The Apprenticeship Levy: A Taxing Opportunity

Is your business ready for the Apprenticeship Levy? How can the recent changes to apprenticeships benefit your business and help you to build organisational talent?

Frank Clayton

This April see’s the launch of the government’s Apprenticeship Levy, a tax on businesses to support the funding of apprenticeships and, more importantly, their growth as a means to bridging the significant skills gap in UK Plc.

The levy will be paid by any business with a payroll in excess of £3m per annum with their levy contribution being calculated as 0.5% of the aforementioned figure. These contributions will be taken each month by HMRC and placed into a digital account for use – by the organisation – on the training and assessment of their apprentices.

If these funds are not utilised within a 24 month period they will expire – meaning the employer can no longer use them – and be transferred into a general fund for apprenticeships.

A Huge Opportunity

As with any large tax raising legislative change the levy has generated many column inches both for and against. What I would like to do is explore its potential from a slightly different angle – one that has perhaps been missed and which I see as a huge opportunity.

The apprenticeship landscape has undergone significant change in recent times, specifically as a result of the Richards Review which recommended, amongst other things, a shift towards employer ownership of the content – a situation that has existed in Germany for many years.

As part of this process it was recognised that a major blockage in employer engagement was the complexity of the apprenticeship frameworks themselves with documents often running to more than 100 pages. The system needed to be simplified – and so began a transition from frameworks to apprenticeship standards.

A standard is defined as “showing what an apprentice will be doing and the skills required by them, by job role”, and this is where the real opportunity lies. A job role not only explains what you are expected to do but how you are expected to do it – this clearly refers to behaviour.

Creating a Balance of Skills

In the construction and engineering sector apprenticeships are considered axiomatic – and rightly so – they have been part of the fabric of training and development for many years, producing huge numbers of highly skilled, technically competent people. Unfortunately, these same people aren’t always the most well rounded individuals when it comes to those “softer skills” that are a vital component for success in more senior roles.

At NG Bailey, where I serve as Head of Group Learning and Development, our apprenticeship programme has long striven to balance technical and behavioural skill. As do our recruitment processes, appraisals and succession plans but the responsibility for doing so is a conscious one, aligned to our values – and funded by the business!

The great advantage of an apprenticeship is that it presents your business with a blank canvas on which to paint; an apprentice – regardless of age- has made a conscious decision to develop the skills they need to be a success in their chosen field, presenting us as employers with a golden opportunity. We define what those skills are and we know that teamwork, communication, self-awareness and leadership are as important as the technical skills required for the role.

Behavioural Development is Essential for Growth

Last week’s CIPD HR Outlook Survey rated performance and people management skills as the most important skills organisations will need in the next three years. The same survey revealed that 44% of HR professionals believe their senior managers’ leadership skills are ineffective. In light of this, how can we ignore a £3bn fund for apprenticeship training that allows us to train and develop people for a job role and the necessary behaviours they need to be successful at doing it!

Our apprentices understand that their behavioural development is a vital component of their growth and equal criteria in judging their success. We include workshops on team building, communication skills and leadership as standard, with 1:1 coaching from our Apprenticeship Development Partners to guide them as they grow. We firmly believe that these young men and women will be our leaders of the future.

We know that apprenticeships are subject to rigourous assessment, which in turn, means the behavioural element of the apprentices development will have to pass muster. What’s great about an apprenticeship is that the majority of this development takes place at work guided by a more experienced colleague, so it’s real world development, using real life scenarios with real life consequences.

The Role of Leaders – Coaching & Developing

Our managers and supervisors take great pride in the role they play developing our apprentices and guiding them through the programme. They act as a constant source of encouragement coaching the apprentices through challenging or testing situations, sharing the benefit of their experience and teasing out those incremental improvements in performance that are the key to any successful development process – to the extent that we often see a supervisor or manager on the invite list of our annual apprentice graduation ceremony alongside the apprentices mum and dad. If that’s not a compliment, I don’t know what is!

In the coming months there will be lots of talk about higher and degree level apprenticeships in leadership and management, particularly as those businesses new to the apprenticeship arena look for ways to spend their levy fund and add value to their organisations. Whilst this is a welcome addition to the stable of apprenticeship qualifications available it isn’t the main opportunity of the reforms.

Imagine if your organisation was able to develop its people technically and behaviourally, with one eye on the role they are training for and the other on the career they are able to have building your future talent pipeline in the process.

If you capitalise on the recent changes to apprenticeships and think about them a little differently you can make those imaginings a reality. We are…

Frank Clayton LinkedIn

One thought on “The Apprenticeship Levy: A Taxing Opportunity”

  1. Thanks Frank for this, your first article on the Leadership Coach Blog. I hope it is the first of many!
    It’s a great overview of the opportunity organisations have to get behind this apprenticeship programme.
    I’m pleased your managers are supporting apprentices by using coaching as a key development tool.

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