Use the levy money before it disappears

In this article: The industry is firing back up, so now’s the time to use levy funds to improve the workforce’s skills before it’s clawed back

Vast sums of money earmarked for training are going unspent. The cash that large employers pay into the apprenticeship levy is clawed back by the government after 24 months if it isn’t used.

However, there is a compelling case for companies to spend their levy cash on training as they look to bounce back from the pandemic, rather than losing it to the Treasury as a tax. The levy compels employers with a wage bill above £3m to put aside 0.5% of this sum for training.

“Apprenticeships have been proven to provide a fantastic return on investment, with every £1 of government investment at Level 2 generating a return of £26 for the taxpayer,” says Simon Ashworth, chief policy officer at the Association of Employment and Learning Providers (AELP). There can be a big return for employers too, who often value apprentice’s innate digital technology skills, diversity, loyalty and fresh perspectives.  

The government, through its “Plan for Jobs” scheme, is also rewarding employers for taking on new apprentices, with a £2,000 award for hiring a new 16-24 employee and a £1,500 incentive for hiring older apprentices. That is money on top of an existing £1,000 grant for any employer taking on a 16-18 year-old apprentice.

Apprenticeships are a unique form of training: they meld work-based learning with a structured program of academic study, allowing for the development of new skills, knowledge and behaviours.

And with 550 employer-designed apprenticeship standards now available, there’s a fantastic range of programmes to meet the needs of many organisations, whether that’s bringing in new talent or upskilling existing employees.

Although there’s a dearth of vehicle technicians in the motor industry, that’s far from the only standard around with apprenticeships available in customer service, sales, finance and much more.

Keep training

And while there is an ageing workforce in this sector, employers should consider training up existing staff, says Katie Saunders, HR director of dealer group JCT600. The company has launched, with the University of Sheffield, degree apprenticeships to raise the leadership skills of its managers.

The prospect of a degree qualification with none of the debt is highly attractive and can help employers with their recruitment and retention. “Interest is high as many industry managers have no formal qualifications and are promoted internally,” says Saunders.

And because degree apprenticeships are pricey, many employers use them to draw down a larger proportion of their levy funds. Even if you spend all of your levy pot, you shift to a co-investment model where 95% of the training cost is paid for by the government.

However, companies need to think about bringing new talent into their business as well, says Ashworth. “Getting the right blend is important and employers need to think about how apprenticeships can support a 3-5 year recruitment and retention strategy,” he says.

But the levy system is complex. This is one reason why so much funding is going unspent — as well as concerns that there are not enough standards to meet the needs of every employer and the requirement that all apprentices spend 20% of their time training off-the-job.

Ashworth’s advice for navigating the system is to find a trusted and experienced training provider to help do some of the heavy lifting. “Work with them to understand your skills, training and talent requirements, then collaboratively develop training pathways linking to job roles, succession planning and skills gaps,” he says. If apprenticeships provide all that, it’s surely a no-brainer for employers to invest in them.

Get in touch if you want to find out more about the levy fund, how you can use and what training the IMI offer