Monday 19th March 2018

Apprenticeship levy one year in: small businesses critical to ensuring levy success

Mark Farrar, Chief Executive, AAT (Association of Accounting Technicians)

April marks the first anniversary of the introduction of the apprenticeship levy and it’s fair to say that the objectives of the new policy have so far proved to be extremely challenging to meet. Figures for new apprenticeship starts slowed significantly during Q1 2017/18, suggesting that employer confidence in the system had fallen.

However, in the past few months we have begun to see some signs that the corner may be beginning to turn. In truth the levy was unlikely to have an immediate positive reaction as firms naturally have taken time to understand the new system and how they can benefit. Larger businesses who pay into the levy, for example, have a 24-month period to use the funds that they have paid into the levy and so many will be considering how best to restructure their training programmes.

For smaller non-levy paying firms, the appetite for apprenticeships appears to perhaps be stronger. In a survey to mark National Apprenticeship Week, AAT spoke with 500 small and medium-sized businesses (SMEs) throughout England, and nine out of ten of them told us that apprenticeships had boosted their productivity. Two in three, meanwhile, reported that a huge advantage of the apprenticeship scheme was that it brought in employees who they were able to train into being more suitable for the business with the specific skills required.

Government start target looms large

 There can be no doubt that the UK’s SMEs have a vital role to play in the success of the apprenticeship scheme including helping the Government reach its stated three million apprenticeship start target. Chancellor Philip Hammond recognised this during the Spring Statement, promising £80 million from the Education Secretary to help smaller firms recruit apprentices.

The 2020 target for the Government to reach three million apprenticeship starts is not all that far away, and with starts falling last year, the Government is currently well short of meeting their objective in this area.

In truth, AAT believes the starts target is limited anyway, in that it considers neither the number of completions (almost 30% fail to complete an apprenticeship at present) or the quality of the apprenticeship scheme itself. It strikes us that there isn’t much sense in people undertaking an apprenticeship if it fails to hold any value in an employer’s eyes, or to provide the apprentice with transferrable skills and knowledge.

Apprenticeships work for businesses and individuals

Many AAT students study for our accounting qualification by securing an apprenticeship position, and so we know first-hand how apprenticeships can help people from a wide range of backgrounds get into a quality career. Take Gina Gardner for example, 21 from Gloucestershire, who told us: “I knew from the beginning that university was not for me, therefore I rejected all five offers I received as I knew that I wanted to follow the route of becoming an apprentice. I chose this route because I knew I wanted to gain on-the-job training.

“Doing an apprenticeship allowed me to do just this, gaining first-hand experience with clients and earning as I learned. I began studying AAT’s Accounting Qualifications at the age of 18 and had completed this by the age of 19. I now work for an independent firm of chartered accountants, business advisors and tax specialists, working in Corporate Tax with clients across Gloucestershire, the UK, and internationally.”

Many businesses are backing apprentices and value the benefits they can bring to them; those businesses who have taken on apprentices are generally happy with them, while  many of those who haven’t yet taken any on are making plans to do so. There should be plenty of exciting options in the future for those who plan to take this path.

Click here to find out more about routes into a finance career through an accounting apprenticeship.

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