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Apprenticeship Levy – has it served its purpose?

The apprenticeship levy was introduced in April 2017, and was developed to tackle the skills gaps across a range of industries, and support the government’s promise to create 3 million apprenticeship starts by 2020. The levy means that businesses with annual wage bills £3 million or more, pay a tax 0.5% of their payroll costs into a pot. Businesses can then draw on this pot of funding to facilitate the cost of training apprenticeships within their organisation. Those who do not access this pot within 24 months, will then lose access to it after this time.

Many employers feel that the introduction of the levy has had the opposite desired effect, and that it has actually made it more challenging for businesses to take on apprentices. Many businesses are in fact paying the tax into the levy pot, and not spending it. Statistics show that 4 in 5 levy paying businesses are yet to take on an apprentice (TES, 2019). As well as this, only 14% of total funds paid by levy paying employers has been spent to date (TES, 2019).

So, why are so many organisations not utilising their levy?

Many employers aren’t utilising their levy, despite paying the 0.5% tax. The burning question is – why are they letting this money go to waste? There a multitude of reasons that employers aren’t choosing to utilise the levy, with some claiming that the levy has in fact made it more difficult to employ an apprentice. Some employers feel that bringing in apprentices across a range of industries in fact devalues them, due to big companies creating apprenticeships in areas such as customer service and cleaning, just to ensure they get back money they pay in to the levy (Telegraph, 2018). Another issue is that many of the new apprenticeship standard programmes aren’t ready, meaning many organisations are still waiting to spend the funding. Businesses have 24 months to spend the money they have into the pot, otherwise they will lose it. Many standards won’t be ready in this timeframe, resulting in employers losing their money and being unable to spend it.

While some employers feel that the levy is hindering the ability to employ apprentices, others are committed to taking on more than ever before. Amazon have recently announced that they will be creating more than 1,000 apprenticeship roles in the UK over the next 2 years (Sky News, 2019). Roles will be available in areas such as IT, Software Engineering, Robotics, Leadership, Technology, Safety and Human Resources. Amazons’ UK country manager, Doug Gurr stated that the apprenticeships have been developed to “give people opportunities to succeed in the digital age, regardless of their background” (Sky News, 2019).

Another major tech player who doesn’t seem to be phased by the Apprenticeship Levy are BT, who will be recruiting more than 1,600 apprentices and graduates in anticipation of rolling out its new 5G networks (Tech Radar, 2019). BT’s HR Director, Alison Wilcox, has said the programmes allow them to “bring in new perspectives, and develop a highly skilled, committed workforce”.

These are excellent examples of industry leading, levy paying employers using apprenticeship opportunities to fill the skills gap, and provide expertise knowledge and experience to young people looking to start their career. 

To find out how we can work together to utilise your levy to inspire, develop and empower new talent, email enquiries@aimgroupfoundation.co.uk

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