Apprenticeship Levy: Use it, don't lose it
Blog //13-10-2022

Apprenticeship Levy: Use it, don't lose it

by Ann Ramsay, VP of Education

At a time when the cost of doing business is soaring, why are so many organisations failing to make use of the apprenticeship levy fund to train their own future workforce or transfer allocations to other smaller businesses?

An acute skills shortage
The apprenticeship levy fund offers businesses significant support with funding the training and assessment of apprentices. Indeed, many rely upon it in order to be able to afford to recruit and train potential new employees. As the UK faces a recession, with well-documented skills shortages, it is surprising that around £1.1 billion a year of the fund, or £95 million each month, is going unspent and returned to HM Treasury. This equates to around 30,000 apprenticeships that are not being funded in this way. Now, more than ever, the UK needs to find ways to attract and train people with the appropriate skills to help boost the economy. In some sectors, such as IT, some commentators believe the UK is experiencing such acute shortages that it cannot realise its potential to be a world leader in digital services, and it seems crucial that the opportunity to address this is not lost.

Share what you don’t use
Large organisations with an annual pay bill over £3 million must pay into the apprenticeship levy fund, at a rate of 0.5%. Some of these corporates don’t employ apprentices at all, while others may offer a limited number of places and are not using their allocation to the full. According to a survey earlier this year, almost half of businesses have returned some unspent funds to the government. That’s where the apprenticeship levy transfer scheme is invaluable, ensuring organisations have a say in how their unused allocated funds can be used. Fund paying organisations can transfer up to 25% of their allocation to smaller, non-fund paying businesses, such as those in the supply chain, or others in the same industry. In this way, everyone can potentially reap the benefit of a more skilled and effective workforce, ready to meet future needs.

Does the solution address the problem?
There appears to be a serious mis-match between the problem and the available solution, so what is going wrong and why are many businesses failing to use the transfer scheme?

  • Inflexibility. Critics of the scheme claim it is too inflexible. For example, if a trainee drops out their funding cannot be transferred to another new starter. Also, the transferred funds don’t cover further training that may be needed beyond the end of the apprenticeship.
  • Wages. The fund doesn’t help with the wage element of apprenticeships, which some small businesses need in order to make delivery of an apprenticeship programme viable.
  • Deadline. Currently each organisations’ allocated funds must be used within 24 months, which many feel is too short a timeframe.
  • Complexity. Schemes like this are a work in progress and some problems only become apparent once they have been running for a few years. They also require designated individuals to understand all of the detail of funding apprenticeships and transferring funds which might not be seen as profit generating activities, particularly when businesses are tightening their belts.

On the flipside, without a sustainable skills pipeline, businesses will struggle to compete, and now is the perfect time to make use of every available penny of funding.

 

Apprenticeships matter
The combination of on- and off-the-job training is what makes apprenticeships so valuable. Students are learning in the real world, not just in hypothetical classroom settings. At the same time, weekly tutor-led sessions make sure that all training is kept to an accepted standard, delivered by education  professionals. This combined delivery ensures that apprenticeship training can address real-world needs. Fully engaging employer organisations with education providers places employers at the heart of the skills education system. This is embodied in the Skills and Post-16 Education Act 2022, for better alignment of course design and resources between FE providers and local communities that effectively supports local businesses and the wider UK economy with the right courses and content.

Well-designed and delivered apprenticeships can:

  • Help fill skills gaps. This is critical for many businesses, local areas and industry sectors that are experiencing skills shortages.
  • Help build a sustainable skills pipeline for the future, from skilled technicians to the business leaders of tomorrow.
  • Bring new, up-to-date skills into the workplace, such as digital skills to ensure a future-ready workforce.
  • Give organisations that train apprentices the first pick of the best individuals to employ post-EPA. They have already onboarded these people and they understand the business, its structure, purpose and culture.
  • Make it easier to build on the apprenticeship training with further specific specialised training if required.

Digital solutions for efficiency
Many corporate businesses design and run their own apprenticeship schemes, where on-the-job training is integrated with structured learning that specifically builds the most relevant skills. Many other employers use training providers such as Further Education (FE) colleges to deliver the mandatory 6 hours a week of off-the-job learning. In order to get the best return on investment, providers are using specific digital solutions to manage the entire apprentice journey. Purpose-designed solutions can help with applications, induction, course delivery, assessment and EPA, so that courses and learners are managed more effectively.

Digital course management and delivery can also result in better outcomes, ensuring training investment is not wasted. Many courses can be enhanced using a virtual learning environment, which can also leverage virtual reality and other digital features that make learning more enjoyable, helping increase retention and course completion rates.

The apprenticeship levy fund and the transfer scheme may not be perfect for all users, but with smart design, management and delivery, all businesses can make it work. It is crucial that organisations of all sizes work together to unlock every penny of the available funding in order to develop the skills that can help elevate individuals and companies to achieve their goals, and build a more prosperous future for all.

 

Smart Apprentices can help by providing an innovative suite of technologies that support the complete digital learning journey.  

 

Education Smart Assessor Blog
Ann Ramsay

Ann Ramsay

PUBLISHED BY

VP of Education

Experienced Manager with a demonstrated history of working in the higher education industry. Skilled in Research, E-Learning, Training Delivery, Coaching, and Performance Management. Strong professional graduated from West Nottinghamshire College .

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