Apprenticeship levy is here – so now what?

Steve Hill, Director of External Engagement at The Open University, discusses how employers can make the most of the new apprenticeship levy.

The apprenticeship levy came into force last month, putting employers at the heart of developing and funding apprenticeships in England.

Designed to boost skills in the UK, the levy applies to all UK organisations with an annual wage bill of £3 million or more and plays an important role in supporting productivity and business growth, providing leaders embrace the opportunity it offers.

Embracing change and transforming business practice is rarely easy, but those who engage with the changes can exploit the well-documented benefits that apprentices bring to an organisation. Along with accessing higher skills through degree apprenticeships, organisations are likely to see a better, more motivated workforce, and improved staff engagement and retention.

But while the levy applies to all relevant employers across the UK, apprenticeships are a devolved policy, meaning authorities in each of the UK nations manage their own apprenticeship schemes, including the funding process.

Since 1 May, organisations have been able to start drawing from the levy pot to fund apprenticeship programmes for employees who live in England, but the situation varies in Scotland, Wales and Northern Ireland – making the decision-making process a bit more complicated for organisations spanning multiple UK nations.
In England, employers who have paid into the levy pot at a monthly rate have two years to use their allocated funding, and those who don’t use it will lose it. Of course, taking advantage of the levy isn’t just about recouping fund, it also comes with attractive benefits for organisations.

Shrewd employers are already planning to future-proof their organisation by building in the agility and adaptability.

This funding presents them with an opportunity to build the skills required to adapt to the constantly shifting economic, technological and political climate. That’s where the newly introduced degree apprenticeships can really add value. Having the right high-level skills within organisations is crucial to being able to operate in this new, agile world.

The key to optimising higher and degree apprenticeships is in understanding what your organisation needs to thrive and perform at a higher level. Apprenticeships can help you to drive your organisation forward in terms of performance, productivity, and quality of service – but only if you are clear on the skills your business needs now and in the future.

Linking your skills needs specifically to driving performance, productivity and quality of service helps you to build your future workforce. Addressing skills shortages effectively by solving your own problems can only strengthen your organisation in an increasingly competitive environment.

Degree apprenticeships offer numerous other organisational benefits. More than 90% of apprentice-employing organisations say apprentices create a better, more motivated workforce , while 76% say they make their workplace more productive .

Degree apprenticeships typically last three to four years but businesses start to feel the benefits right away, as apprentices bring their new-found skills to the workplace from the very beginning. In addition, the training time ensures lower staff turnover and, therefore, recruitment costs.

Offering degree apprenticeships puts employers ahead of their competitors in terms of attracting new talent too. With the cost of a traditional degree now set at £27,000, funded workplace training becomes more appealing to individuals. Workers can earn while they learn, gaining work experience and a degree at the same time.

Apprenticeships lead to enhanced performance, increased efficiency and improved productivity. But it is important to ensure the training you choose is of a high quality and aligns with your business objectives.

So how can you best take advantage of the levy?

1. Get to grips with the apprenticeship levy

To optimise the value of apprenticeships, it’s important to get to understand the levy and the funding available to your business. Since 6 April 2017, all qualifying employers within the UK have been required to spend half a per cent of their total payroll bill on the apprenticeship levy, which will be collected annually via PAYE. To find out how much your business would pay, visit our online levy calculator.

2. Understand how funding works

Used correctly, apprenticeship levy funding can help organisations in England deliver advanced technical, managerial and professional skills. With the development of higher and degree apprenticeship standards, employers are being put in the driving seat of developing these skills by drawing down apprenticeship levy funding; funds are available online from the 1 May 2017, via the Digital Apprenticeship Service. Use your funding entitlement because contributions that remain unspent for over 24 months will be withdrawn.

3. Align apprenticeships with future workforce skills needs

The key to optimising higher and degree apprenticeships is to understand what your organisation needs to thrive and perform at a higher level. What skills shortages and gaps are negatively affecting your business? What skills do you need to drive organisational performance and productivity? By building a strategic view of future skills needs, through close L&D and business collaboration, you’ll be in a stronger position to identify and map your apprenticeship needs accordingly.

4. Pilot an apprenticeship programme in your organisation

While many employers recognise that work-based learning can help develop a highly skilled workforce, some are put off by the organisational change needed to make large-scale commitments to implementing new programmes. Running a pilot provides employers with the opportunity to trial all of the aspects of workplace training, while assessing the business impacts and return on investment in a manageable way.

5. Use apprenticeships to develop existing staff

There’s a common misconception that apprenticeships are only for new, entry-level recruits. However, the new higher and degree level apprenticeships allow employers to help mid-career staff to realise a higher potential. Even if an employee has a qualification in a different discipline, they could still gain new skills through a higher or degree apprenticeship – it’s a great way to unlock the potential of your current staff.

Organisations need to put themselves in a stronger position to plug skills gaps and apprenticeships provide significant benefits to individual organisations, as well as a solution to many issues within the UK economy.

Now is the time to nurture existing talent by taking advantage of the apprenticeship levy – or else face being left behind, without the skills required to achieve your organisation’s future goals.

For more information and advice about apprenticeships visit

Author: Editorial Team

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