Last reviewed 31 May 2019

As Brexit continues to approach, businesses continue to be concerned about how they will locate the staff they need with the right skills. Dave Howell asks whether leveraging the current apprenticeship landscape could deliver the skills stability small businesses in particular need for future growth.

For many business owners taking on apprentices has either been a regular component of their operations, or a complicated system that many have stayed away from. Indeed, according to the latest official figures, apprentice starts have fallen by 25% over the last year.

Often pointed to as a complex component of the system, new figures focusing on the Apprenticeship Levy from the Institute of Directors (IoD) concluded half of businesses polled now fully understand how the systems works, and more importantly, how their business can use the Levy. However, many that pay the Levy either don't use it entirely – if at all, often with the view that it is a stealth tax.

All UK employers with a pay bill of over £3 million per year pay the Apprenticeship Levy. The levy is set at 0.5% of the value of the employer’s pay bill, minus an apprenticeship levy allowance of £15,000 per financial year. The funds generated by the levy have to be spent on apprenticeship training costs. The government tops up the funds paid by the employer by 10%.

Former Director General of the IoD Stephen Martin said: “The Apprenticeship Levy has had some serious teething problems, but our figures suggest that the creases are being ironed out. Looking ahead, we shouldn’t shy away from broadening the scope of the Levy. Apprenticeships are an immensely valuable tool, but they aren’t a one-size-fits-all solution. Opening out the system to encompass other forms of training would be to the benefit of employer and employee alike.”

How a business approaches their use of apprenticeships and how they manage their candidates needs to be approached carefully. Seb Dean, Managing Director, Imaginaire Digital told Small Business Essentials: “Having the ability to introduce an apprentice in the industry and shape their understanding of the best practices is a great way to bring on more staff. In doing this, you're training an individual to work in a way that suits your company, making them the perfect fit. What's more, teaching them the best practices ensures that there are no bad habits that they're bringing to your business.”

Dean did, however, warn: “Having been in talks with a number of apprenticeship companies making sure we're going with the right one for us, I'd say you can never be too careful. We enrolled with 3aaa apprenticeships knowing that they were the largest provider at the time only to have them implode and leave us without an apprenticeship provider for months. However, the best piece of advice would be that you can't judge candidates on experience. Most applicants will be young and fresh out of school with little to no experience, but some will be eager to learn.”

How you approach the management of any apprenticeship scheme across your business has a number of components all of which must be carefully assessed. Degree Apprenticeships could be appropriate in some industries, which could then have a strong link with university students who could form part of a highly trained and skilled workforce. However, Jisc – who provide educational support found that less than half (43%) of the approved degree apprenticeship standards have no providers.

Finding people

Whether your company pays the Apprenticeship Levy or wish to take-on apprentices across your enterprise, Gareth Jones, joint Managing Director of In-Comm Training outlined the key steps your company needs to take:

  1. You need to start with understanding your business needs and the role skills play in helping you overcome challenges and, ultimately, helping you grow your company.

  2. Once you have identified the issues and opportunities, do your due diligence. It’s vital that you research more than one provider and use strict criteria when making your decision. For example, what is their Ofsted rating, what does the actual programme content look like? How competent are the trainers and does the equipment and technology match your future needs?

  3. One of the biggest things to consider is whether the provider is delivering the new standards or not, as this will ensure the employee you get at the end of it will add real value to your business.

  4. Finally, remember an apprentice is an apprentice. You need to manage your expectations and not see them as cheap labour, but ultimately someone who - one day - with the right support and constant training, could be running your business.

Whether your business pays the Levy or not, apprenticeships could become a vital component of your workforce over the medium term. The uncertainty over Brexit and the impact this could have on the labour market across all sectors means all business owners need to assess how apprenticeships could offer the flexible and highly trained workforce they need today and long into the future.

