Ensuring the apprenticeship levy is not doomed to fail

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What many, and indeed this article, fail to understand that this 'stealth tax' penalises companies who were already heavily involved in Apprenticeships. If I give an example of our company we ...


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MPs have labelled the apprenticeship levy a “blunt instrument” but it is still an opportunity not to be missed

As we get ready to fire the starting gun on one of the biggest investments in skills and training in a generation, it's inevitable that sceptical voices have emerged.

It was no surprise when we were greeted by national news that the apprenticeship levy, which came into effect last month, was ‘doomed to fail’ according to an education and business select committee report. MPs labelled the levy a “blunt instrument that risks being unduly focused on simply raising participation".

The report itself was a lot more nuanced than headlines might suggest, and was right to point out that focus on the quality of outcomes for apprenticeships must not be lost in the attempts to meet the 3 million target.

However, critics of a ‘blunt instrument’ should not underestimate the power and potential of an ambitious top-down target to give employers the space to reshape the way they manage skills-based learning. The levy could revolutionise the way we view education and training with, for the first time in a generation, a definitive move towards quality technical education.

Businesses will be able to take ownership of the agenda, to shape training programmes to benefit their employees and their organisation. Let’s not forget that this is something employers have been crying out for for some time.

Given the potential, a bigger concern should be the risk of wasting this opportunity. It is worrying that as recently as February a survey of business leaders showed a third of firms remain confused about the financial implications for larger companies. In a recent Pearson survey of more than 100 large businesses we found 43% of senior managers and training specialists still felt they lack confidence in understanding the upcoming changes.

It is little wonder, then, that some in the business lobby have criticised the levy as just another payroll tax. It is certainly true that without taking steps to make the most of the levy many mid-sized and large firms will find that they have been slapped with an additional bill.

Yet the levy is much less complicated than it appears and provides firms with a unique opportunity to shape in-work training. And while it may look like another payroll tax, companies can use the levy very specifically on their own staff development needs – with an additional 10% top-up from the government. If used effectively it becomes an investment with an immediate 10% return.

Another regular criticism of the focus on apprenticeships is that businesses that tend to recruit graduates will not benefit from the levy, but are still expected to contribute to the £3 billion annual charge.

However, it would be short-sighted for large businesses looking to attract and retain the best talent to ignore the potential for apprenticeships to play a key role in their recruitment plans.

This is particularly so with the arrival of innovative degree apprenticeships, which have the benefit of supplying companies with a stream of junior staff who have both the academic rigour that a degree instils, and the practical and professional job-ready skills that many businesses say are in short supply in today’s graduates.

The tide is turning on the perception of apprenticeships, and their increased prominence through the levy will only add to this. More choice for 16- to 18-year-olds is a good thing and will inevitably lead some talented young people to ask 'is a traditional university education right for me?' or even more pertinently 'do I have to choose between work and a university education – can I do both?'

More broadly, as the levy beds in, attitudes to the workplace will change. Education and training will no longer be seen as an added extra but a core part of the workplace – more young people will be mentored from school.

In time, as confidence in apprenticeships grows and ex-apprentices become more senior, certain organisations offering apprenticeships could start to rival traditional universities as a hallmark of quality.

But all of this will only happen if we get behind the apprenticeship levy and make it work; by recruiting enough apprentices, engaging businesses with degree apprenticeships to ensure they meet their recruitment needs, and changing our attitudes towards apprenticeships to treat them as the valid and sensible option that they are.

Roxanne Stockwell is principal of Pearson College London

Comments

What many, and indeed this article, fail to understand that this 'stealth tax' penalises companies who were already heavily involved in Apprenticeships. If I give an example of our company we currently have circa 800 learners every year, the levy will cost us around £800k plus the 10% top-up meaning we have a pot around the £900k. At £5k a learner that is around 180 learners. Now I realise that after a company uses their pot the cost is only £500 but after spending £800k that we don't currently I very much doubt our CFO, or many for that matter, will then say 'oh yes please have another £500 per learner on top of that?!!! Poorly thought through blunt instrument which has the possibility of being counter-productive rather than productive?!


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