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HR community reacts to apprenticeship levy update

Further details on levy funding arrangements have met with mixed reactions

The HR community has reacted to confirmation that the apprenticeship levy will go ahead as planned from April next year, despite calls from business groups for the charge to be delayed until after the economic impact of Brexit is clear.

The latest update on the levy, initially due to be published in June, has provided greater detail around funding arrangements. It has revealed that:

  • the 98% of employers with wage bills of less than £3 million, and who therefore will not be paying the apprenticeship levy, will have 90% of any apprenticeship training paid for by the government
  • levy-paying employers – those with a pay bill of more than £3 million – that want to spend more on training than is in their digital account will have 90% of their additional apprenticeship training costs funded, to incentivise employers taking on more apprentices
  • the government will pay an additional £2,000 to help 16- to 18-year-olds, young care leavers, and young people with an education, health and care (EHC) plan make their first step into the world of work – with £1,000 going to employers and an additional £1,000 to training providers

Ben Wilmott, head of public policy at the CIPD, responded that it is “irresponsible for the government, particularly in a time of economic uncertainty in the aftermath of the referendum, to simply press ahead with a policy that is not fit for purpose.”

He said that “there is the damaging unintended consequences of forcing employers to reduce investment in other areas of equally valuable workforce training and development, and to essentially ‘re-badge' existing training as apprenticeships in many instances.”

Catherine Sermon, employment director at Business in the Community (BITC), agreed this will be the unintended consequence. “A lot of businesses are saying their levy will be larger than their standard annual L&D budget, and significantly larger than their community investment budget… so there will be trade-offs in terms of other L&D opportunities available for the wider group of employees,” she told HR magazine.

Though she is heartened by the finer details around encouraging care leavers into employment, and around incentivising youth take-up of apprenticeships, Sermon added that the levy will potentially distract from outreach activities, which are vital to attracting young people from more disadvantaged backgrounds.

“There’s a huge amount of preparation that needs to be done before a lot of people from [care leaver] backgrounds will feel motivated and able to take advantage of such a structured programme,” she said, adding: “Government needs to provide a solution in helping employers use some of that [apprenticeship] budget for outreach work.”

Richard Gregory, global head of U+ (learning and development) & HRIS for Rentokil Initial, told HR magazine that he too is concerned by how prescriptive the details on how funding can be spent are.

“Funding can’t even be used for things like recruitment of apprenticeships, or funding the time line managers will need to set aside for on-the-job coaching; there are a lot of hidden costs and hidden things that taking on an apprenticeship means you’ve got to do,” he said. He stated such a prescriptive approach undermines the positive move of incentivising youth take-up of apprenticeships, as this is the group requiring the most intensive, costly support additional to the training itself.

“Being prescriptive on what you can and can’t spend the funding on just doesn’t help; it means this is just a tax,” he added.

Gregory said that the plans are also too prescriptive in terms of how much time apprentices will need to spend in formal classroom training. “People will need to spend 20% of their time, so one day a week in that setting; that’s just an artificial thing that doesn’t need to be there,” he said, adding: “Some in some sectors will need that time off the job, others won’t.

“That’s 10 weeks a year of training; 220 hours. I’m an L&D professional and, for some professions, I would struggle to come up with meaningful material to fill that time,” he continued, explaining that the result will be wasted time in the classroom and increased disillusionment (particularly among young people) with apprenticeships as a true vocational alternative to more formal education.

Gregory added that the fact organisations still have to wait until October for further final details is disappointing. “We [at Rentokil] are about to start doing our budgets and planning for 2017. The government providing details in October – it’s too late to respond,” he said. “It just seems the government is out of touch with business.”