Back in 2018, In-Comm commissioned the Training Barometer report where they assess the current state of apprenticeships in the UK. Now, a year later, we sit down with Bekki Phillips, Managing Director of In-Comm Training to discuss with them the concerns they have around the Levy, and how the company believes the delivery of apprentices in the UK can be improved.
The full report, viewable here, provided six recommendations to the government, that being:
- Produce more marketing in the mainstream media through strategic partners.
- Lower the £3m Levy threshold to help with engagement.
- Make the levy more flexible to allow it to be used in all forms of training.
- Make providers engage more with the Trailblazer standard to increase understanding.
- Provide more support for Micro-businesses and SMEs to allow apprentices to work 18-Months off the job.
- Create a new approach to engage SMEs with adopting automation and Industry 4.0.
For those of you who may not know In-Comm, the company trains more than 450 apprentices every year at its academies in Aldridge, Bridgnorth and Shrewsbury, providing vocational training opportunities that match the specific needs of the employer. Currently, they offer 40 different apprenticeships in Advanced Engineering, Manufacturing, Leadership & Management, Business Support and Logistics.
So, from manufacturing firms’ views on the levy to lowering the amount, and the calls to government, what does In-Comm Training believe should change?
The training Barometer report states that 55% of manufacturing firms you work with feel that the apprenticeship levy is working. Yet that means 45%, don’t think it’s working, from your experience why does the idea of does it work seem so divisive?
Generally speaking, employers feel that the Levy is too prescriptive and not flexible enough to meet their organisation’s training needs. While apprenticeships are a fantastic way of growing our engineering skills base, for some firms it may not be the best possible route.
Recently, we’ve also had companies pointing out the complexity and rigidity of the Levy scheme, with many citing the 20% off-the-job training - when apprentices may have release days to a provider for example - as a major barrier for engagement with SMEs. These smaller companies simply can’t afford to have apprentices out of the business for that long.
The report states that 20% of firms questions have increased the number of apprentices as a direct result of the Apprenticeship Levy. Is there still space for this number to grow in the future?
At present, I don’t see any space for this growing, particularly with the uncertainty of Brexit influencing a lot of investment decisions. You just have to look at the annual Make UK/BDO Regional Manufacturing Outlook to see that manufacturing in the West Midlands is facing uncertainty due to the downturn in the automotive sector and the ongoing effects of Brexit.
The only thing I can see is that we, the industry, really need a bit of certainty to know where the economy is going. With that being said, it’s not all doom and gloom. We have just been named as one of the training providers selected to support the delivery of a new skills fund launched by the West Midlands Combined Authority (WMCA).
This initiative will essentially use unspent Levy money from the bigger firms to remove the 5% fee that SMEs normally have to pay to take on an apprentice, making it easier for them to invest in young people.
Our employer-led approach to skills was one of the main reasons we have been chosen to support and this same approach sometimes shields us away from national sentiment and a general downturn in starts.
However, whilst our numbers remain above the national average, we have still seen the downturn in automotive cause a number of our apprentices to be let go halfway through their course. This is causing a lot of short-term pain for the young person and a much longer-term issue for the industry that will again be left trying to fish from a much-reduced talent pool.
We need support from Government to look at ways where we can stop this from happening, protecting the engineers of the future and ensuring they can complete their apprenticeship and start their career in engineering and manufacturing.
It is a plea we delivered directly to Andy Street during a recent visit to our Technical Academy and the West Midlands Mayor promised to seek ways to prevent this from happening in the future.
One of the key recommendations you made in the report was that if the government lowered the levy to £3m, then it would help companies with engagement. What was the key reasoning to set the Levy at that amount?
The old Levy system back in the 1970s involved companies paying a Levy across the board, which they would then claim back from the national pot based on the type and amount of training they completed. This could be Apprenticeships, management training or continued professional development.
I agree with the thoughts of the CIPD (Chartered Institute of Personnel and Development) who are calling for the Apprenticeship Levy to be replaced with a broader training Levy. The advantage of this would be that it would allow employers to fund both apprenticeships and other forms of accredited training.
Furthermore, the CIPD has suggested that by making this proposal applicable to a headcount of 50 or more would result in doubling the amount raised by the Levy to £5 billion, which I see as a huge opportunity for business.
What I find interesting is that the CIPD research shows the design of the current Apprenticeship Levy is incentivising employers to use their funds in counterproductive ways, including:
- 22% of employers said that they use their Levy money on training, which would have happened regardless
- 15% say they use the scheme to accredit skills that staff already have
- 14% report that the Levy has directed funds away from other forms of more appropriate training.
Your report also stated that more support is required in order to allow SMEs the affordability of allowing apprentices to work 18-months off the job. What support would you like to see be given?
The issue is that SMEs need to gain productivity improvements and bottom-line benefits from their apprentices, with many smaller firms typically unable to carry the extra costs associated with an apprentice.
What I find interesting is that research undertaken by the Federation of Small Businesses has come up with three statistics that really reinforce the need for this support, that is:
- Recruiting an apprentice was the biggest challenge for SMEs, with 42% struggling to do so.
- 29% of SMEs said that allocating management time to supervise apprentices was a barrier that they faced.
- 25% of respondents said that meeting the requirement for 20% of training to be done “off-the-job” was a challenge for them.
In-Comm has been rated, by Ofsted, as an ’Outstanding’ provider, and with over 35-years’ experience, the company would have been witness to a lot of change. With that being said, what would your main call to action be to the government?
When we purchase machinery, we are able to claim Capital Allowances in our Year End Accounts, thus reducing our Tax Liability. This, however, is not the case when a company invests in an Apprentice, which over a period of time, can end up costing the business even more than the equipment!
Therefore, we would encourage the government to introduce tax allowances for all businesses recruiting apprentices and investing in the engineers of the future.
If I had the opportunity to add another call to action, it would be based on how we’re seeing a number of our clients in the automotive supply chain being forced to make redundancies due to the downturn in business.
Apprentices are often the first to be cut as firms need to maintain their skilled staff so they can continue to deliver to their customers. In turn, this means our young people can’t complete their apprenticeships and through that, we’re struggling to find new employers for them to join, as the job roles are different to what they had started their course doing.
In my view, the government could offer support to firms to help them keep their apprentices, so they have the resource and long-terms skills in place for when the economy picks up.