Tribal Group Blog

Tribal Group Blog

Time to decide - what is the levy strategy for your business?

Posted by James Hill on November 9, 2016

2017 will be a turning point for employers, employees and apprenticeships as a whole.

By now I expect every employer understands what the apprenticeship levy is and, financially, how this will affect their business. Despite this, with only 6 months until the levy comes into effect, many organisations still have no clear strategy for embracing the levy and utilising their levy funds.

A CIPD report into apprenticeships [Apprenticeships that work – a guide for employers, October 2014] provided some key insights into the impact an apprentice can have on a business:

- 96% of employers who take on an apprentice report benefits to their business
- 81% of consumers favour using a company which takes on apprentices
- 88% of employers believe hiring apprentices increased employee satisfaction and engagement
- 75% of employers reported that their apprenticeship programme helped cut recruitment costs
- 80% of employers believe that apprenticeships will play a greater role in their future recruitment policy resulting in lower staff turnover, fewer skills-related vacancies and reduced recruitment costs.

However, despite these statistics it is clear that the impending apprenticeship reforms will deliver the most significant change to employer talent development strategy. Employers are now faced with a challenging decision. Do they do nothing and treat the levy as a sunk cost or new business tax? Do they engage one or more training providers to deliver accredited training to their employees? Or do they explore the option of becoming an employer-provider, drawing down SFA funding to deliver apprenticeship programmes themselves?

The apprenticeship levy: how will employers respond? (DfE,October 2016) highlighted the uncertainty of employers:

‘Employers expressed a degree of uncertainty about how the levy was to be introduced and what types of training could potentially fall under the ambit of apprenticeships. Many employers tended to see apprenticeships, at least initially, in terms of the training it had delivered to them in the past. They did not, at first, see apprenticeships as a form of training that could, with more standards coming on stream, meet the skill needs of a much wider range of jobs, at differing levels of seniority, than in the past.’

The findings of the research paper support the assertion that employers will react in one of three ways:
1) Business as usual
2) Use the levy to increase apprenticeship training within the business
3) Write off the levy payment as a business tax

The report went on to classify the impact that apprenticeship reform may have on a business:

a neutral impact where the introduction of the levy will have no impact on apprentice volumes. This was observed in relation to the traditional trades in the engineering and construction sectors where apprenticeship is the common means of acquiring the skills necessary to work in craft jobs;

quantitative additionality where the levy will bring about a higher number of apprenticeship starts because the levy has accelerated the speed at which apprenticeship training is undertaken in the workplace (such as using apprenticeships to meet new occupational training needs);

qualitative additionality where training unaccredited training – sometimes allied to management and leadership training - falls under the ambit of apprenticeships in the future as firms look at different ways of ensuring they fully reclaim their levy payment.

Through our work supporting training providers and employer-providers across the UK, we have seen first-hand some of the challenges being faced and how organisations are responding to the wider apprenticeship reforms. In recent months I have spoken to a number of employers who have been asking for advice and guidance concerning the impending changes and how they can go about analysing their business needs to make an informed decision.

Undoubtedly government, training provider and other stakeholder websites provide a wide variety of information and resources, but these disparate materials are not helping employers to find specific, tailored advice and guidance based on their business needs.

Following these numerous requests for support we have developed our Talent Development Pathway.

The Talent Development Pathway has been designed to support organisations by providing expert advice and guidance. The first stage is the ‘L&D healthcheck’, which will provide employers with the specific analysis they require in order to understand the options available to them. The pathway has been designed in collaboration with HR Directors to help employers not just make a decision but make the correct, informed decision.

Following the L&D healthcheck, Tribal will provide a report outlining the options and make a recommendation on the most suitable route to take. We can provide best practice advice and guidance, whether your organisation chooses to engage with training providers or decides to become an employer-provider. If you need to become an intelligent customer, or need to develop an effective operating model, our team of experts can help you at every step.

The apprenticeship reforms are presenting employers with an opportunity to engage with apprenticeships and make this type of training a viable and valuable part of their L&D and talent strategy. The transition from traditional frameworks to employer-led standards have enabled employers to devise the learning they want their employees to undertake so that they can make an immediate difference in their organisations. These really are apprenticeships for the 21st century and we would encourage all employers to embrace these changes.

Click here to find out more about the Talent Development Pathway

For more information on how Tribal can support your organisation through the apprenticeship reforms or for an informal chat please contact James Hill, Strategic Partnerships Manager – / 07795 478 888

Topics: Skills, Training and Employability

Picture of James Hill

Written by James Hill

James is a Strategic Partnerships Manager with a wealth of experience in the work-based learning and skills sector, focusing on supporting providers and employers in delivering high quality apprenticeship and traineeship programmes.