From spend to value – now 18 months since the Levy was introduced

We should not be surprised if, eighteen months on from the introduction of the Apprenticeship levy and the biggest reform in skills funding for a generation, it is still the main topic of conversation amongst employers concerned with talent recruitment and development.

However, a lot has happened in that time and the focus of discussion has moved on from understanding the levy and implementing the associated processes to trying to resolve the issues that still frustrate the reforms such as End Point Assessment and maximising employers’ ability to draw down levy funds for Apprenticeship training.

It is worth reminding ourselves from time to time that the original purpose of the Apprenticeship levy was to reverse the decline in employer investment in skills training and to increase the number of Apprenticeship opportunities. Three million more Apprenticeships by 2020 has been an enduring Government manifesto commitment.

The response from most employers has rightly been cautious in this first year while recognising that the levy is often a serious amount of money for them.

Employers with existing Apprenticeship programmes have been better placed to review current arrangements and look at possible expansion into other occupational areas and at introducing new Higher and Degree Apprenticeships albeit in typically small numbers. These employers have been able to adapt to the levy relatively easily without fundamental changes to talent development policies, though internal and external processes have had to be reviewed and revised that have been time-consuming and a distraction.

In many respects, the introduction of the levy was aimed at those employers who did not have Apprenticeship programmes. There is little doubt that the levy caught their attention and forced a rapid reappraisal of talent attraction and development practices. It is not yet clear how many companies simply wrote off the levy as an additional tax, but I do not come into contact with any of them.

In my experience, the best companies have seen that there are opportunities from the introduction of the levy to do more than just maximise the amount of levy that they can effectively recover for training. They have taken the opportunity to see how they can derive best value from their recruitment and training. They have put their best practices first and generating a return on the levy second.

I was talking with a major global company recently who had realised that the levy was “a really big deal.” They set out to “create value from the levy, rather than simply to spend it. Their ethos was one of building talent rather than buying it. So, they reviewed their talent acquisition arrangements that were heavily graduate dependent and “dipped their toes in the water” with Apprenticeships. They are concentrating especially on those areas where they have found graduate retention to be an issue. They are feeling confident that they are on the right path.

I was reminded of the consistent advice given by PeoplePlus to employers to start small with new programmes and to build from there. This has always seemed very sensible to me and we heard from employers such as Marks and Spencer at our recent employer meeting that they have adopted such an approach.

This may also partly explain why Apprenticeship numbers appear to have gone down in the short term. The levy is generating a good deal of fresh interest in Apprenticeships as anticipated, but employers want to make important investment decisions based on their own testing and evaluation and not simply because Government says Apprenticeships are the way to go.

So, it has been a period in which levy issues have dominated and there will be more bumps in the road no doubt. However, if employers increasingly find value in Apprenticeships supported by the levy there is every chance that the original aspirations for improved training and increased employer investment are achieved.

David Way – CBE
PeoplePlus Apprenticeships Ambassador and editor of A Race to the top: how to achieve 3 million more Apprenticeships by 2020