The Training Provider for Businesses
The apprenticeship levy - an untapped opportunity? Why up to two thirds of businesses could be missing out on a key opportunity to boost the skills of their workforce.
Apprenticeship Levy Research Report 2017
Evolve Learning Group is part of
2 | Apprenticeship Le v y Resear ch Report • 2017
Contents Introduction 3 Missing a trick 5 Mind the gap 7 The training landscape 9 Why apprenticeships? 11 Call for clarity 13 Barriers to engagement 15 Fresh opportunities 17 Partners in quality 19 The levy effect 21 Conclusion 23
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Introduction UK plc is in the midst of a skills shortage, with employers competing for the talent they need to build the next generation of managers, designers and technicians. To plug the gap, the government has committed to creating three million new apprenticeships by 2020, and the apprenticeship levy is at the heart of this initiative.
To explore why so many businesses are missing out on the opportunity to harness new skills, Evolve Learning Group Ltd and West London College commissioned Opinion Matters to carry out research among decisionmakers in over a thousand employers to get their views
However, new research suggests that millions of pounds of apprenticeship levy money aimed at improving the skills of existing staff and bringing new employees on board could be going unclaimed.
The government has committed to creating
3million
new apprenticeships by 2020
4 | Apprenticeship Le v y Resear ch Report • 2017
Missing a trick Since April 2017, employers with a wage bill of more than ÂŁ3 million have been required to pay the apprenticeship levy. Employers are encouraged to tap in to this new opportunity to develop the skills of their workforce so they can compete in a dynamic global economy. However, only one in three (32%) of employers who reported that they qualify for the levy are taking advantage of it to train new and existing staff. In London, this figure is as low as one in six (16%). At a time when employers are finding it difficult to recruit individuals with the key skills for their business, the apprenticeship levy could represent a missed opportunity for many.
But why are employers not grasping the opportunity to develop their skills base? How much do they know about apprenticeship reform? And where do apprenticeships fit into the future of their organisations? We conducted a survey of 1005 employers with more than 150 employees during the summer of 2017. In the course of the research, we spoke to business decision-makers with responsibility for staff training and recruitment. This report outlines the main findings of the research.
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Only 1 in 3
employers take advantage of the levy
1
2
3
6 | Apprenticeship Le v y Resear ch Report • 2017
Mind the gap The skills gap has been a hot topic in recent years, and with the uncertainty surrounding Brexit and the accelerating pace of innovation in technology, the question of how to address the UK’s shortage of skilled labour has filled many column inches.
But do employers really find it difficult to hire the right people? Nearly 90% of employers in our survey agree that they find it somewhat problematic to recruit individuals with the right skills for their organisation, while 21% say that it is extremely problematic. In London, where the skills gap has been reported to be widest, this figure rises to 38%. So how are employers currently developing the skills, knowledge and expertise they need to thrive?
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90%
of employers find it problematic to recruit individuals
8 | Apprenticeship Le v y Resear ch Report • 2017
The training landscape By far the most widely offered form of training is informal, or on-the-job training, with 83% of respondents providing this to their employees. 57% of employers offer mentoring programmes, while 55% give employees the opportunity to study towards a qualification.
Only 45% of the organisations surveyed offer formal apprenticeship programmes, although they are more likely to be offered in some regions than others with apprenticeship hotspots in: • Yorkshire and the Humber: 53% • West Midlands: 51% • East Midlands: 50%
Within your business, what types of training do you currently offer employees? Total
London
Base 1005
187
Informal/on the job training
83%
71%
Mentoring programmes
57%
46%
Study programmes with the opportunity to recieve a qualification
55%
61%
Offsite training with private training providers
50%
49%
Formal apprenticeship programmes
45%
45%
Other please specify
2%
1%
No training is offered
0%
-
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83%
of employers offer on-the-job training
10 | Apprenticeship Le v y Resear ch Report • 2017
Why apprenticeships? What are the benefits for employers that offer apprenticeships? And what impact do these schemes have on the business’ skills base?
Apprenticeships also help employers keep their skilled personnel, with nearly half (48%) saying they improve staff retention.
Two thirds of employers (61%) which currently offer apprenticeships believe that they are a cost-effective way of hiring new staff. And nearly three in five (56%) feel that apprenticeships offer training for new and existing staff that delivers the exact skills a business needs.
“I fully expect part of the return on investment for us will be that our people will stay in the organisation for longer, become more engaged and drive better quality back into the business.” Stuart Rowberry, resourcing & development business partner, OSC Group (UK) Ltd, a major international facilities management services provider, employing 26,000 people in the UK.
“We are hoping that we will get a flow of young people with real potential coming into the business, and the levy enables us to include extra courses and add-ons in our programmes if we feel anything is missing.” HR manager for large UK business employing 75 apprentices.
