The Apprenticeship Levy

A catalyst for change in workplace learning

An apprenticeship levy comes into force in April 2017 that will have significant financial implications for most businesses so it makes sense to prepare early.

So what is it?

The Levy is effectively a tax to fund and facilitate increased numbers of apprenticeships in the UK.

It will apply to all UK employees in all industries.

Everyone will receive an offset allowance of £15,000, meaning that only employers with an annual wage bill in excess of £3m will have to pay it. All remuneration relating to employment will be relevant so that includes salary, bonus, commission payments and pension contributions, but excludes benefits in kind. It will therefore impact a good proportion of UK organisations.

Employers who embrace apprenticeships will be able to claim back their contributions for the training of their apprentices. The money that large companies pay and don’t claim back for their own apprenticeships, will fund the apprenticeships for smaller companies

The implications are significant

For the UK’s biggest employers, the levy could run into millions of pounds so maximising the levy to make use of their contributions to support their own business is essential. This means considering apprenticeships as part of their talent strategy.

If you have responsibility for Talent and L&D budgets these are some of the questions you should be asking:

  • How will the levy impact your L&D budget?
  • How can you maximise the opportunities provided by the levy to support your business strategy and talent development?
  • Are apprenticeships in your talent strategy for 2017? Where and how can you introduce them?

What’s key to remember is that within this cost there are opportunities to use the levy, and the good news is that apprenticeships are evolving.

How Apprenticeships are changing

Previously, if someone had mentioned an apprenticeship you’d probably think of occupational training for a 16-19 year-old? Now, an apprenticeship should be regarded as a job with training to gain a recognised qualification, applicable to every age group.

  • New style apprenticeships are being created for young and more experienced workers, from entry level qualifications to management and leadership.
  • They can apply to new employees and/or existing employees who want to gain additional qualifications and extra skills to support their career path.
  • More higher-end degree apprenticeships are being created for higher level skills development, enabling the ‘apprentice’ to achieve a degree or even a masters on completion.

What the previous and new apprenticeship schemes have in common is that learning is achieved primarily in the workplace supported by a minimum of 20% off the job training. This could be developmental workshops, master-classes, coaching and mentoring, peer-to-peer learning sessions or projects contextualised to the workplace. So 20% work-based learning supporting 80% workplace learning.

Work-based learning

Work based learning, with the right frameworks and organisational support in place, has proved a very successful form of development. Effective work based learning requires collaboration across business functions and peers and provides personal and meaningful context to the content other learning methods deliver. It also has the potential to create a learning environment in the workplace and supports a culture of continued professional development within an organisation.

The 70-20-10 model is well understood if not uniformly implemented, by most organisations. The apprenticeship format of 80-20 is similar. The principles and methods are the same, albeit the ‘work based’ experiential learning is formalised and delivered to an apprenticeship standard.

A system will also be needed to demonstrate that the learning has happened but the formal process of logging work-based experiential learning may well be a good discipline for many L&D organisations to adapt, plus bring tangible benefits, such as demonstrating return on investment and engagement with learning.

The future of organisational learning

A recent group chat on LinkedIn about the future of learning triggered many comments on digital learning, gamification, knowledge management, employee engagement, collaborative learning, virtual reality and other trends in learning techniques.

The levy is not a trend, it’s coming soon and is likely to be a game changer not just for the future of learning but also for talent management strategies, employee engagement and work based learning.  

Are you ready for it? We’d love to hear your thoughts in the comment box below.

Louise Sutton is an L&D Consultant, Executive & Performance Coach