The apprentice levy is an investment, not a tax

apprentice levy

The apprentice levy is an investment, not a tax

Thursday 6th April 2017. Let us remember this as the red-letter day that the UK took its first real steps in bridging the engineering skills gap.

Until now, it’s fair to say that efforts by the engineering industry as a whole to provide young people with the skills and knowledge they need for a career in engineering have been lacking. With no legal requirement for companies to offer apprenticeships, many opted not to run such schemes – despite the many benefits and advantages of doing so. As of 6th April 2017, this all changed. But how?

Acknowledging the issue at hand, the UK government introduced the Apprenticeship Levy. While this may not affect smaller organisations, those with a turnover of £3 million or more are required to spend 0.5% of their annual wage bill on training and development.

Unsurprisingly, the initial reactions from firms in the engineering sector were mixed. For some, it’s effectively another tax forced upon them by central government. For others, it’s an opportunity.

Regardless of opinion on the matter, companies earning over £3 million per year are now incentivised to hire apprentices. The shrewd firms will be the ones that seize the opportunity by analysing the limitations of their own workforces and investing in apprentices to ensure those gaps are filled in the future.

As you may know, this has been our approach in recent years and the results have been highly encouraging. Our motivated, competent and well trained apprentices have proven themselves to be incredibly valuable assets. And we’ve no doubt that the best is yet to come.

As for the cost associated with training them, research conducted in 2009 by the Apprenticeship Ambassadors Network (AAN) revealed that the average payback time of engineering apprenticeships was around 3 years. That’s a lot quicker than most people realise.

It’s not just employers who benefit financially from apprenticeship programmes. A report last year revealed how the amount apprentices earn over the course of their lives is outstripping that of graduates by up to 270 percent. Avoiding £45,000+ worth of debt, in favour of an appealing starting wage is leading more and more young people to at least consider it as a viable training option.

Like we said, this new levy is an opportunity. An opportunity to get more people into work, avoid crippling – and sometimes unnecessary – university debt, and improving the skills within the workforces of engineering firms. And this is all while strengthening the UK engineering industry as a whole. To us, this doesn’t seem taxing at all.

Learn more about our own apprentice training scheme and find out what our apprentices think about it here.