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How well is the apprenticeship levy working for businesses?

PUBLISHED: 08:42 07 March 2018 | UPDATED: 08:42 07 March 2018

A City College Norwich engineering apprentice. Picture: Keith Whitmore

A City College Norwich engineering apprentice. Picture: Keith Whitmore

Copyright © Keith Whitmore

National Apprenticeships Week has brought a renewed focus on the apprenticeship levy – but is it having the intended impact on the skills of the region’s workforce?

Flagship Group apprentices Matt Levesley, 18, and Ellie Colk, 19, both from Norwich. Picture: Flagship Group.Flagship Group apprentices Matt Levesley, 18, and Ellie Colk, 19, both from Norwich. Picture: Flagship Group.

The introduction of the apprenticeship levy in April last year was meant to support an additional three million apprentices by 2020.

However, nearly 12 months on from the legislation coming into force there has been a fall in course starts.

The first quarter of the 2017/18 academic year, August to October, saw the number of apprenticeship starts drop to 114,000 from 155,600 during the same period the year before.

The Department for Education has recognised the levy and other changes to apprenticeships were likely to impact on the number of starts. Companies paying the levy have two years to spend the money, meaning some may be biding their time before using it.

RG Carter bricklayer Billy Bales who graduated from the Carter Academy in 2017 and is now employed by the company. Pciture: MJ Wase.RG Carter bricklayer Billy Bales who graduated from the Carter Academy in 2017 and is now employed by the company. Pciture: MJ Wase.

The fall has sparked concerns from organisations including the Institute of Directors, manufacturers’ group EEF and the Federation of Master Builders, who say that while the levy may be admirable in principle, its execution is flawed.

Since April 6 2017, an employer with an annual wage bill over £3m is required to pay 0.5% of it into a pot which can then be used to pay apprenticeship providers. Smaller businesses, which don’t pay the levy, can access funds and now only have to pay 10% of the fees for apprenticeships.

While some larger companies have viewed the levy as an additional tax, many have embraced it as a chance to redefine what constitutes an apprenticeship, using the money for training programmes at all levels of their business.

Norse Group employs some 9,650 people, with 6,000 of those in Norfolk, and pays more than £500,000 a year into the apprenticeship levy.

Neill Ovenden of DJB Instruments in Mildenhall. Picture: Phil Morley.Neill Ovenden of DJB Instruments in Mildenhall. Picture: Phil Morley.

Chris Nichols, head of learning and organisational development, said the business had decided to put the money to good use, at entry and management level, by becoming a provider itself.

“The levy is quite a considerable sum for us so we had to utilise it,” she said.

“What it has done is given us the opportunity to take on new apprentices but also upskill existing people.

“We always had management development programmes but now we have been able to fit those within the structure set out by the levy rules.”

The programmes have begun to be rolled out across the country, with 70 workers currently enrolled and a further 15 starting next month, and Norse is working with joint venture partners, including local authorities, on the possibility of training their staff.

For smaller businesses the levy can be seen as a win-win, with a greatly reduced cost for apprentices – though they still have to pay wages, travel and licence costs.

Richard Bridgman, founder of Warren Services and member of the New Anglia Local Enterprise Partnership skills training board, said the changes had meant his business was now able to invest in higher level apprenticeships, which he believes could be important in filling the current skills shortage.

He said: “We are a non-levy payer meaning we only pay 10% of the cost of the apprenticeship.

“This means with higher level apprenticeships, which can cost £6,000, we only pay £600, making it more within the realms of our capability to fund.

“Before I couldn’t really afford to spend £6,000 training someone who might leave as soon as the apprenticeship was done.”

Thetford-based Warren Services has been working with West Suffolk College and Mr Bridgman said although there had been a UK-wide decline of 41% in apprenticeship starts for the six months after the levy was introduced the college had seen a 12% increase.

A similar picture has been reported by City College Norwich (CCN) where there was a 14.3% rise in starts between March and October 2017, compared to the same period the year before under the old rules.

Head of employer responsive delivery Ed Rose said the public sector had been quick on the uptake with the apprenticeship levy while some parts of the private sector had been slower to adapt.

“We have seen some employers use it quite well and others treat it more like a tax,” he said.

“We haven’t seen a massive change with either payers or non-payers but we have tended to see payers come in for higher level programmes.”

One requirement of the new rules is for apprentices to spend 20% of time learning “off the job” which Mr Rose and Ms Nichols had said had proved difficult in cases, for example when senior managers were involved, and that more flexibility would be beneficial.

It is not just businesses which have been paying more attention to apprenticeships since the levy, with the increased focus leading to greater interest. .

Nadine Tapp, Flagship Group learning and development manager, said: “We have more of a focus on apprenticeship programmes, the quality and the end results of them, but we have also seen an increase in speculative inquiries and applications for them.”

She said the levy was encouraging promotion from within and helping succession planning within businesses.

“It can help bridge the gap from operational to strategy and enable that learning to take place,” she said. “I hope in the future we will have people who do their 3rd, 4th, 5th and 6th levels with us and go right through.”

Mrs Tapp added: “This is the biggest reform apprenticeships have had and now it is important to ensure everybody has the right amount of information.”

Degree-level course for future leaders

Flagship Group is among the companies looking at different forms of apprenticeship, and has teamed up with the University of Salford to bring through its next generation of leaders.

The housing association and the university have created a degree-level apprenticeship in housing policy and practice.

Flagship Group already has the first two candidates on its Bright Futures Programme which aims to give management training across the housing sector and is now recruiting for two more.

Matt Levesley, 18, and Ellie Colk, 19, both from Norwich, started the scheme last summer and will complete it in 2020.

Miss Colk said: “This particular apprenticeship really appealed to me as it looked different to many of the others which focus a lot on admin. Already we’ve been involved in lots of projects.

“It’s a great opportunity to learn valuable skills such as social and IT skills which you can apply anywhere.”

Competition for the next generation in construction

While apprenticeships now extend well beyond traditional trades, a well-established competition is today seeking the best youngsters in the region’s construction industry.

The Norfolk and Waveney Building Apprentices’ competition takes place at the Norfolk Skills and Careers Festival, and will be hosted by construction firm R G Carter.

The winner will claim the Carter Cup, named after the tournament’s founder, the late R E Carter.

The company offers a range of opportunities for craft apprentices and trainee construction managers through its Carter Academy, which is recruiting a further 40 apprentices in September.

Chairman Robert Carter said: “As a company, we are very proud of our long history in delivering high-quality training and apprenticeships, and are dedicated to inspiring the next generation of construction and engineering professionals.”

‘Youth not ready for work’

The apprenticeship levy isn’t the only complication when taking on new recruits.

So says the boss of an engineering firm who has given up on offering apprenticeships, citing an “appalling” work ethic among young trainees.

Neill Ovenden, managing director of DJB Instruments in Mildenhall, said he had taken on apprentices at various times over the last five years, but had thrown in the towel after “bad experiences”.

“We have fundamentally given up on it because we have found the youth of today just aren’t ready for work,” he said. “Unfortunately it’s something we have moved away from.”

The firm, which specialises in vibration sensors and sensing technology, has a workforce of 24 when at full strength, but struggles to find suitable workers, he said.

“We are basically just taking on people who are beyond the apprenticeship level,” he said. “I have had the same conversations with lots of other businesses.”

It was a “great shame”, he added.

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