6 months on - 6 things we still want to see from the Apprenticeship Levy

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Could change be on the way? 

At the Conservative Party conference this week the new Skills Minister Anne Milton MP appeared to be open to some tweaks…or possibly changes…to the apprenticeship levy. It was widely reported on the Twitterati that she had welcomed the opportunity to hear directly from businesses as to the challenges of the Levy and the need for greater flexibility.

This will be music to manufacturers’ ears.

Manufacturers and the Apprenticeship Levy

So 6 months on from the introduction of the apprenticeship levy we state 6 things we still want to see from it. But first a gentle reminder of the impact of the levy on manufacturers.

Let’s be straight - the Apprenticeship Levy has been one of the most fundamental changes to the recent skills policy landscape and a policy that manufacturers continue to have reservations about.

 

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The Levy presents short-term wins – with 46% of manufacturers planning to increase engineering and apprenticeship numbers, 35% increasing apprenticeships and 47% plan to use the Levy on training existing employees under an apprenticeship framework or standard

 

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But even that won’t be easy, with manufacturers’ plans to absorb the new cost of the apprenticeship levy within their existing apprenticeship budget or their wider training budget. The latter is particularly worrying given that not all training that occurs in manufacturing (or indeed other industries) can easily be shoe-horned into an apprenticeship and neither should it be.

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So what needs to happen for the Levy to be sustainable and lead to long-term wins such as increasing the quality of apprenticeships and creating a responsive training market…just a couple of things that manufacturers

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And now for the 6 things we want to see now:

  1. Review the current maximum 15 funding band capped at £27,000 - The delivery of quality higher and degree apprenticeships in engineering and wider STEM disciplines is likely to exceed this amount. Providers are deterred from offering such courses on the assumption that Levy paying employers are unlikely to pay the additional excess, leaving employers without access to provision. 
  2. Allow employers to agree a payment schedule with their providers – the currently mechanics of payments leaving employers accounts on a monthly basis is a disincentive for providers to deliver apprenticeships in engineering, which, have a high upfront cost. Allowing employers to agree a payment schedule with their providers gives employers greater flexibility in spending their Levy funds and ensures that providers and colleges continue to deliver high cost, quality courses.
  3. Increase the amount of unused funds a Levy-payer can transfer to 50% - as skills needs of supply chains increasingly align to OEMs we must ensure Levy funds can be invested across industry, The Government should increase the current cap of 10% to 50% in April 2018. Given the administrative burden involved, many employers will not see value at 10%.
  4. No further dilution of the Levy -While manufacturers want to see flexibility on how they spend their Levy funds, they do not want the Apprenticeship Levy “pot” to become diluted. The Levy has already been diluted with a significant amount allocated to the devolved administrations who can then spend those monies however they see fit. Employers are concerned about proposals to use the Levy to fund retraining schemes and other initiatives.
  5. Spell out clearly exactly how devolved administrations will send their levy funds – various strategies and plans presented in different forms makes it difficult for the many manufacturers that operate across the UK to understand how it all works in practice. Employers need more than being signposted in all different directions. Instead the devolved administrations should come together to clearly state the intentions of the levy and this should be shared alongside all other information on the levy.
  6. Get SMEs on the digital apprenticeship service as soon as possible – Transferring of levy funds from one employer’s digital account to another employer’s digital account is only possible if…the employer has a digital account. Currently, only levy payers can register for the apprenticeship service, non-levy payers (SMEs) are not able to. But if we are to allow transfers from April 2018 we best start communicating this to small business now.

 

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Author

Head of Education & Skills Policy

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