How will the apprenticeship levy benefit small businesses?

Here, Richard Marsh, apprenticeship partner director from Kaplan, tells us how the apprenticeship levy will affect your business.

The introduction of the Apprenticeship Levy has stolen all the headlines, but this is a change that impacts on employers of all sizes

The introduction of the Apprenticeship Levy has stolen all the headlines, but this is a change that impacts on employers of all sizes

Apprenticeships are evolving, and April will see fundamental changes to the way these programmes are funded and delivered. The introduction of the apprenticeship levy has stolen all the headlines, but this is a change that impacts on employers of all sizes.

As well as changes to the funding – what an apprenticeship is has also changed. The new apprenticeship standards being introduced place more focus on the knowledge, skills and behaviours developed in a job role and this should encourage businesses to think again about utilising this training route. We fully support the government’s ambition to increase the quality and quantity of apprenticeships across the UK.

Attractive option?

Apprenticeships are fundamentally about combining working, learning, and earning. For young people this is an attractive combination, and for employers too. It’s encouraging to see so many businesses already on board with apprenticeships – understanding their value and impact – but we, like government, want to see more businesses benefiting from them.

It is fair to say the apprenticeship levy has caused some unease from the business community, and more needs to be done to underscore the results these programmes can deliver. The apprenticeship levy will apply to both public and private employers across all sectors with a payroll bill in excess of £3 million a year, and set at a rate of 0.5 per cent of the total payroll.

Each employer will then receive of £15,000 per company to offset their levy payment. Therefore, the apprenticeship levy itself impacts larger businesses specifically, but the changes have repercussions for the whole of the business community, including small businesses as they will now have to pay a flat rate cost. These changes will all come with the support and guidance of training providers and government.

Apprenticeship affordability

In fact, the apprenticeship levy means that apprenticeship training will be more affordable for all businesses – levy payers or not. The government will pay up to 90 per cent of apprenticeship training costs for non-levy payers, plus £1,000 cash for apprentices under 19, and National Insurance reductions for under 25s. This is more than they have paid for younger apprentices up to now (although less than they have paid for older employees).

This will mean that more businesses and young people can benefit, and is important for the small business community, regardless of size and sector: small businesses often have to consider hiring decisions and an increased headcount more carefully, which means looking at bringing in apprentices and nurturing young talent could be a sound solution.

The residual impact of these changes to apprenticeships will be felt far wider than the 2 per cent of businesses directly affected by the levy contributions.

By getting more businesses on board and providing more funding for apprenticeships overall, the stature and relevance of apprenticeships will be enhanced – hopefully making them an increasingly attractive option for training in the UK and something all businesses will want to be part of.

But what are the tangible benefits for employers?

Well, apart from accessing the financial benefits of the state’s 90 per cent investment from the National Apprenticeship Service, we know that 89 per cent of employers say apprentices make their business more productive.

Additionally, 75 per cent of apprentice employers have found apprenticeships help to lower recruitment costs, and 80 per cent say that apprenticeships will play a bigger part in their future recruitment plans.

Employers also tell us that apprenticeships are a great way to ensure diversity in their workforce and they provide effective development opportunities for managers as they have to use skills such as coaching and mentoring.

The focus on quality is also something that will deliver for small business employers too. Raising standards is all part of making the offer stronger for employers and young people. It also means apprenticeships can be as tailored and bespoke as possible, which is very important for small businesses with more flexible office structures and more fluid job roles.

We would encourage businesses to take the time to plan how to best integrate apprenticeships into their business. They should be treated the same as every other employee, whilst also supported and nurtured with their learning needs. Employers and HR teams, alongside their training providers, need to work with apprentices closely to ensure their qualifications and ambitions are achieved.

At first, school-leavers experience a different environment to the classroom they may be used to — they’ll face processes and procedures they won’t have come across before, and professional life may be more demanding. However, with the right support from training providers, HR teams and line managers, the acclimatisation can be swift.

The best advocates for apprenticeships are those who have completed them and businesses that have already benefited. In your business network community, many businesses will have experiences of apprenticeships and will be willing to share best practice learnings and advice.

Training providers, such as Kaplan, also offer a wealth of experience brokering the best results for employers and young people, whilst also taking on the burden of administration and management.

When it comes to financial and accountancy apprenticeships, every business can benefit. Given that all organisations have these functions, business support apprenticeship programmes can be introduced easily. For finance, providing on-the-job experience really matters, and as apprentices combine both knowledge and its application, they really lock in their learning.

This learning in a real-life setting certainly brings to life the theory studied in the classroom. It will also allow businesses to develop and shape the skills of staff in a way that works for them. Apprenticeships can be an efficient way of growing and investing in a finance function, so as your business grows and finance needs increase, your finance team can grow and develop with it.

Richard Marsh is apprenticeship partner director of Kaplan.

Further reading on the apprenticeship levy

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