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The apprenticeship levy: Don’t get left behind

Posted on by from Open University

How can you use the apprenticeship levy to develop your organisation?

According to a 2016 report by the UK Commission for Employment and Skills, organisations are facing a major skills shortage and it’s not only the big industrial sectors that are struggling. While part of the skills gap is a shortage of people skilled in STEM (science, technology, engineering, maths) areas, management and soft skills are also lacking, and these affect every employer, whatever their size or field.

Employers need to think to the future and make sure they’re developing higher skills in the workplace, and this is where the apprenticeship levy, and the introduction of new degree apprenticeships, comes in.    

From 6 April 2017, UK organisations with an annual pay bill of over £3 million will have to spend 0.5% of their pay bill on the levy. It’s easy to get caught up in the cost and the effect of the levy on the bottom line – but, if used correctly, the opportunities it offers employers far outweigh the cost. 

Contributions are designed to be recouped through your organisation’s ‘levy pot’ to train apprentices and boost skills. If you haven’t yet considered how your organisation could use its levy pot, now is the time. If you wait too long, you risk losing access to some of the funds and missing out on a vital opportunity to bring higher skills into your business. 

So how can you best take advantage of the levy?

1. Align apprenticeships with business strategy

It’s important to think about what you want your organisation to look like in the future, and the jobs that you want your people to be doing. You could use apprenticeships to develop your existing employees or bring in (and train) new people to provide the skills you’ll need. Taking a strategic view of your future needs will enable you to identify your apprenticeship needs, including the standards needed to drive your business forward.

2. Conduct a skills audit

A skills audit should provide a clear view of the skills held by your employees and the specific skills you will need in the future. You will then be able to make informed decisions on where to create apprenticeship opportunities in your organisation.


3. Take an integrated approach

Think about how apprenticeships could align with your existing training programmes, as you may be able to turn them into, or replace them with, funded apprenticeship programmes. To do this, review your current programmes, map them to apprenticeships standards, and consider any other additional learning that might be required. Some apprenticeship providers will be able to do this for you.


4. Choose the right provider

Diligence when choosing an apprenticeship provider will pay dividends. Ask a broad range of questions to assess if they can really meet your needs. Do they have a proven track record? Can they help with attraction, selection and recruitment? Will their delivery methodology fit with your organisation’s requirements? Can they offer a wide range of standards to meet your needs? All these are important considerations.

5. Communicate with your employees

The arrival of apprenticeship programmes will impact on your employees. It will mean a massive cultural shift, and engaging, supporting and motivating staff is important for introducing apprenticeships effectively. Consider your internal communications strategy: how will you get staff on board, and how will you promote apprenticeships to staff?

Taking advantage of the levy with degree apprenticeships isn’t just about recouping funds, it also comes with attractive benefits for organisations, such as accessing higher skills, improving staff engagement and retention, and enabling organisations to recruit from a wider, more diverse talent pool. All of which lead to improved productivity and performance.

Identifying potential and investing in work-based training makes staff feel valued, which increases motivation, job satisfaction and also creates a sense of loyalty towards the employer. In addition, the three to four years of training around a degree apprenticeship, ensure lower staff turnover and, therefore, recruitment costs. 

Offering degree apprenticeships puts employers ahead of their competitors in terms of attracting new talent. With the cost of a traditional degree now set at £27,000, funded workplace training becomes more appealing. Workers can learn while they earn, gaining vital work experience and a degree at the same time. 

Taking this all into account, it’s clear that apprenticeships provide significant benefits to individual organisations, as well as a solution to many issues within the UK economy. 

Organisations need to put themselves in a stronger position to plug skills gaps. Now is the time to nurture existing talent by taking advantage of the apprenticeship levy - or else face being left behind, without the skills required to achieve your organisation’s future goals.

For more information on how to make degree apprenticeships part of your skills gap solution, download ‘Maximising apprenticeships for improved performance and results’, a free guide for employers produced by The Open University and KPMG.

David Willett

By David Willett

David is the head of propositions at The Open University,

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