What do you feel an apprenticeship programme offers employers? Total Base 1005 A cost effective way of hiring new staff
61%
Training for new and existing staff that delivers the exact skills a business needs
56%
Improved staff retention
48%
Access to a wider range of candidates to choose from
43%
Improved career mobility for staff
35%
I don’t feel an apprenticeship programme offers employers anything
5%
Other, please specify
1%
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48%
of employers say the levy impoves staff retention
12 | Apprenticeship Le v y Resear ch Report • 2017
Call for clarity However, there appears to be a lack of awareness of the apprenticeship levy and what it could mean for employers.
78% of employers in our survey agree or strongly agree that more needs to be done to increase understanding of the apprenticeship levy’s value.
Although nearly two in five (37%) of respondents state that they fully understand the apprenticeship levy and how it could benefit their business, over a third (35%) are still not sure how it could benefit them, even if they had heard of the levy.
“There appears to be a lot of confusion around the levy,” said the head of resources at a major transport company. “There should be more information out there that is clear and understandable, and the official websites could help here. When you visit the apprenticeship websites they are not always as engaging as they could be - you want people to be really inspired and excited by what they are seeing.”
Interestingly, 28% of respondents are still not aware of it at all. Building awareness is only part of the picture. Employers in our survey also identified a gap in understanding about the levy.
“People see the word apprenticeship and think ‘oh, it’s nothing to do with me’. They don’t realise they can use it to upskill current staff.” Said one London based employer with over 30 apprentices.
Four in five respondents (80%) agree that more needs to be done to engage businesses to use the levy.
“Having attended a number of presentations and roadshows on the subject of the levy, I have been surprised that even quite substantial businesses are asking very basic questions about it. Although some of the rules are quite complex, the government has published a lot of information.” Stuart Rowberry, resourcing & development business partner, OSC Group (UK) Ltd.
Are you aware of what the apprenticeship levy is? Total Base 1005 Yes, I fully understand what the apprenticeship levy is and how it could benefit my business 37% Yes, I have some awareness of it but I am not sure how it could benefit my business
34%
No, I am not aware of it
28%
Yes, other please specify
1%
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The levy
can be used to upskill current staff
I think more needs to be done to engage businesses in using apprenticeship levy funding
I think more needs to be done to increase understanding of the apprenticeship levy’s value
Strongly agree
30%
Agree
49%
Neither agree or disagree
14%
Disagree
3%
Strongly Disagree
1%
I don’t know
3%
Strongly agree
34%
Agree
44%
Neither agree or disagree
16%
Disagree
3%
Strongly Disagree
0%
I don’t know
3%
14 | Apprenticeship Le v y Resear ch Report • 2017
Barriers to engagement So why are businesses which qualify for the levy not using it? The main explanation from employers is that they do not have a formal apprenticeship programme or strategy in place. Something that applies to more than a quarter (29%) of respondents. Another barrier is the perception that the process may take up too much time. Nearly one in five, (18%) believe the application process to be too time consuming, and 12% are still unaware of how to access the levy.
But for businesses which are prepared to put in the legwork and research the levy, there are considerable gains to be made.
“There is no substitute for fully absorbing yourself in the apprenticeship levy process and developing that knowledge in the business. I took the time to gain firsthand knowledge of the rules, risks and opportunities, so that we could be in the position to move immediately as soon as the reforms took effect.� Stuart Rowberry, resourcing & development business partner, OSC Group (UK) Ltd.
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29%
of employers do not have a formal apprenticeship programme in place
16 | Apprenticeship Le v y Resear ch Report • 2017
Fresh opportunities Perhaps one reason that some businesses have been slow to embrace the apprenticeship levy is because they do not realise it can be used to upskill existing employees.
“I think apprenticeships still seem to be targeted towards new entrants, probably because a lot of organisations are quite naïve about apprenticeships and have not really grasped the idea that the levy can be used to upskill people as well.” Resourcing Manager of a UK logistics business. For some employers, upskilling their current personnel will be a key focus, certainly in the first few years of the levy.
“What the levy gives us is the opportunity to really invest in some training in an ongoing and structured way for succession planning. We have some excellent operators throughout the business, and their technical knowledge is spot on, but we want to use the levy to develop their management skills.” Stuart Rowberry, head of group resourcing, OCS Group.
“Training up people within our organisation is part of the company’s ethos. We aim to use the levy to train supervisors to become junior managers, and junior managers to become senior managers,” said a learning and development manager at one London employer.
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Opportunity to invest in ongoing training
18 | Apprenticeship Le v y Resear ch Report • 2017
Partners in quality Having decided to launch an apprenticeship programme, which type of organisation would a business choose to partner them? Nearly two thirds (65%) of employers would choose to run their programme via a further education college, and in London, that figure rises to 73%.
