The Apprenticeship Levy - A 'Tax'? or an Opportunity for Investment?

**IMPORTANT UPDATE** - 15th November 2017

Following the AELP Autumn Conference held on 1st November, a major improvement has been made regarding the flexibility of the 20% OTJ rule:

Keith Smith, Director of Funding from the ESFA, said he “understood” the concerns and explained that the training could be done “in lunch hours or after work, providing employers give that time back to the person”, adding: “That is the flexibility of the model”.

This means that employers no longer have to worry about their learners being 'non-productive' for one day a week because they are now permitted to complete and record their learning outside of working hours. However, it is still fundamentally important to the new Apprenticeships that employers allow their staff the time and space to learn and develop - the rules have just been relaxed slightly - which is great news to us all!

ORIGINAL POST:

It has been just over 6 months since the Apprenticeship Levy was launched, and after researching the latest news and updates, I was surprised to find out that a vast number of employers are not yet using it to their advantage.

Recent research has found that only half (10,500 out of a possible 19,150) of levy-paying employers have signed up to a DAS account to reclaim their funds.1 Some companies may still be in the process of planning how best to use it , but I think it is important, first of all, that employers recognise the value of the levy - not as a ‘tax’ but as an opportunity for INVESTMENT.

There could be a number of reasons for this lack of engagement with Apprenticeships, but from my own observations, I think it may be due to a mix of uncertainty about the impact of the levy for businesses and the result of ‘top-down’ implemented legislation that was perhaps a little rushed in order to start achieving the target set of 3 million new apprenticeships by 2020. This ambiguity has even opened up a loophole where some providers are offering illegal financial incentives in return for access to larger levy funds.2

It cannot be easy for organisations to thoroughly understand how to use the levy whilst navigating through their already hectic workloads. So we at Square Mile Leadership have dedicated a lot of time and effort to ensure that we are experts when it comes to the Levy; that’s why our aim is to make the process as simple and straightforward as possible, allowing you to focus on the skills needs that will improve your organisation’s performance.

Unlike traditional Apprenticeships, the clear structure of the new Apprenticeship Standards are designed by employers themselves, meaning all training is centred around and made relevant to a specific role. Therefore, employers can start to see the value and return on their investment almost immediately, with staff learning new skills and building confidence as they go.

In fact, these new apprenticeships are not just for new employees. The Levy can be used to up-skill existing employees with a growth-mindset who want to improve themselves and progress in their role, making it a true investment for the future of each organisation.

A major concern for organisations is the mandatory 20% Off-The-Job training. In effect, it is equal to about 1 day per week where learning must take place ‘off-the-job’. At Square Mile Leadership, we have come up with an ingenious solution to this using the 70|20|10 rule created by McCall, Lombardo and Eichinger. We suggest that because a significant amount of new learning occurs in both the 20% ‘social/peer learning’ and 10% ‘formal learning’ - most of which we don’t consciously recognise - we are able to justify the legal requirement as being only 20 out of this 30.

OTJ training does not mean that employees have to be ‘Out-of-The-Office’ for the training to count.

It simply means that apprentices must be learning something new; something that relates to their role but is not defined in their normal job description and that allows for the development of knowledge - not simply a review of existing knowledge.

The Department for Education’s rules allow for OTJ learning to include workshops, seminars, conferences, forum events, shadowing colleagues, coaching, mentoring as well as any learning support and time spent writing assignments for the apprenticeship.

It does not, however, cover progress reviews, on-programme assessments or any training undertaken outside of the apprentice’s contracted working hours.

The best way to look at it is to imagine the learner to be a new employee, starting a new role for the first time. They will need to spend at least 4-6 weeks getting to know the business, understanding the areas that they will be responsible for, and how to best carry out their day-to-day tasks. Every time this learner gains new skills and knowledge, it can be recorded as Off-The-Job, because the knowledge is new and does not mirror what they did in their previous role.

Moreover, any learning that occurs in the workplace encourages a direct understanding of how the course relates back to their role, so learners are able to actively apply their knowledge as they learn, strengthening their skills through practice as opposed to just theory.

The bottom line is that individuals who receive training are proven to perform better than those who are left to figure it out on their own. The issue of ‘accidental management’ has been well documented over the last few years, and it is the result of rewarding hard work with promotion and greater responsibilities, but without the necessary Leadership or Management training needed to cope with the shift in dynamics from task-driven to directed-task management.3 They fail to develop the vision, behaviours and skills needed to manage themselves and others, inevitably leading to challenges such as added stress, conflict in the workplace, or project failure - all of which limits productivity and reduces morale.

The Apprenticeship Levy provides an unprecedented opportunity for businesses to combat these issues and ensure that their people are properly trained to deal with any challenges that they encounter. Moreover, the Levy can only be used for these apprenticeships - so why not use it?! By simply ignoring the levy, businesses are effectively throwing away the resources that could be used to improve overall business performance and create the happy, productive and loyal workforce that we all aspire to be part of.

1 http://www2.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2017/10/09/half-of-eligible-businesses-register-to-reclaim-apprenticeship-levy-funds.aspx

2 http://www2.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2017/03/09/employers-and-providers-already-fiddling-apprenticeship-levy-costs.aspx

3 http://www.managers.org.uk/insights/news/2015/september/watch-the-curse-of-the-accidental-manager