Surge in SME owner-managers looking to up-skill
Businesses who do not pay the Apprenticeship Levy because their wage bill is less than £3m annually can pay 10% towards the cost of the course; and one education provider has seen a big uptake in SME interest.
TheBusinessDesk.com’s roundtable event, attended by senior HR directors and leaders from across Yorkshire businesses and chaired by Yorkshire editor Kayley Worsley, saw the group discussed the opportunities and challenges brought about by the introduction of the Apprenticeship Levy in 2017.
Since then, business with a pay bill of more than £3m annually have paid the levy and SMEs have been given the opportunity to pay 10% of the cost of the course for a staff member to complete an apprenticeship course.
Dr David Lowe, Programme Director and Senior Lecturer in Commercial Management, Alliance Manchester Business School, said 50% of all admissions onto the level seven course offered by Alliance Manchester Business School were from SMEs. “I don’t know whether that’s because they are owner-managers and there is a self-interest there. But it’s something to explore,” he said.
“They are coming because they don’t have that formal qualification. They have a wealth of experience but now want to get that those additional frameworks, concepts for them to be able to progress as leaders and managers. Through it, they can increase their capabilities, skills and productivity.
“We’ve addressed that quite explicitly in how we was arranged our assessment process. By coming on the programme, you will get X number of days towards that 20% [time away from the business to complete the qualification]. But the assessment or assessments are around real issues within the organisation; so it’s part of the day job.
“We’re aiding them to resolve real issues for them and their organisation. The workplace project is embedded within the university project, so they don’t have to be doing other projects.”
Frank Clayton,Group Head of Learning, NG Bailey, said this was interesting because SMEs had struggled in the past. He explained: “The SME piece is
a challenge because of legislation.
“SME employers have always been legislated to make a contribution to the cost of their apprenticeship. But colleges, traditionally, never made them pay it. But when the levy legislation came in, they were told it had to be enforced.
“So suddenly from an SME point of view, SMEs or feel like they’re getting caned because they suddenly find the 10% that they never had to pay before. So that created a challenge.
“I think the SME market has always had a challenge with apprenticeships. If you’re a very small business, finding the right apprenticeship is hard.
“You still have the resource challenge. If you want the best out of that individual, whatever stage of their career or life there are at, they need support. And if you’re in a small business, that’s hard work.”
Apprenticeship Levy uses – positive and negative
Carla Murray, Head of Resourcing, Talent and L&D at EMIS Health, said that the business would “probably not” have got to the stage they are at now without the apprenticeship levy. She said: “This need was here long before the levy – and we did do some before the levy – but that was really few and far between.”
She added that it was always important to seek out a good provider because some organisations had been “jumping on the bandwagon” since the apprenticeship levy was introduced. She added: “What also surprises me is that a lot of suppliers aren’t using the levy to be able to offer courses.”
When looking at courses for staff to attend, the firm has asked to use their levy for them but many providers “haven’t gone down that route,” she explained. “We have a pot of money that’s sat there [as a levy paying business] – we won’t lose ours because we have done enough to stop it disappearing in April – but there’s a risk if businesses don’t use it.”
Clayton added that there was also issues for new entrants, particular those entering a business which does pay the levy, who wanted to get on with their programme but were still waiting for the IFA to approve a course. He said he was worried business felt that there was too much bureaucracy.
He said that he had heard examples where large businesses looking to spend their levy had been given instructions to recruit thousands of apprentices. “You put that vacuum cleaner into the market, and you just suck everything out in the market,” he reflected.
Delegates agreed that any business needed a proper structure to deal with such an intake.
Matthew Lewis, Partner and Head of Employment Practice at Squire Patton Boggs, said: “The struggle with it is that the drop off [in apprenticeship
take-up] has been dramatic. You have those people who are have become levy payers; they did apprenticeships beforehand, and will carry on doing – whether you are a levy payer or not.
“There are those people who become levy payers and think actually, what’s the best way I’m going to get the most bang for my buck?”
He said he had heard examples of firms who were paying a large amount of levy taking the view that the only way they were going to get anything back was to cut our graduate recruitment in half and hire people to complete level six apprenticeships.
Lewis added: “And so those guys will come out out of university in four years – rather than three years – with the same degree, from the same university, but with work experience and no debt. That sounds like a win, win for everybody.
“But that’s not what the government anticipated the levy would be used for. So from a social mobility perspective, it’s had the opposite result from what the government anticipated.”
Sarah Armitage, Recruitment Specialist at WSP, said: “You need to be careful because when when you take that approach to cut the recruitment in half, for example, to then hire hire all these apprentices externally – you need to have the framework internally to be able to support that. It’s about getting that balance right between offsetting as much of the levy payment as possible. Of course, we want these opportunities to bring these enthusiastic young people in. We must be able to up-skill our business. But at the same time, we need to be able to support everybody that we bring into the business. Actually a mass recruitment drive probably isn’t the way to do that.”
Lewis added: “I think there are lots of organisations that just simply have looked at as another employment tax.”
Armitage said that some firms saw implementing programmes as part of the levy as a further cost when needing to account for headcount increases; and therefore allowing it to just be paid as an extra tax.
“Unless you were using it to train accidental managers, you’re right, you’ve got the cost of hiring employees and the potential cost if that doesn’t work out; as well as turnover issues,” said Lewis.