Apprenticeship levy will see revenues soar, despite fall in starts

Survey of hundreds of business leaders reveals employers believe apprenticeship and training schemes will increase workforce productivity and revenues

The government’s Apprenticeship Levy will be a boon to business rather than a hindrance to productivity according to a survey of industry leaders.

Hundreds of business leaders who took part in the poll said that they expect productivity and revenues to be positively impacted as a result of the scheme, introduced by the Government in April 2017.

The news comes after the latest figures from the Department of Education reveal that levy-funded apprenticeships at higher or degree level jumped by 424% in September. Decision makers initially voiced concerns when the Levy was announced over the feasibility of training a large number of apprentices, the costs involved and the lack of information available on the Levy.

This latest poll has found that the tide has turned on this initial cautious reaction. The majority (76%) of leaders surveyed stated the levy is positive for business, with only 9% believing the opposite. The majority of those who use the levy funding are planning to recruit and train graduates (51%), and hoping to invest in upskilling existing staff (46%).

The study of 300 senior decision-makers, commissioned by training and recruitment specialists, Pareto Law, explored the value of the recently introduced Apprenticeship Levy, and whether businesses believe using funds to invest in new and existing staff training is really worthwhile.

The Apprenticeship Levy charges businesses with a payroll of over £3m a 0.5% rate, which is used to fund apprenticeships and quality training. The government contributes 10% to the amount paid, and the fund is held in a dedicated government account to be paid directly to training providers.

More than two-thirds (65%) of business leaders surveyed stated that investing in training like the new apprenticeships increases company revenue, while 70% have seen a boost in productivity as a result of apprenticeship and training schemes.

The survey found that 30% of businesses are planning to use their levy to fund some form of technical training, but the findings suggest that soft skills are more of a priority for employers, with more than half (60%) responding that training in soft skills has already had a positive impact on their business.

Customer Service, Leadership and Sales Development training are at the top of the investment agenda for the levy-paying businesses surveyed, scoring 32%, 31%, and 26% respectively. Demand for return on investment (ROI) on levy investment is also placing sales training high on the agenda of over 25% of businesses throughout the UK.

Examining what employers look for when hiring a new member of staff reveals a strong correlation with the findings on apprenticeship training priorities. Communications skills (22.3%) and sales & business development skills (20%) are ranked the highest, above even industry knowledge (18%), or a relevant degree, (15.67%).

According to participants, the benefits of utilising the levy extend further than an increase in productivity, with 40% of business leaders saying that investing in training makes staff feel more valued, while 35% said it helps foster a more committed and motivated workforce.

Jonathan Fitchew, CEO and founder of Pareto Law, commented on the findings: “Businesses have been unclear about what the Apprenticeship Levy entails and how it can benefit them. Levy pot predictions have already fallen by £100m, and based on the amount of UK businesses eligible for the levy, there’s a potential £1.2bn not being taken advantage of this year alone*. But for the companies already putting the levy into practice, we wanted to get a clearer picture of what UK really thinks of the Levy.

“We’re always talking to decision makers about what affects them and their businesses, and we commissioned the poll to delve deeper into what they really think about the levy and its potential to help their companies.

“We’ve found that, despite any initial trepidation, employers are already taking advantage of their levy pots after seeing positive results from wider training programmes. With over half of business leaders planning to recruit new graduates, and then use their levy to fund the training, it’s clear that the changes made will widen opportunities at every level.

“The tide has definitely turned on the Apprenticeship Levy – and it should be seen as a real opportunity to bolster your company’s workforce and upskill the talent of the future.”