What Does the 2017 UK Apprenticeship Levy Mean for Your Business?

January 24th, 2017

Jon-Mark Sabel



What is the UK Apprenticeship Levy?

The UK Apprenticeship Levy is a government-led initiative to increase the number of employed apprentices. Over the past several years, Parliament has been working with employers to develop national apprenticeship standards across industries. In May of 2017, a levy of 0.5% will be placed on each employer’s annual paybill, with an allowance of £15,000. In other words, each business will be required to contribute 0.5% of their paybill, minus £15,000. This effectively means that only employers with a paybill of £3 million will pay the levy, which will be withdrawn on a monthly basis. The estimated £3 billion raised this way will be used to operate and fund apprenticeships across the UK through a Digital Apprenticeship Service. Employers that pay the levy will receive the amount they have paid plus an additional 10% to spend on apprenticeships. These funds will be accessible through a digital account, topped-up monthly. Let’s look at how this might play out. Say an employer has an annual paybill of £10 million. Their annual contribution will be £35,000 (10 million * 0.05 - 15,000), resulting in a monthly payment of £1250. With the additional 10% provided by the government, this employer will receive £1375 of apprenticeship funding each month. Employers that do not pay the levy will still be able to use the Digital Apprenticeship Service to find apprenticeship candidates, choose training providers, and pay for apprenticeship training.

How Does Apprenticeship Work?

Apprenticeships provide a valuable opportunity to improve employees’ skillsets and productivity. Apprentices must spend at least 20% of their time on off-the-job training, supplied by certified training providers. This off-the-job training must last no fewer than 12 months, and the apprentice must be employed through the duration of the program. By the end of the apprenticeship, the apprentice should meet national, employer-driven standards.

What the Apprenticeship Levy Means for Your Business

If your organization’s annual paybill is under £3 million, you do not need to invest in apprenticeships. However, the 2014 Apprenticeship Evaluation Survey of Employers revealed that once a business employs an apprentice, they “overwhelmingly have a positive experience” - so it is certainly something worth considering. With the development of national apprenticeship standards and the Digital Apprenticeship Service, finding a guaranteed match for your organization’s needs will be easier than ever. Funds in digital apprenticeship accounts expire after 24 months, so if your organization is among the estimated 2% of businesses that will contribute to the levy, you have a very high incentive to invest in apprenticeships. But with the new national standards, there is good reason to believe that apprenticeships will provide a great return on investment.

The Candidate Experience Apprentices Demand

Millennials are quickly surpassing previous generations in workplace manpower, and much has been made of the “millennial mindset,” “what millennials expect,” and “what millennials want.” Questions of this variety have been gaining ground of late, largely as a result of the impending apprenticeship levy in the U.K. With incentive given to invest in apprenticeships, everyone wants to know how to attract the best apprentice candidates. And they’re often basing the discussion on an inaccurate assumption. Apprentices of today are not Baby Boomers, Gen-Xers, or even Millennials. They are Generation Z, the iGeneration. Born with a Facebook profile and phone-in-hand, the iGeneration does not know technological stagnation. Even the youngest of Millennials remember the time of dial-up internet: the methodical, rhythmic bleeping of a Windows 95 attempting to crawl online. For these, internet inaccessibility and slow machines are a distant, amusing memory. This is a memory those of Generation Z do not have. The iGeneration is more than accustomed to the on-demand, video-driven world that has accompanied the rise of mobile content- they presume it. They expect old-school practice to be flipped on its head across industries and platforms in the same way they expect McDonald's to always have McNuggets. The apprenticeship search is no different. They demand an on-demand, mobile, and video-driven candidate experience.

Need proof?

In 2016, 52% of job seekers (and 62% of those aged 18-29) indicated they hunted for jobs from their mobile device in bed. 37% conducted their job searches in the office of their current job. Imagine missing out on the more than 50% of apprenticeship candidates who will likely search for openings from their phone. Those who apply for apprenticeships are a unique bunch: in doing so, they openly advertise their willingness to learn and grow. In an economy prone to rapid technological shifts, these are the kinds of people who will drive businesses to success. Providing a mobile, video-driven candidate experience not only grants greater access to the new generation of apprenticeship seekers; it indicates that you are forward-thinking organisation, just as willing to embrace change as they are. With organisations given substantial incentive to invest in apprenticeships, the best apprentice candidates are sure to become a scarce commodity. The companies able to attract these will reap the rewards that come with employing the best, dedicated talent.

Giving apprenticeship candidates an experience they expect will put you in good company. See how Vodafone uses an on-demand, mobile, and video driven candidate experience to appeal to top graduates.