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The apprenticeship levy – boon or burden?

The government is shaking up how apprenticeships in the UK are organised and paid for. What will the outcome be?

This week, the government’s new apprenticeship levy becomes a reality. High street names including Next, Debenhams and Marks & Spencer are now required to contribute to the levy as part of government plans to introduce 3 million new apprenticeships by 2020.

The levy, which comes into effect on 6 April, has been set at 0.5% of the total wage bill for all businesses whose payroll exceeds £3m a year. Employers will receive a tax allowance of £15,000 to offset against their levy payment.

Apprenticeships will also now be based on standards designed by employers, in a bid to make them more relevant. There has also been a drive to improve quality, and more rigorous testing at the end of the apprenticeship has been introduced to ensure employees are ready for the job.

Reaction to the changes has been mixed. Proponents argue the new schemes are more robust and provide consistency. Critics, however, point to the administrative and financial burden at a time when retailers are dealing with business rates changes and increases in the living wage. Concerns have also been raised about the speed at which the levy is are being introduced. Here, industry experts give their views on the much-debated topic.

 

The industry view

Nicola debney

Nicola Debney Head of learning and development, Debenhams

Our development programme for supervisors fitted nicely to the new framework and it made sense to convert to an apprenticeship. It makes the programme longer, and adds in maths and English. It’s a more robust approach to signing off the competence of our managers. The programme has a broader spectrum than our existing scheme. It’s more thorough, but has been a lot more work.

The fact that the new apprenticeships are nationally recognised is really important – it will help attract people and encourage applicants. But it’s difficult to know yet whether the additional time and money will turn into an added extra for the business. There’s been a lot of waiting for information, and we anticipate a lot of administration without any extra resources.

 

Annette allmark people 1st

Annette Allmark Director of strategic policy at staff consultancy People 1st

The whole idea of the legislation has been to make apprenticeships more robust, driving quality and consistency. The standards have been developed by employers, so they’re business relevant, covering all the knowledge and skills people need to do their jobs well. How retailers train apprentices is flexible – it could be through in-house training or a third-party provider.

Apprenticeships were something that concerned the learning and development department, and weren’t discussed in other parts of the business. With the levy, a lot more people will be interested and there will be engagement across all levels, including at board level. The standards apprentices learn will be relevant across the sector, helping retailers to attract people but also building up a pool of talent.

 

Lee lucas

Lee Lucas Principal, the Fashion Retail Academy

I’m personally a huge advocate of apprenticeships. I started my career as an apprentice and I think a new model could create opportunities if it is done well.

It will be interesting to see where we are in two years’ time, when the full ramifications of the legislation are known. What we will end up with is fantastic in the first instance – apprenticeships will help drive employment. But in a year’s time, when the first wave are all qualified, where do those people go?

A lot of people might end up with a level 2 apprenticeship but still no job, particularly as retail apprenticeships are focused on store roles, which we know the industry will need fewer of over the next three to four years. There may be unintended consequences.

 

The government’s view

Business secretary Sajid Javid has promised employers have “nothing to fear” from the changes to apprenticeships. He argues that apprenticeships have previously been seen as a “safety net” for young people who did not want to take A-levels or go to university.

The new legislation will allow companies to plug any skills gaps with British workers, rather than looking overseas. The government says the levy puts employers at the heart of apprenticeship training, and gives businesses a choice between training apprentices themselves or working with training providers.

By 2020, it wants young people and adults to see apprenticeships as an attractive option.

However, the education and business select committees’ subcommittee on education, skills and the economy has warned the levy lacks focus and will not fill the skills gap.

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