenticeships, businesses are helping to develop the skills and knowledge levels that will be required to drive the economy forward across all industries. It’s a win-win.”

Practical Support for your Business

For more information download Rullion's Q&A white paper here, containing the latest updates on the levy.

Free, impartial advice is available to employers planning to grow their business through recruitment, training or upskilling, specifically in relation to the new apprenticeship funding. 

The Apprenticeship Growth Service, led by the Manchester Growth Company’s Business Growth Hub, works with employers to help them compile a workforce development plan. The service can advise employers on the kinds of training that will best suit their needs and the most appropriate training provider, then manage the whole process, saving time and administration costs. As well as filling vacancies, employers can tap into apprenticeship training and funding to upskill their current staff.

The service is taking referrals now. For more information, go to www.businessgrowthhub.co.uk.


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