The Apprenticeship Levy:how to maximise the value

“We want apprenticeships to be part of the DNA of UK businesses, not merely a tick-box.”It is now almost a year since the rollout of the

Apprenticeship Levy, an ambitious scheme to deliver

three million apprenticeships by 2020.

Initial take-up has been mixed, however, with some

critics suggesting the levy may not be up to the

job. According to the figures, apprenticeship starts

plunged 61% in the three months following its

introduction (May to July 2017). 1

But it is too early to draw conclusions based on the

number of apprenticeship starts recorded since

the levy was introduced, stresses Mike Thompson,

Head of the Apprenticeship Programme at Barclays.

“Organisations are still adjusting to the new funding

system,” he notes. “There are also over 300

apprenticeship standards for specific occupations,

some of which are still being designed by groups of

‘trailblazer’ employees.”

“Hopefully, these are just teething problems and

employers are biding their time,” adds Joe Dromey,

Senior Research Fellow at the Institute for Public

Policy Research (IPPR).

Investing in skills

At Barclays, Thomson explains, the reforms

have given us flexibility to the point where our

apprenticeship programme now spans 16-year-olds

right through to the oldest at 68.

“We’ve moved from a traditional apprenticeship

programme to one that also includes the reskilling

and upskilling of the existing workforce. We’re

starting to see the benefits of being able to invest

much more broadly in our skills than perhaps we

would have done five years ago.”

Companies that pay out more than £3 million in

annual payroll must now put 0.5% of their total

wage bill into the levy. In return, they receive

vouchers which they can spend on approved

apprenticeship training courses.

Companies are already benefiting from the government’s ambitious programme to boost apprenticeship numbers in the UK. But to maximise the value of the Apprenticeship Levy, some teething problems must first be overcome.

The Apprenticeship Levy: how to maximise the value

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The government tops up this figure by 10%, but

funds must be spent within two years or they expire.

More than just a ‘tick-box’ process

“We want apprenticeships to be part of the DNA of

UK businesses, not merely a tick-box,” says Clare

Bonson, Head of Intermediary Engagement at the

National Apprenticeship Service, the Education

and Skills Funding Agency. “We want enlightened

recruitment strategies and employers taking a long-

term view to developing current and future talent.”

There has been some resistance from employers to a

new rule requiring 20% of all apprenticeship training

to take place off the job. However, it can be taken

flexibly to assist employers, whether it is one day a

week or over a block at certain times.

Using technology wisely

Technological solutions can be used to help provide

this flexibility through webinars and e-learning

initiatives that can be accessed virtually around the

clock. However, Thompson issues a note of caution.

“An apprenticeship has to add value,” he says. “To

deliver that knowledge base, there needs to be a

master-apprentice type model. The worst I’ve seen is

100% self-led learning. That’s not an apprenticeship.

It’s all about how you use the technology. There

needs to be a skills and knowledge transfer. That

can be quite difficult using just technology. But there

isn’t a lot of money at the bottom end, so I can see

investment in technology happening in this space.”

Unintended consequences of levy?

There is also a fear that the good intentions

of the levy could have damaging, unintended

consequences. Just over a year ago, around 95% of

all apprenticeship 2 starts were at the semi-skilled

Level 2 or Level 3 grades, not higher-level degree

apprenticeships. The levy’s introduction may yet be

detrimental to low-skilled workers. And because a

huge amount of the levy is raised in London there

are concerns it will just be spent there, further

accentuating any regional socioeconomic divides.

“An apprenticeship has to add value. To deliver that knowledge base, there needs to be a master-apprentice type model. The worst I’ve seen is 100% self-led learning. That’s not an apprenticeship.”

“Of course, there may be a business case to do so,

but the levy is encouraging firms to invest more in

their own staff who are already, in many cases, highly

skilled,” says Dromey at IPPR. “We are also beginning

to see an increasing skills gap developing with

London having far higher levels of pay, productivity

and qualifications than the rest of the country.”

Challenges that may also arise are larger levy-

paying employers, who have yet to spend vast

swathes of their budget, beginning to act towards

the end of 2018. Colleges and providers – who are

already facing increased requests to provide more

tailored training, as well as procurement issues –

may struggle to cope with increased demand as

companies get to grips with the new system.

With Brexit looming large on the horizon, the timely

introduction of the apprenticeship levy may in fact

help to plug future skills shortages should an exodus

of European Union nationals materialise.

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Key takeaways• The government’s Apprenticeship Levy is helping firms to look at the

issue of recruitment more strategically

• The levy can be used not only to train up younger people, but also upskill and reskill existing employees

• Companies need to spend the levy within two years or they will lose it.

1 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/650515/SFR53_2017_FINAL.pdf

2 http://researchbriefings.files.parliament.uk/documents/SN06113/SN06113.pdf

Barclays Bank PLC is registered in England (Company No. 1026167) with its registered office at 1 Churchill Place, London E14 5HP. Barclays Bank PLC is authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority (Financial Services Register No. 122702) and the Prudential Regulation Authority. Barclays is a trading name and trade mark of Barclays PLC and its subsidiaries. Item Ref: BM413338. March 2018.

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