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Apprenticeship Levy to Pay Dividends for Many Employers

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Half (54%) of decision-makers at levy-paying companies are making use of the apprenticeship levy, but there’s a long way to go before all companies are using the funding effectively, according to new research from The Open University.

The Apprenticeship Levy was launched in April of this year to increase investment in training. It’s levied at a rate of 0.5% of an organisation’s wage bill if it totals £3 million or more a year. But three months on some companies are still uncertain about the levy. 

One in five (18%) employers say they don’t know how the levy works and 2% say they don’t know anything about it at all. 

But among the 80% of senior managers who have a good grasp of the levy, most are supportive. 85% believe it will have a positive impact on their organisation and 87% are confident it will boost productivity and the British economy as a whole.

Many organisations in England are already using the levy to augment the skills of their workforce. More than two-thirds (68%) of employers report that they’ve increased the number of higher apprentices in their workforce and half (53%) have boosted the number of degree apprentices.

Additionally, 58% of senior managers say their company is using the levy to offer training to existing employees, particularly in management and IT, where skills are lacking. Many are using the levy to build those skills within their organisation rather than paying to source it from elsewhere. That includes spending money to hone employees’ management skills and sharpen their digital know-how. 

Steve Hill, External Engagement Director at The Open University, said: “With 0.5 per cent of many organisations’ wage bills going into a levy pot to pay for work-based training, the pressure is on for employers to see the benefits, and use the funds appropriately. But this research paints a positive picture for businesses, where organisations are already seeing the apprenticeship levy not as a tax, but as an investment.

“Understanding that improving skills and productivity can boost the bottom line is crucial to the success of the apprenticeship levy. Better training leads to more motivated and better-skilled employees – who are engaged with and loyal to an organisation. By investing in training and development, the return on investment of the levy will be seen in more productive and efficient staff.”

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