How the levy can address employers’ skills ‘blind spot’

12th August 2016 at 01:00
Instead of being a threat, the scheme offers firms an opportunity for government co-investment in training

The apprenticeship levy, announced in 2015 with cross-party support, has been hailed as a flagship reform that will boost skills in the UK economy. Education providers have a vital role to play in dealing with employers’ concerns. Government clarification on how the levy will work is finally expected to be published today, ahead of its implementation in April 2017.

Fears among employers have been growing, as evidenced by CBI research published last month (bit.ly/CBIresearch). It is important that businesses fully understand the value of flexible work-based learning routes for higher-level and professional skills.

Boosting higher-level skills

The chorus of grumbles from boardrooms about a “tax on jobs” is rightly countered by those who argue that the levy will redress a historical underinvestment in higher-level and professional skills development across business. Employers should recognise that, rather than being a threat, the levy represents an opportunity for far greater government co-investment in higher-level skills.

The levy is a welcome opportunity for employers to upskill their existing workforce and attract the talent they need to succeed. The CBI’s latest survey reveals that 69 per cent of businesses are struggling to recruit the right staff and that this situation is likely to be exacerbated by the impact of Brexit. Recent research by the Chartered Management Institute (CMI) shows that employers are finding it even harder to recruit managers with the right skills. Poor access to high-level skills will clearly hold back the UK’s competitiveness.

New generation of professionals

The new suite of Trailblazer management apprenticeships is a good example of how employers can benefit from both current and future apprenticeship funding schemes.

In the past 10 months, we have seen the launch of the Chartered Management Degree Apprenticeship (CMDA), and new level 3 and level 5 management apprenticeships. The schemes are already being incorporated by employers, as part of their management-development programmes, providing a progression route for managers at all levels.

The management apprenticeships were developed by a group of 40 employers led by Serco and Civil Service Learning, and supported by the CMI. They provide professional qualifications for team leader and operations manager roles, with CMDA leading apprentices to chartered-manager status. These programmes equip apprentices with a broad range of practical skills, which they can start applying in the workplace to deliver results as they learn.

Benefits for business

Attracting and developing talent is crucial to long-term business success, but training for managers is overlooked in many organisations. The levy tackles a blind spot in that 71 per cent of firms admit that they fail to offer management training to first-time managers. This is a huge mistake given that an estimated £19 billion is lost in the UK each year as a result of bad management.

As CBI deputy director general Josh Hardie rightly says: “The UK must carve out a new economic future and this is an area where we must take action to support our competitiveness and prosperity.” The levy addresses this by stimulating investment in higher-level skills, including the next generation of managers.

The benefits of apprenticeships and degree apprenticeships are not just for large firms. By setting the apprenticeship levy at 0.5 per cent of an employer’s wage bill, with a £15,000 allowance to offset the cost, smaller companies (with payrolls below £3 million) will pay nothing. Large employers, meanwhile, will be able to recoup their levy payments by employing apprentices and benefiting from a 10 per cent top-up from the government, which has committed to spending twice as much per place on apprentices than when it came into office.

Immediate action

The levy is not an employer tax. All funds can be reinvested into an organisation’s own workforce and in many cases can be aligned to existing talent-development schemes.

Clarity is required but this does not mean employers should stall decisions to invest in their staff. The current funding regime for Trailblazers is very attractive, with plenty of money in the pot up for grabs. There are probably some further sweeteners on the horizon to help maintain employer investment in training during post-Brexit economic uncertainty. Education providers must allay employers’ concerns about starting these new apprenticeships and help them to take advantage of funding to tackle their skill gaps.

Petra Wilton is director of strategy at the Chartered Management Institute

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