Business Leader Magazine brought together key business figures to discuss the apprenticeship levy and the impact millennials are having on UK businesses.
What is the apprenticeship levy?
In spring 2017 the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.
The apprenticeship levy is being introduced on 6 April 2017. The levy requires all employers operating in the UK, with a pay bill over £3 million each year, to invest in apprenticeships.
Are you seeing more businesses employing apprentices?
Matt Tudor: “We have seen a huge growth in apprenticeships since 2012. We have gone from placing 700 in that year to two thousand this year. There has been a real shift in young people’s attitudes towards apprenticeships; and a shift in the attitude of parents towards apprenticeships as a legitimate alternative to an academic route.”
What impact do you see the apprenticeship levy having?
Matt Tudor: “The levy is not just about new entrants but an opportunity to re-train existing
members of staff; and I think that is quite exciting as it means your accidental leader, that is suddenly running a team of four or five, can enrol on a level four leadership apprenticeship.
“It’s also encouraging to see how some sectors, such as care and accountancy, have embraced the levy and have set new strong standards, whereas some sectors such as construction are lagging behind.
“The message to industry is that you can start your apprenticeship now and have it funded under the old methodology, or you can wait and go from April 1st.”
Will the introduction of the levy be a positive thing for business?
Dominic Merlin-Cone: “It depends on who you ask. Our firm thinks it will be, as it gives us an opportunity to re-look at how we recruit apprentices and it creates an opportunity for us to work with other accountancy firms to introduce a standard.
“We’re looking to shift the balance more towards school leaver level to address issues around the talent pool and lack of numbers.
“The levy is good for us but it does represent an administrative and cost impact for many of our customers, who have yet to be fully persuaded.”
Chris Steel: “The challenge is not for those that will be paying the levy, but engaging the SME
business community using it.
“How do you engage the 90 per cent of SME’s who have their head stuck in the sand and think they’ll be able to carry on as they are?
“One thing I am pleased about is that colleges seem to be embracing the lifelong learning model where bright people in a business can go on and get a degree and much more.
“The levy will help to encourage this further.”
So how can SME businesses be engaged around the levy?
Neil Way: “Part of my agenda with the WOE LEP is to try and do exactly that. At Jeff Way Electrical we’ve employed apprentices for a long time so we know all about it, and we have the infrastructure, but if you speak to SMEs that isn’t the case, and they need extra support.
“If you spoke to most SMEs – they just don’t have the knowledge and resources or time of day as they can’t see the benefit of it, and they are too busy running their businesses.
“So what we’re trying to do is create a framework where they can get that help and assistance, and part of that challenge is changing the thinking of an SME from seeing an apprenticeship as an investment and not a cost.”
Phil Stott: “There are resources out there for businesses but it’s a bit of a mess and not joined up at all – so if you’re an SME it’s difficult to know where to go for information, and what they need is a guiding hand through this.
“SMEs feel this is a tax and a pain – and even pre-levy, the moment the bad times hit companies pull back on the skills investment. That is the issue – you need to see this as an investment in the future.”
What has the experience been for SMEs that do employ apprentices?
Craig Davidge: “We’re a ‘SME’ business and we employ apprentices and we’ve had quite a bit of success out of it.
“We’re proof that it can work for smaller firms. What is interesting is that as a search consultancy we are being called in for jobs that are dropping down into middle management and the talent pool is shrinking. Which means that top of the agenda for many businesses is improving your own talent, which will be good for apprenticeships.
“I would also say that the apprenticeship is almost the wrong word – it could do with a re-brand because traditionally it is always seen as the joiner or chippy but it is more evolved than that. It is also an option for people in their 40’s and 50’s who may want to re-train.”
Matt Tudor: “A re-brand could be a good idea as we’re certainly not shouting about apprenticeships enough. There is huge confusion around SMEs and the levy as they won’t actually be paying it, and if they do take on an apprentice they get government funding and colleges will help them with most of the administration and ensure the apprentices are competent in English and Maths.
“Government chuck up a website and expect people to look at it. It’s incumbent on us to educate.”
Liz Cheaney: “My concern is on the administrative change that is set to happen. We invest big
six figure sums in professional development and soft skills from carefully selected providers. This works well and then suddenly we have an agenda being driven by somebody elsewhere we need to look at other providers and programmes.”
Does the Food and Drink sector embrace apprenticeships?
Steve Ashworth: “The food and drink sector struggle to bring in apprentices and recruit generally, as it’s not seen as a profession to go into.
“There also isn’t an appreciation that food and drink mean the Yeo Valleys of this world and encompasses engineering and other areas. This will hopefully change with the building of the innovation centre.
“Another concern is that businesses can’t get apprentices out to where they operate due to them often being rural locations that are hard to reach. There is often no bus or train route, so infrastructure needs to be tackled too.”
How are businesses adapting to the requirements of millennials?
Matt Tudor: “We have learnt that it is important not to hire them as you were hired when you were 17 as they are motivated in hugely different ways. It’s also imperative to not switch off Facebook/Twitter etc. as they often need to access it to thrive.
“They also want to be part of a business that is like a family and work for one that has a clear moral purpose.
“There is also the understanding that they will be in a career for a very long time so they’re sometimes not keen to start too quickly, and pre-disposed to have multiple careers.”
Phil Stott: “We work with SME businesses and micro-businesses too, and if there is one thing we could sell to them it would be how millennials can benefit them in relation to social media, as their approach to it is light-years ahead of anybody else. But there is a disconnect between young people and the people running companies, that they can help each other.”
Matthew Hiddleson: “There is a disconnect between businesses being run by generation x and employing generation y and it’s a growing issue. Young people are the digital natives, they are always connected and often people running businesses aren’t comfortable embracing this.”
Doug Bamsey: “It is also about inspiration and aspiration as you can’t count on a career for life anymore. Businesses need to change the message to young people.
“EDF do a good job of this and go into schools to inspire kids at eleven and twelve as well as eighteen. Primary schools need to do more to encourage business thinking.”
Neil Way: “But do schools really care, though? As they’re not assessed in line with how many
people become apprentices but instead how many people go to university. We’re based in Knowle, where there are high levels of unemployment, but schools never approach us.
“You think they’d be biting our hands off, but it’s all about going to college and then university, as this is another statistic for them.”
Craig Davidge: “It’s also worth noting that 80 percent of millennials want to run their own business one day and this is a huge change to how things used to be. If you get five or more years out of an employee these day’s you’ve done a good job.”