Making the Apprenticeship Levy work for employers

We’re one year on from the introduction of the Apprenticeship Levy and we have a lot to reflect on: more than £1.39 billion has been paid in by large employers over the last year, according to our recent Freedom of Information request.

But disappointingly, only 8% of this vast sum has been withdrawn to fund apprenticeship training.

It’s easy to just explain this away as employers still getting to grips with the levy. But time is not limitless – any funding that remains in their National Apprenticeship Service accounts after 24 months will expire. So time is running out for organisations to use their levy pot, and they risk not being able to use it to further the skills of their employees.

And this slow start could cost organisations in England significantly; if employers in England continue to use the funding at the same rate, they risk losing as much as £139 million a month from April 2019, which could otherwise be used to build skills, attract and retain staff, and increase efficiency.

Picking up the pace

April 2019 is just one year away – not a long time, especially when you consider it can take up to nine months to get an apprenticeship programme up and running. So employers that intend to make the most of the levy must pick up the pace.

As many as three in 10 business leaders who have accessed the funding said that the process was more time consuming than they expected – so employers need to ensure they don’t underestimate the time required.

Entering the fourth industrial revolution, it’s even more timely for employers to not only think about the skills their organisation is lacking now, but also those that their workforce will require in the future. As employers attempt to make their organisation more adaptable and flexible at this time, it makes sense that the levy performs in a similar way.

We know that the delays, limited availability and lack of flexibility of the programmes are significant barriers preventing organisations from taking up apprenticeships: according to our research, one in four (24%) business leaders agreed that apprenticeship standards – which define programme content – need to be approved more quickly by the Institute for Apprenticeships, as the current delays are limiting the training options available to them.

The modular approach

As we enter a politically and economically uncertain time, with Brexit on the horizon, many organisations will be considering how to attract, retain and advance their talent. For some employers, the levy in its current form seems inflexible, and means that programmes available aren’t meeting all of their needs, with the delays in apprenticeship standards.

The lack of flexibility needs to be addressed to ensure that organisations get value for money, and we think that ‘modular apprenticeships’, which allow organisations to develop tailor-made programmes that fit their specific needs, could be an attractive solution for both employers and the UK government.

By adding additional learning modules to ‘core’ apprenticeships, employers could develop bespoke, personalised training programmes. The development of these personalised apprenticeships would ensure employers of all sizes and types can access the skills they need, including non-levy paying organisations and SMEs. Employers would also be able to add new modules throughout training, keeping skills up-to-date and relevant, and allowing apprenticeships to adapt, as business needs change.

We believe by making apprenticeships more flexible, and taking a modular approach, employers in England will be able to fill the skills gap, future-proofing their organisations, and ultimately reap the returns on their investment. It’s food for thought.

David Willett, Director of Corporate Sales, The Open University.