Guest blog by Roxanne Stockwell, Principal, Pearson College London
You may have missed it, but today the Government will implement the biggest shake up of workplace training and funding for a generation through the introduction of the apprenticeship levy.
The idea behind the Levy is very simple. The Government is committed to recruiting 3 million apprentices by 2020 and is introducing the Levy to both fund this reform and, crucially, encourage businesses to participate. It estimates that it will raise £2.5 billion from the Levy by 2019-20 – double the amount spent in 2010-11.
So far so good. But reception to the Levy from the sector and various commentators has so far been luke-warm. Last week a joint report by MPs from the House of Commons education and business select committees concluded that the Government’s Levy plans lack focus and target the wrong industries. Meanwhile, the IPPR think tank believes that it will worsen the north-south divide.
I have been working with many businesses, large and small, for over a year to develop a response to the Levy and I have to say that I disagree with these fears.
It is clear to me that the Levy represents the most promising opportunity that employers have had for a generation to reshape education around their own business needs. Given the current skills shortages in some of the UK’s most strategically important sectors, this is something that is sorely needed. The Government has recognised this through its Industrial Strategy. Our Pearson research, run in partnership with the CBI last year, found that 41% of employers are not satisfied with their graduates’ levels of business and customer awareness. With the introduction of the Apprenticeship Levy, they have a real opportunity to correct this problem and design a programme of work-based training in partnership with education providers like universities and further education colleges.
However, if we are to make the most of the opportunities that the Apprenticeship Levy present, businesses need to plan now.
The first thing to understand is how the scheme will work in practice. From 6 April all companies with a payroll of £3 million or over will need to contribute towards the Levy. Employers can use HMRC’s PAYE tools to work out how much they need to pay and then divide this figure by 12 to calculate their monthly bill. In the past the majority of apprenticeships have been offered in SMEs and they will also get increased support from April 6. However, the Levy should also encourage larger businesses to expand their apprenticeship numbers.
The second thing to understand is the commitment involved in hiring apprentices. Developing the talent of the future is an investment, both in terms of time and money, but the dividends are great. Offering an apprenticeship means that you are providing young people with training directly relevant to your industry and your workplace. Additionally, the time they spend in the classroom each week boosts their analytical skills and knowledge that enhances the practical learning that they receive on the job. Degree apprenticeships are particularly useful in this respect as they provide instant access the best combination of on-the-job training alongside the academic rigour of a degree.
Degree apprenticeships can help keep businesses up-to-date with the latest commercial practices and consumer trends, and also up-skill existing staff and help boost employee retention. In time, this will mean that we train up the business-savvy graduates needed to help UK Plc thrive.
Degree apprenticeships can be especially useful to attract new hires. They are an incredibly enticing proposition for young people, and we have found we can get hundreds of applications giving employers a fantastic choice of high calibre applicants for jobs. Many young people are thinking more carefully about whether they would prefer to be fully immersed in academic study or whether they are better suited to studying a degree whilst getting hands-on experience, including those with excellent grades. 37% of SME employers believe that apprentices make the most productive new hires and it is clear that businesses interested in accessing, attracting and retaining the best talent need to consider the value that a degree apprentice could bring to their organisation.
Businesses have a lot to consider to meet the Levy commitments. But despite some concerns there is a genuine opportunity here. With proper planning and an open mind the introduction of the Levy could be the most effective boost to the reform of work-place learning in our lifetimes so I urge all businesses, large or small, to seize the day and make a success of it for their own business.
Roxanne Stockwell is Principal of Pearson College London, the first higher education provider founded by a FTSE 100 company.