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David Willett

The Open University

Corporate Director

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Mind the (skills) gap – getting the most from the Apprenticeship Levy


The last year has seen significant focus from UK government on supporting apprenticeships. Three million new apprenticeships are promised by 2020, as well as the development of new standards across a further 43 industry areas – bringing the total up to 61 and counting [PDF].

Apprenticeships are crucial to fuelling the economy with skilled, adaptable employees, particularly with the introduction of degree apprenticeships. They build better links between academia and business and help students to learn practical workplace capabilities – both related to their specific area of study, and softer skills; like critical thinking, independent learning – and even people management.

Introducing the levy

The apprenticeship levy, introduced this year, is expected to boost the market, and to reinforce the importance of apprentices. The majority of apprenticeship funding will come from this employer levy – set at 0.5% of an organisation’s payroll. It affects all UK employers, including those within the public sector, with annual wage bills of £3m or more.

The levy was initially met with mixed reactions from employers. Organisations reported not being fully aware of how the new reforms would affect them and how apprenticeships would fit into their organisations’ strategy. Some saw the levy as a ‘payroll tax’ – an additional burden on their business, which wouldn’t deliver significant benefits.

Understanding the benefits

But, three months on, we can see that the most savvy organisations are embracing the levy. In our latest commissioned research we found that half of senior managers are already making use of the money raised, and a further 25% of business decision-makers say they already have concrete plans to use the funds.

So, organisations are beginning to see the benefits the levy can bring. They see it not as a tax, but as an investment; and understand that improving skills and productivity can boost the bottom line. The diverse nature of apprenticeships means that these forward looking employers will benefit from a workforce with skills capable of morphing to suit the changing business environment. Rather than encouraging the development of narrow skillsets, apprenticeships lay groundwork to encourage the development of an agile mindset – adaptable and useful in an unpredictable employment market.

Getting the most out of the levy

For many employers, reclaiming the value of the apprenticeship levy will be what incentivises them to invest more in apprenticeship training. For this ambition to be realised, it’s vital that they understand and value the link between apprentices and the bottom line, and select partners that will help them gain the biggest return on investment.

The Open University offers a range of degree and higher apprenticeships that are designed for organisational needs. Our apprenticeships are delivered flexibly to fit around your organisation’s demands, are scalable for consistent training across multiple sites and provide high quality work-based learning for real business impact.

Working with large and mid-sized businesses in the UK, to deliver tailored solutions, we are able also to provide concrete advice on how to get the most of the apprenticeship levy.

It’s vital that employers don’t think of the levy as a pot that needs spending, but as an investment. Our advice is to consider what your organisation’s biggest areas of pain or missed opportunities are and whether an investment in apprenticeships should be used to address these.

Addressing the skills gap

One of the key ways that the levy will make a significant difference to organisations is in addressing a stubborn skills gap, which hinders productivity for many.

Finding skilled workers is a perennial problem for many employers, and faced with a shrinking talent pool, exacerbated by the uncertainties of Brexit, it is important that employers invest in developing their workforce. Our advice to businesses is to think ahead – higher and degree apprenticeships will help develop new and existing workers, who are able to make an immediate impact in the workplace.

These workers will have hands-on experience and the right skills to positively influence an organisation.

Developing digital skills

According to a report published by the Commons Science and Technology Committee, 12.6 million adults lack basic digital skills while 5.8 million have never used the internet at all. This report, and the surrounding media and industry debate, echo our own long held view that digital literacy must be at the heart of the skills discussion – and that there must be a renewed focus on ensuring digital and technology competency in order to maintain a competitive business environment.

Apprenticeships are a vital component in boosting digital skills. The Open University’s own Digital and Technology Solutions Professional Degree Apprenticeship develops the higher-level skills and behaviours required to create confident and capable digital and technology professionals.

Apprentices specialise in different but related digital roles, and all are able to support their organisations to develop new products and services and increase productivity using digital technologies – a vital discipline for a digitally driven workforce.

Invest in training

Mirroring an industry wide focus on better training (a key tenant of the UK government’s Industrial Strategy), many organisations are looking to use the levy to boost the skills of their current workforce.

We all know that good training is vital in ensuring employees are engaged and productive; making them well versed in the skills they need to do their jobs, and reassured that employers value their contribution enough to invest in them. But with the introduction of the apprenticeship levy, it’s crucial that training provides tangible return on investment.

The new apprenticeship standards have been driven by employers and, at The Open University, we have listened to organisations requirements carefully. Our apprenticeship programmes have been built specifically to encompass both the technical and soft skills that are required to help deliver meaningful results, using our experience developed over the past fifty years.

Invest in apprenticeships, invest in better business

So, these are just some of the ways organisations can use the apprenticeship levy to their benefit.

In our recent report with Towards Maturity, In-Focus: The Work-Based Learning Dividend – including research from over 600 learning and development leaders – we uncovered a correlation between how view the importance of investment in skills and their willingness to embrace the new apprenticeship levy, and perhaps it’s no surprise that the most savvy organisations are looking at the levy as another way to boost productivity and performance.

The organisations most concerned with skills and development don’t see the levy as ‘just a tax’ but a chance to put learning at the heart of an organisation. And they’re turning to organisations like The Open University to help them make the most of this important development for business.

Want to get more value from the apprenticeships levy? Take a look at our 2017 guide to Higher and Degree Apprenticeships Guide, produced by TrainingZone and The Open University.

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David Willett

Corporate Director

Read more from David Willett

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