Industry not taking advantage of apprenticeship levy 10 months on, warn experts

It has been 10 months since the government started taxing businesses with the apprenticeship levy. At the moment, only businesses with payrolls of more than £3m have access to the funding pot they are contributing to, but as the levy hits its one-year anniversary the gates should open to smaller hauliers who want funding for training new or existing staff.

And while May might seem a long way off, experts have warned that it takes time to understand the funding and to work out what training is best suited to your business, and that businesses should start considering their options well ahead of time.

“It’s been going eight months [for bigger businesses] and it’s been eight months of deliberation, consternation and confusion,” said David Coombes, MD of Skills for Logistics.

The first months of the levy being in place have seen too many businesses not being able to spend the money available to them for training, according to recruitment specialists Bis Henderson and Skills for Logistics.

This, they say, is because employers are still struggling to understand the levy and what they can do with the funds.

Coombes said: “I can’t believe the amount of confusion and misunderstanding at large, professional organisations that employ thousands of people. About 10%-20% of all businesses are just writing it off as a tax. Around 40% are still not getting their heads around what they can do with it.

“It’s incredible how much of an impasse it is at. Organisations are not sure how to spend it and what to spend it on.”

Coombes blamed bad communication from the government about the levy mechanics and the lack of available training standards in the logistics sector, of which there are only three – LGV driver; warehousing; and supply chain.

Rolled out too soon

Coombes admits to working with one major 3PL that he believes has only managed to use around a quarter of the money it has paid towards the levy.

“They admitted they don’t think they’ll be able to spend more than 50% of it,” Coombes said, adding that he believes the levy was “rolled out a year too soon”.

Andy Kaye, MD of Bis Henderson, added that there is a widespread misunderstanding about who the levy money can be spent on.

“There is a misconception out there that the levy is only for new members of staff. In reality that is not the case. What the levy is capable of being used for is the upskilling and the development of current staff. That’s where we feel it has probably got more benefit.”

Coombes agreed that upskilling existing employees is the way forward for people looking to get started on spending levy funds. “It should be internal training first, people should look at training their own employees before bringing new people in, initially,” he said.

Much misunderstanding of how to use the levy, according to David Lynch, MD of training provider Novus Academy, comes from the use of the word apprentice.

Lynch told MT: “I think there’s a lot of historical baggage that goes with the term apprenticeship. What qualifications cover and who they are available to, as well as how that training is delivered, have changed enormously over the years.

“What people think of is typically school-leavers entering their first job. But that hasn’t been what apprenticeships are for a long time – you can have apprenticeship learners in their 60s. So it’s not a very engaging message for someone looking at an apprenticeship qualification after 40 years’ job experience.”

Coombes has worked with a major delivery firm on its levy-funded training, and said the business chose to avoid the word apprentice altogether.

Management programme

“It’s called a management programme – not an apprenticeship programme. Apprentice is the wrong phrase; most organisations would be better using their own branding to represent the training,” he said.

Another issue for hauliers looking to fund training with levy money – regardless of size – has been the requirement for apprentices to spend 20% of their time studying rather than working.

“It’s putting people off,” said Coombes. “A lot of people contact me to say they don’t want a warehouse level two apprentice because they have a whole day out of the warehouse a week. They don’t like having to pay them for time they’re not working.

“We have raised this with the skills minister Anne Milton and she confessed that it was a very blunt, perhaps inflexible, process, and therefore they are looking at what could change.”

Regardless of its teething problems, Coombes argues every logistics business should be engaging with the apprenticeship levy.

He said: “It’s about education and increasing skills. Yes, it’s a tax on some, but we’ve got an increasingly large skills problem in this sector. So just to write it off is obviously very poor. We’re trying to work with as many companies as we can to introduce the right training providers.”

• Not sure how the apprenticeship levy works? Here's the five key things you need to know