Apprenticeship Levy: Win or Lose

Apprenticeship Levy

Apprenticeship Levy: Win or Lose

In a previous blog, we spoke about the opportunities that the Apprenticeship Levy could bring to businesses and the engineering sector. With the deadline fast approaching for vast amounts of unspent funds to be returned, there remains questions on where has it all gone wrong?

The Apprenticeship Levy has been in place for 2 years now. Data supplied by the ESFA shows just 14% of the total funds paid by Apprenticeship Levy employers have been spent.

So, despite the growing skills gap crisis, employers are continuing to miss out on an important opportunity to ensure they are prepared for the upcoming challenges, particularly as Brexit’s deadline grows closer.

By being unable to make long term strategic decisions surrounding apprenticeships whilst simultaneously missing the finesse to be competitive in the market, UK businesses are at a standpoint.

So why aren’t they spending?

There is widespread confusion about the levy itself and how it actually works, which has led to an averseness to implement the scheme. With 95% of employers failing to spend all of their apprentice budget within the first year.

There is a lack of clarity on how and when to spend the budget. The Apprenticeship Levy is essentially a pot of money, where employers have 2 years to claim an allocation of that money for apprenticeship training.

However, if that money remains unspent by April 2019, it will return to the Treasury.

A substantial amount of businesses continues to view the Apprenticeship Levy predominantly as a tax. Nobody likes taxes, least of all big businesses, so the perception of an Apprenticeship Levy being viewed as ‘undesirable’ is something that needs to be addressed, by the Government, in order for it to succeed.

Additionally, the inflexibility of the scheme regulations has limited its potential for improving businesses. As seen by the ongoing reluctance to invest in the broader improvement of staff.

Employers are seen as main contributors, with their payment into the scheme being significantly more than the funding they receive for apprenticeships in their organisation. The price per head allowed by the Apprenticeship Levy (£15,000) is insufficient to facilitate the necessary cost that comes with hiring and training an apprentice.

So, what is the solution?

The key to the success of an apprenticeship scheme is co-operation between government, the business community and social partners.

Although businesses owe some level of social responsibility to the nation, more action is needed by the government to clarify what the Apprenticeship Levy is and how it can be spent. The perception that it is a tax is damaging and must be addressed in order for businesses to spend.

Whilst the intentions behind the Apprenticeship Levy are right, the implementation must be changed for businesses to fully embrace it.

Whatever the problems, with the Apprenticeship Levy, here at Dawson Shanahan we are committed to teaching STEM activities. We believe that training the next generation is critical to shrinking the engineering skills gap. Through our paid apprenticeship programme, we give young people the skills, knowledge and experience needed to accelerate their career in today’s fast-moving world of engineering. Learn more about our apprenticeship school here.