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Viewpoint: the apprenticeship levy, one year later

15 July 2018 by

The government initiative to fund three million apprentice places by 2020 has had a mixed response, but, as Jill Whittaker says, the funds are there for the taking and businesses are already seeing results

For some hospitality businesses, the perceived admin involved with the government's apprenticeship levy may have felt a little overwhelming. It's perhaps hardly surprising that, according to a report by the Open University, £1.3b of the cash paid into the fund is yet to be claimed.

But this figure is less dramatic than it first appears; with businesses having 24 months to use levy payments, they may just be taking time to understand the scheme first. This is our experience at HIT Training. In the hospitality sector, May 2017 saw apprenticeship starts at just 25% of the same month in 2016. But by the end of 2017, that figure had increased to 80% year on year. Far from writing a scheme off in its infancy, we need time to allow new complicated legislation to bed down.

As a reminder, the levy itself requires all companies with a pay bill of more than £3m to contribute 0.5% of their payroll costs to the scheme, which they then claim back for training. This amount is then topped up by 10% from the government. Businesses with pay bills below £3m don't pay into the fund but they still have access to government subsidies of 90% of the cost of the apprenticeship, with the employers co-paying the additional 10%.

A recent survey from People 1st showed nearly two-thirds of employers in the hospitality, travel, tourism and aviation sectors are either confident or very confident they will see a return on investment from their levy contribution. Better staff retention rates, improved skills and personal development have all been highlighted as benefits by nearly three-quarters (72%) of respondents.

Apprenticeships are excellent for upskilling staff while also recruiting and retaining top talent. The past few years have seen the introduction of new apprenticeship standards, making training even more relevant and rigorous, with the benefits to the business even more obvious. As expected, we are seeing apprentices lead on to successful, long-term careers in hospitality. Additionally, the numbers doing higher level apprenticeships has also increased. There is no doubt that those businesses that do their homework and choose the right apprenticeship provider are reaping the rewards.

May also saw a new evolution to the levy, which enabled large employers to transfer 10% of payments to others registered on the apprenticeship service. Levy-paying employers can work with others to increase the skills base in their supply chain or sector – helping to professionalise the industry as a whole.

Recent research found that 70% of apprentices stay with their employer after completing their qualification – even more important as we head towards Brexit. Additionally, 92% of businesses said having an apprenticeship programme has led to a more motivated and satisfied team.

As the levy moves into its second year we encourage businesses to utilise and maximise their payments. There's no doubt apprenticeships are the go-to solution for employers looking to attract, retain and develop talent, from new starters right through to senior level employees.

Jill Whittaker is managing director at HIT Training

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Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.

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