“Colleges are very flexible and they can adapt to what we need,” an apprenticeship programme manager from a large UK organisation told us. “The further education sector is very good at this. I would advise companies to do a skills audit of their organisation, see what their training needs are, then talk to the local colleges.”
34% of respondents would approach a private training provider.
“We have gone for a mix of colleges and private training providers as we wanted to focus on having the right organisation for each apprenticeship we offer. It’s important to build strategic partnerships so you can work together, and the providers can deliver what you need.” Stuart Rowberry, resourcing & development business partner, OSC Group (UK) Ltd. The key drivers behind the decision to work with a college or a training provider are the flexibility to deliver the exact training their business needs (57%), quality of teaching (56%) and professionalism (55%).
If you were to launch an apprenticeship programme in the next six months who would you partner with to deliver the training? Total
London
Base 1005
187
A further education college
83%
73%
A private business that provides training services (a private training provider)
57%
37%
I would not partner with anyone to deliver training
55%
12%
Other, please specify
50%
2%
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73%
of London employers would choose to run their programme via a Further Education College Please state the reasons for your choice(s) Total Base 852 Flexibility - they can deliver exactly the training my business needs
57%
Quality teaching and learning is of a better standard
55%
Professionalism - they are efficient and proactive
55%
Experience - they are more experienced
35%
Other
3%
20 | Apprenticeship Le v y Resear ch Report • 2017
The levy effect For companies which have embraced apprenticeships and are taking advantage of the apprenticeship levy, there is evidence of an uplift in candidate applications, new hires and staff retention.
The impact of the levy on the big picture is promising too, with nearly two in five (38%) of employers seeing an increase in the overall skills of their workforce and 53% in London. And the potential for success is definitely there. Three in five (60%) agree or strongly agree that the apprenticeship levy will do a lot to upskill Britain’s workforce.
Has the apprenticeship levy had an impact on an...
Nationwide
London only
...increase in candidates applying for vacancies
39%
63%
...increase in number of candidates hired
31%
49%
...increase in staff retention
30%
44%
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2 in 5
employers see increase in workforce skills
22 | Apprenticeship Le v y Resear ch Report • 2017
Conclusion There has never been a more important time for UK business to access a quality pool of skilled and motivated workers. To build the skills of their workforce, businesses face a two-fold challenge; finding new entrants with the potential to succeed, and developing the skills of their existing staff. As yet, employers have been slow to engage with the apprenticeship levy to achieve these goals. This is due in part to a lack of awareness of the apprenticeship levy, but importantly, a gap in understanding of the purpose of the levy, how to access it, and what it can be used for. There is a call for more information around the levy itself, which would go a long way towards challenging perceptions that the application process is difficult, or that there is a lack of flexibility in how the levy can be used. As a head of Human Resources we interviewed suggests, “Find out what skills your business is lacking, not just in new entrants, but where you need to upskill, and then get to work on using the levy., because if you don’t use it, it will be gone.” However, where businesses have started to engage with the apprenticeship levy, the impact has been positive. And whether the levy channelled into structured apprenticeships for new joiners, or upskilling programmes for existing employees, our survey suggests that the levy effect is working.
“It’s time to take action and start getting things done,” says Stuart Rowberry of OSC Group (UK) Ltd. “The apprenticeship levy is here to stay and you have to get to grips with it if you want to see the benefits for your business.” Many of the country’s labour market challenges can be met through apprenticeships, and the levy offers employers a golden opportunity to fill their skills gap. By partnering with training and education providers, businesses can develop a talented and committed workforce to take them into the future.
“The apprenticeship levy gives me a training budget that no one can take away from me. If we don’t use it, we lose it,” said a manager in charge of staff development in one cleaning company of around 1,000 employees.
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The Training Provider for Businesses
Evolve Learning Group Ltd Evolve Learning Group Ltd delivers bespoke employer focused training and apprenticeships through a mixture of classroom-based teaching alongside workplace training and assessment. Businesses select the best way for training to be organised and delivered, with support from the Evolve team. Part of West London College, the Evolve Learning Group Ltd already supports over 500 businesses and organisations across the UK to meet their training needs.
About West London College Located across four main sites, West London College is a leading college in west London. A further and higher education college offering both part-time and full-time courses, it educates around 14,000 students. It is rated good by Ofsted and recently won a national TES FE Award for outstanding use of technology to improve teaching, learning and assessment.
evolvelearninggroup.co.uk
To download a copy of the report please visit www.evolvelearninggroup.co.uk/levyreport
The Training Provider for Businesses
Contact Evolve Learning Group to find out how you can maximise the Apprenticeship Levy evolvelearninggroup.co.uk/levyreport employer@evolvelearninggroup.co.uk 020 7565 1333