The Apprenticeship Levy is an investment, not a tax

Last month the government introduced the Apprenticeship Levy, which all employers operating in the UK will have to pay, charged at a rate of 0.5 per cent of companies’ annual pay bill. The government is committed to increasing the quantity and quality of apprenticeships and aims to create an additional 3 million apprenticeship starts in England by 2020; the levy will help to deliver these new apprenticeships and support quality training by putting employers at the centre of the system.

However, when the Levy launched on April 6th, it received a mixed response. There were some who believed that it would be met with confusion and ignorance by thousands of companies; research by City & Guilds suggested that one in three of the employers liable to pay the Levy were unaware of it or were confused about how the system would work^[1]. Some employers said they were unsure how successful the measures would be, while others were concerned that it wouldn’t lead to three million quality apprenticeships. There were also concerns that the Levy would be viewed as “just another tax”, rather than a focused attempt to tackle skills shortages.

I believe that the introduction of the Apprenticeship Levy should be seen as a huge opportunity and not a cause for concern to businesses.

Establishing your own apprenticeship scheme can seem daunting, but there is huge support out there to help any company interested in setting one up and there are countless benefits that come with bringing apprentices on board.

The figures speak for themselves^[2]: 80 per cent of companies that have run an apprenticeship programme report a significant increase in employee retention and 76 per cent have reported an increase in workplace productivity. Launching an apprenticeship programme can also be good for business, with 81 per cent of consumers favouring a company that takes on apprentices. Crucially, companies are able to tailor the skills developed by their apprentices to their own flexible requirements.

For Barclays, launching an apprenticeship programme has been a win-win for both the business and for the apprentices themselves. Being able to mould the skills developed by our workforce has paid dividends as many of the apprentices graduate into more senior roles within the business. None of Barclays’ apprentices were in education, employment or training when they joined the bank. Today, many of them are successfully working their way up through every part of the business, and contributing to Barclays’ achievements.

I do understand that getting to grips with the ins and outs of the Levy might be intimidating, but it really does present a great opportunity andis a huge incentive for employers to hire apprentices. I encourage companies to seize this opportunity, identify and address any current or future skill gaps in their business and create a workforce tailored to their specific needs.

Amongst all this, we must remember that the Levy should also benefit employees as much as their employers. The Levy will help to ensure people of all ages and backgrounds have a chance to progress in life, provided they get the right support. It is important to have clear career paths for apprentices following their graduation to ensure that they continue to develop and feel that their apprenticeship is just the start of an exciting career journey.

One piece of advice I’d give to any business that’s paying the Levy is to consider it as an investment and not a tax. It’s a chance to invest in the long-term health of your business and your workforce. Hiring apprentices is a very good way of bringing in a rich, broad, diverse talent set to your business. Grab hold of the opportunity and make the most of it.

Mike Thompson, Director, Early Careers, Barclays, Institute for Apprenticeships panel chair for legal, finance and accounting