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Ignorance, apathy, inconvenience – why the disappointing take up of the apprenticeship levy?


Michelle Elliot


24th July 2018


Apprenticeships are not a new phenomenon. In fact they’ve actually been around in various forms since the 12th century. So, are ignorance, apathy or inconvenience possible reasons for the disappointing take up of the apprenticeship levy?

The benefits of apprenticeship programmes to both the employer and the apprentice are widely publicised and include access to skilled workers, greater retention of staff, provision of a different kind of more practical learning, and a valuable return on investment for the employer across both private and public sectors.

The Government made substantial funding changes to apprenticeship programmes in the UK in April 2017. These aimed to encourage greater take up. Since then, funding has been via a new corporate hypothecated tax called the ‘Apprenticeship Levy’ (the Levy).

As a result of the Levy, all UK companies are in line to pay an additional 0.5 percent tax on top of their payroll fees. However, an introduction of an off-set allowance of 15,000 meant that only employers with a wage bill above 3m per year (or to be precise, 250,000 in any one month) will actually make payment.

Employers calculate the amount of Levy to be paid, based upon the previous month’s payroll bill and then declare it to HMRC who collect it via the monthly payroll process (PAYE) whereupon it is paid into the Apprenticeship Levy, at which point it becomes ‘public money’.

In the first year of operation, approximately 50,000 organisations paid a total of £1.39 billion into the fund. However, organisations only withdrew eight per cent of it, which in monetary terms equates to £108 million. Worryingly for those paying the Levy, time is running out. Funds generated by the Levy are available on a ‘use it or lose it’ basis. There is a two year deadline on each monthly payment.

Could it be ignorance?

So is ignorance about the Levy, or the complexity about drawing down the money, proving to be a stumbling block? At UCQ we are supporting the Government’s efforts by encouraging companies and organisations to use the Levy before it’s too late to access the first year’s funds. By working closely with employers wishing to offer our recently launched the Chartered Manager Degree Apprenticeship (CMDA) to their employees, we can help them access the funds and discuss how they can use the money to their benefit by upskilling their workforce.

Although there has been talk about it being difficult to draw down the funds, navigating through the process is straightforward. In simple terms, employers wishing to use their Levy payments to fund approved apprenticeship programmes need to set up an “apprenticeship service account”. Someone within the payroll department using the employer’s Government Gateway account normally does this; the Government will then top up any funds paid into the account by 10 percent.

So is it apathy?

This could well be the case as there has been a distinct lack of investment by UK companies in the development and training of managers, leading to us falling behind all the other G7 nations in terms of productivity. Only 20 percent of British managers have a formal qualification in management. Employers really do need to address the situation quickly to compete in the future, especially after Brexit.

Following years of development by the Trailblazer groups, some employers are still unaware of degree apprenticeships, launched in 2015. One of the earliest approved degree apprenticeships was the Chartered Manager Degree Apprenticeship (CMDA), offered by UCQ, which includes a full UK management honours degree and Chartered Manager status.

Crucial to the success of the new degree apprenticeships, is the response and commitment of learners and employers. This is to ensure academic integrity and quality assurance. With Levy funding, together with a management degree programme designed to suit the business, there’s no reason for apathy.

Perhaps it’s inconvenience?

I can understand why some companies may be reluctant to send an employee on a traditional management degree course. Typically they cause a lot of disruption in the workplace while they are studying. We therefore knew UCQ had to be innovative and move away from the schedules of more established programmes. By drawing on our own previous employer experience, we designed a work-based programme that suits the business. Providing far greater flexibility ensures this.

Attending courses has to be convenient; having six city centre-based regional offices in England’s major cities certainly makes it easier for students to attend UCQAlternatively, subject to numbers, we can hold sessions at the employees’ offices.

To minimise disruption further, students can participate in live webinars or mix and match according to work commitments. In addition, each one will have a mentor working alongside them and their employer for the duration of the course. This ensures the arrangement of the most suitable programme for both parties.

Time to act, there is no more time for ignorance, apathy or inconvenience.

At UCQ, we believe it’s important for employers to actively explore how they can maximise the return on the money they are paying into the Levy by considering the different apprenticeship programmes. They can provide business improvements; upskill the workforce; and deliver social mobility by providing a solution to staff who may not have followed a traditional academic route, but excel at contextualised work-based and experiential learning.

The CMDA programme provides all of this by enabling managers to become fully qualified to degree level and, as such, increase both their and the company’s effectiveness and productivity. With Brexit fast approaching and under a year to use the initial Levy monies, the clock is ticking.

Ignorance, apathy or inconvenience, a featured in the HR Director: www.thehrdirector.com/features/apprenticeships/apprenticeship-levy/