The Apprenticeship Levy, designed to increase investment in training, was launched in April 2017 for companies with a wage bill of over £3 million but has had mixed reactions from employers.
Businesses have reported not being fully aware of how the new reforms would affect them and how apprenticeships would fit into their organisations’ strategy. Some saw the levy as a ‘payroll tax’ – an additional burden on their business which wouldn’t deliver significant benefits.
This uncertainty still remains months later. Research shows among employers based in England, 25% of senior managers said that they currently have no plans to use the levy.
But with 0.5 per cent of many employers’ wage bill going into a levy pot to pay for work-based training for staff living in England, the pressure is on for organisations to see the benefits and use these funds effectively, giving financial directors a more decisive role in staff training than ever before.
It is believed the most switched-on organisations will see the levy not as a tax, but as an investment understanding improving skills and productivity leads to a boost in the bottom line.
While line managers or department heads tend to make decisions about the training required by individuals and HR leaders look at the skills required across an organisation, bills like the apprenticeship levy mean there is also pressure on financial directors to ensure funding is being used appropriately. To do this many organisations must take a closer look at training. Training schemes may be formalised – and the output of training and development measures analysed more closely.
Better training leads to motivated and highly skilled employees who are engaged with and loyal to an organisation. By investing in training and development, the return on investment of the levy will be seen in more productive and efficient staff.
Understanding the benefits
For many employers, reclaiming the value of the apprenticeship levy will be what incentivises them to invest more in apprenticeship training. For this ambition to be realised, it’s vital that they come to understand and value the link between training and the bottom line and select a provider that will help them gain the biggest return on investment.
One of the key ways that the levy will make a significant difference to organisations is in addressing a stubborn UK skills gap, which hinders productivity. Finding skilled workers is a perennial problem for many employers and the need for investment in skills development may become more pressing for a UK that is outside of the EU. The apprenticeship levy will help develop new and existing workers, making an immediate impact in the workplace. These workers will have hands-on experience and the right skills to positively influence an organisation’s productivity and performance.
The introduction of degree and higher apprenticeships can play a particular role here for many organisations and large companies. The diverse nature of the learning content within a degree apprenticeship means that employees who sign up for them will harness skills suitable for the changing world of work. Rather than encouraging the development of narrow skillsets, degree apprenticeships encourage the development of a more agile mindset – adaptable and useful in an unpredictable employment market.
If you have any questions on the Apprenticehip Levy please contact HMRC here.