Productivity levels in the UK are currently sluggish. The UK lags behind our G7 counterparts, with the US, Canada, and Japan topping the table. Final estimates from the Office for National Statistics showed that in 2016 the UK had one of the lowest productivity levels (Constant Price GDP per hour worked) in the G7. Only Italy was shown to be less productive.
There has been extensive analysis on the reasons why, but it is the result of a combination of factors, including the need for better automation, low numeracy and literacy levels, and a national tendency towards sick days.
With ambitions for a more productive nation that generates greater revenue per head, our Government is committed to investing in human capital.
On such mechanism for achieving productivity in the long term is by increasing the uptake of vocational skills training. The Government set an ambitious target of funding three million apprenticeship placements by 2020, and introduced the Apprenticeship Levy to help the nation achieve this.
The Apprenticeship Levy has received mixed reviews since its introduction last April, but at MiddletonMurray, an apprenticeships and traineeships consultancy, we have seen that with the right approach businesses can use the Levy to bring on new staff and significantly boost employees’ skills and overall productivity.
What is the Apprenticeship Levy?
The Apprenticeship Levy came into effect in April 2017 to help lift the UK out of its productivity crisis. Businesses with an annual payroll of more than £3 million are required to contribute the equivalent of 0.5% of their pay bill towards their Levy “pot”. This money is set aside to fund apprenticeships or on-the-job learning for the company’s employees, but if it remains unused after two years, the funds can be accessed by employers of all sizes to provide employee training. Following a slow uptake from Levy-paying employers nationwide, the pot has continued to grow.
What are the benefits of an apprenticeship?
Apprenticeships are a fantastic option for training your workforce on the job. At MiddletonMurray, we have placed more than 10,000 apprentices across the country. We work with businesses of all sizes who are recruiting at all levels, whether it’s taking on young people straight from school, upskilling existing staff in new competencies, or supporting someone older who would like to change career.
Apprenticeships can have a transformational effect on businesses. This type of further education allows employers to build a skilled, productive workforce with dynamic and agile skillsets that uniquely suit them as a business.
As many ‘traditional’ jobs disappear, businesses can prepare employees for digital jobs of the future, and keep abreast of future technologies, like blockchain. Courses can be flexible, custom-built to meet a business’ specific needs, with content dovetailed into specific industries or companies.
Apprenticeships are offered in ‘levels’ and cater to all stages of education. Each level has a minimum duration of one year, and a level six is equivalent to a degree, while level seven corresponds to an MBA.
How can large corporates take advantage of the Levy?
Large companies with a Levy pot worth millions of pounds may never be able to take on enough young people to take advantage of their entire Levy contribution. Instead, they may wish to use an apprenticeship format to upskill their existing workforce, using the Levy to offset their training budget.
Existing staff can be upskilled in their current job role to improve productivity or be taught new skillsets to expand their areas of expertise, diversifying staff into a more dynamic, agile workforce.
Management staff and future leaders can also be put through more advanced management apprenticeships using the Levy to fund this training.
Household names, such as Goldman Sachs, Adecco, Fortnum & Mason, BT, KPMG and PricewaterhouseCoopers are already embracing the Apprenticeship Levy, using it to bring on new junior staff and upskill existing staff.
Another way large firms can take advantage of the levy pot is to transfer some of their Levy pot to other businesses. These funds can be directed to other businesses in the supply chain, encouraging suppliers or partners to upskill their own workforces, contributing to a more productive and efficient supply chain.
How can smaller businesses take advantage of the Levy?
SMEs can take advantage of the Levy to get the edge when it comes to attracting talent versus more established companies with recognisable brand names and a myriad of benefits, who are frequently the first port of call. Comprehensive, structured and practical training programmes are a compelling factor in attracting new people to a business.
Businesses that are just starting out, looking to expand or are offering a new service can also use the Levy to bring on extra pairs of hands when working with a smaller budget. With a wide range of courses and the ability to add bespoke training modules, apprenticeships create an opportunity to nurture talent in a way that keeps the business’ culture and ambitions at its core, and from the ground up.
At MiddletonMurray, our aim is to make sure all companies are fully aware of what the Levy can offer them, instead of seeing it as another tax. It’s a cost-effective, practical way to train new staff in the exact skills you require for your business and future-proof your existing workforce.