Inside knowledge

Croner-i Business Essentials spoke with Paul Freeman, Director of Education and Talent at Global Knowledge Apprenticeships and began by asking for small businesses, are apprenticeships still a valuable way to gain trained staff?

Freeman responded: “Small businesses can benefit from the UK’s Apprenticeship Programme, which can help expand their workforces and upskill their existing staff. However, there is still a disconnect between the apprenticeship programme and the UK’s SME community. The government is acutely aware of the lack of take up and the need to put more incentives in place as they see small business as vital to social mobility.”

Has the Apprenticeship Levy delivered a framework that has enabled business owners to develop the skills base they need?

“The FSB report on Apprenticeships published in April 2019 reported that 41% of small businesses felt their costs had increased since the reforms. Awareness is still a problem with only 40% of eligible smaller businesses taking the £1000 incentive for hiring 16-18-year olds and a third saying they are not even aware of the incentive.”

For smaller companies is the Levy putting them off developing an apprenticeship program?

“The Apprenticeship Levy applies to employers with an annual wage bill of over £3 million, so it's not the thing that is turning smaller companies off the Apprenticeship Programme. Of the small businesses that employed apprentices after the 2017 reforms, 20% say they have had difficulty contributing 10% towards the training and assessment costs. Hurdles for small business also include recruiting; management and the required 20% off-the-job training. The fact that the employer contribution level has now dropped to 5% should help, but it is too early to say at this stage.”

Are Degree Apprenticeships understood by business owners and how they can implement them to gain sustainable skills across their enterprises?

“Although still a small part of the whole Apprenticeship Programme, there has been a substantial increase in the number of degree apprenticeships. Degree-level Apprenticeships are not available in all sectors and subject areas, but those that exist are becoming more popular and small businesses can benefit from the long-term engagement with staff who undertake an apprenticeship to this level.”

What is your essential advice to business owners considering apprenticeships for the first time?

“Develop a good understanding of the programme and the incentives and costs. It’s a mistake to dismiss apprenticeships because you feel your company is too small or you don’t have the time to dedicate to overseeing the apprentices. Get advice from an expert about how to recruit, how to train and mentor apprentices and look carefully at the financial return on investment. Most small businesses will be pleasantly surprised by what’s on offer for them.”

What do you think the future of apprenticeships looks like?

“Apprenticeships provide more than training: The employers are giving their recruits a clear plan for their training and career progression through apprenticeships and, in turn, they can develop the team that supports their business culture. It is the mix of learning, mentoring and work experience that is so valuable and I envisage the blend of learning will only increase.

“In the future, more topics and sectors will encourage apprenticeships. The GKA/Bletchley Park Cybersecurity Level 4 apprenticeship was launched last year along with the trailblazer for Level 3. It will be apprenticeships like these, on the cutting edge of the fourth industrial revolution, that will be the most popular, with both the employers and the apprentices.

“Last year, Ofsted’s Chief Inspector warned about the quality of apprenticeship providers after almost one-fifth failed an initial assessment. Ofsted has been caught short in supporting the huge increase in providers and allowing start-up organisations to operate without any quality checks. This will slowly right itself but not without damaging the image of apprenticeships in certain areas.

“The launch of the Apprenticeship Levy created a deluge of organisations looking to cash-in and a lack of governance in terms of regulating the RoATP (Register of Apprenticeship Training Providers). It’s vital that employers take the time to understand the quality provision and experience that their prospective providers bring to the relationship.”

Clearly, the apprenticeship landscape whether your business pays the Levy or not is complex. Taking time to understand your business's precise needs and then matching them to the appropriate standard and apprentice provider is vital to locate the right apprentices for your needs.

Imaginaire Digital’s Seb Dean offered this concluding advice: “The worst thing you can do when hiring an apprentice is to do so with cheap labour in mind. Similarly, finding the best way for your apprentice to learn is important. If they work and learn better with more attention and help, give that to them. Some may need a little more reassurance than others and if that's the case make sure you're reassuring them.”