Comment: How can the apprenticeship levy benefit businesses and young people?

With the introduction of the apprenticeship levy today (6 April 2017), apprentices are a hot topic. Kerry Featherstone, Director of the University of Sheffield's AMRC Training Centre discusses.

AMRC Training Centre apprentice using equipment

How can the apprenticeship levy benefit businesses and young people?

By Kerry Featherstone, Director of the University of Sheffield's AMRC Training Centre.

The government wants to create three million new apprenticeships by 2020 and so to ensure investment in training, they are introducing a new way of paying for it.

Large companies will have to pay 0.5 per cent of its annual bill, which will be ring-fenced for training.

I believe this is a positive move. For too long, this country has not held apprenticeships in high enough regard, and they have not been given the profile they deserve.

Now I’m happy to see that the tide is starting to change. But we need to carry on reinforcing that message.

90 per cent of apprentices remain employed after completion of their apprenticeship and a quarter go on to be promoted within their first year.

One of the huge benefits of the apprenticeship levy is that it will take age restrictions away from funding of apprenticeships. Business will be able to use the levy for training purposes among employees at all ages and all levels of the organisation.

The levy provides businesses an opportunity to look at its current workforce and look at how it can upskill employees to benefit the company and even diversify into new areas. If used in line with organisation resource planning, I think the apprenticeship levy can create capacity for companies to grow.

Companies paying in will receive the money back in the form of apprenticeship training, along with a 10 per cent top-up bonus from the government, and I do think there will be a feeling from firms that if they are paying in, they may as well get something out of it.

But the quality of the training has to be right. The University of Sheffield is an approved apprenticeship training provider and we hope to work with organisations to offer training and skills in areas to address skills shortages and make it an opportunity for economic growth in the region.

We already provide highly skilled training for apprenticeships at our AMRC Training Centre where we have some of the brightest, talented young people from across the Sheffield City Region employed by local businesses.

They are learning the engineering skills for the future in partnership with industry, where many areas are suffering from an ageing workforce and are facing a skills shortage. By providing a new highly skilled workforce, we can help boost the region’s economy.

Individuals with an advanced or degree apprenticeship will earn more over their lifetime than those who have a similar-level qualification.

Apprenticeships can also mean better staff retention for businesses. 90 per cent of apprentices remain employed after completion of their apprenticeship and a quarter go on to be promoted within their first year.

For young people, as well as increasing employability, an apprenticeship increases earning power. Individuals with an advanced or degree apprenticeship will also earn more over their lifetime than those who have a similar-level qualification.

These young men and women could have gone to university but they have chosen an alternative route. Whether it's because the practical style of learning suited them better or because university might not have been seen as a viable option for them.

It is four years since our training centre first opened its doors and welcomed our first cohort of apprentices. We now have delivered training to more than 810 learners and as they progress to the next level, we are providing it, with routes through to a degree, and will be developing masters and even PhD qualifications.

It is vital that as a Russell Group University we are offering these alternative routes to a successful career in engineering. And I think the levy can only help strengthen the message of the benefit of an apprenticeship.

The apprenticeship levy at a glance:

  • The levy comes into force from 6 April 2017.
  • All employers in England with a pay bill over £3 million per year will pay 0.5 per cent of its annual bill to help fund investment in apprenticeships.
  • The government will apply a 10 per cent top-up to the funds for spending on apprenticeship training in England.
  • The new tax aims to fund three million new apprenticeships in England by 2020.