It is now almost a year since the government introduced the apprenticeship levy – a 0.5 per cent levy on all salary bills that exceed £3m, regardless of sector. 

When the levy was first introduced, many companies were irritated and sceptical.

They saw it as an additional tax, as complex and prescriptive, as something they did not have the resources to manage, or simply as ill-suited to their business training needs.

Now, the mood has changed, according to delegates at a conference on Apprenticeships in Financial Services, held during National Apprenticeship Week by City HR Association and The London Institute of Banking & Finance.

There are, of course, still challenges. Within financial services in particular relatively small companies – some with less than 100 employees – pay the levy. They may find it hard to make productive use of the funds available.

Claire Tunley, head of employability at the City of London Corporation said that many small and medium-sized asset management and banking firms “struggle to utilise their apprenticeship levy payments”.

That is often because they have only limited HR resources and are grappling with many other regulatory changes such as the introduction of MiFID2 and the Senior Managers and Certification Regime, which take precedence.

Some of them have also found that if they only want to hire one or two apprentices there can be limited training providers who can accommodate their needs.

Apprenticeships matching business needs

The government is, however, trying to ease the burden. Tunley pointed out that companies will soon be allowed to transfer up to 10 per cent of the funds earmarked for apprenticeships to another organisation and that many companies are starting to work together on this and on co-commissioning training providers.

Further “the government has shown it is willing to move” for example on what training should be included in apprenticeships to ensure that it really meets business needs.

Some of the large banks had already embraced apprenticeships before the levy was introduced, in particular, Barclays, which has been offering them for 6 years.

The landscape has changed a great deal over that time, according to Mike Thompson, head of early careers at Barclays.

The frameworks and standards that were in place in 2011 were “grim…there was nothing attractive to Barclays about apprenticeships [then],” said Thompson.

The bank launched them because of political pressure to do something about youth unemployment and inclusion. The aim was to have a more diverse talent pool.

Taking a deep breath

Barclays started with 7 apprenticeships in 2012. “We took a deep breath and scrapped the criteria we had been using and re-wrote the interview process,” said Thompson.

By the end of twelve months, Barclays had 1000 apprentices and has now helped 3400 people into work and long-term careers. Its early careers apprenticeship scheme has a focus on the long-term unemployed (over six months out of work, aged 16/24; those aged over 24 who have been unemployed for more than 12 months; those with fewer than 5 GCSEs), but will consider people from any background.

They recently launched a degree-level apprenticeship scheme with The London Institute of Banking & Finance, which combines a degree with a professional designation, and recently announced a Master’s Apprenticeship in Leadership – the first bank to do so.

Barclays has found that having a highly inclusive and flexible apprenticeship scheme has benefits and that parts of the bank would never have considered taking on an apprentice in the past, such as fraud control, have started to take to older returners because of the valuable life experience and maturity they bring.

Banks that are “still at the stage of making it happen”, as Carl Andersen, responsible for people, talent and diversity at Société Générale noted, also see advantages in apprenticeships. “The levy is one of the best opportunities…an absolute generational change,” he said.

Société Générale is looking at how best to use the funds to boost diversity and inclusion, digital transformation and changes to conduct and culture.

Still room for improvement

It is not all plain sailing, of course. Peter Pledger, chief executive of the National Skills Academy for Financial Services, admitted that the system is “complex and over prescriptive”, but that is because it is dealing with £2.8bn of government money.

He said that “every single employer” dealing with the levy is having similar problems and that the government is reviewing the system and open to change. Moreover, the system is already more flexible than it may seem.

Beyond some basics including English, Maths and digital skills, “the curriculum is in your gift,” he said.

Employers have the right to shape it however they like as long as it meets the apprenticeship standard and the end-point assessment.