Now Offering 
Careers Advice

Construction and the Apprenticeship Levy

The perception of what a modern-day apprenticeship means has changed over the last decade; previously thought of for the low academic achiever and comprised of entry-level trade based schemes. But that has all changed, and apprenticeships now form a solid foundation for highly sought after workforce skills.

The History of Apprenticeships

An Act of Parliament in 1563 to end the control of guilds resulted in a standardisation of skilled workers, and tradespeople had to undertake seven years of training in order to be deemed competent. Although celebrated at its launch, the system soon became thought of as archaic in the face of modern technology and by the 1960’s apprenticeships were purely aimed at trade roles. A lack of change in the way apprenticeships were delivered, and the subjects that they encompassed saw the number of apprenticeships taken up by 1990 drop to under 53,000 compared to the 243,700 undertaken in 1966.

Modern Day Apprenticeships

Apprenticeships changed with the publication of the Leitch Review in 2006, as there was a need to consider the UK’s long-term skills requirements. The review found that adult skills needed to increase not only across all levels but also in a wider area of subjects. A direct result of this review was the availability of funding for apprenticeship schemes and the actual minimum standards that govern apprenticeships improved on. Prior to the introduction of the Apprenticeship Levy, 90% of employers interviewed were happy with the apprenticeship programme, and 75% had seen the value that apprentices could bring to both the productivity and quality of their products and services.

The Apprenticeship Levy

The Apprenticeship Levy was introduced last year and required all businesses with a payroll in excess of £3million to pay 0.5% levy of their payroll. Each contributing employer is entitled to an allowance of £15,000 to offset what they owe, so theoretically, the levy will only have a financial impact on companies with a payroll in excess of £3million. In addition to this, the Government will add an additional 10% to the pot. All the money that is collected in a company’s digital account goes towards apprenticeship training and assessments.

How has the new Apprenticeship Levy been accepted by industry?

Unfortunately, not as well as the Government would want. Employers find it confusing, and this has been seen in the dramatic drop in apprenticeship numbers we have experienced since the scheme began last year. With the skills gap widening in areas of STEM (Science, Technology, Engineering and Maths) subjects and a new raft of older workers due to retire in the next five years, it is more important than ever that the right training is available to a new generation of workers.

Construction and the Apprenticeship Levy

We are all now very familiar with the skills gap crisis construction faces over the coming years, and much has been made about how we need to be focusing on encouraging newcomers of all ages into construction. The Government has seen apprenticeships as a way of tackling this gap, but almost a year on from the introduction of the Levy, we are still waiting for approval on many aspects of the apprenticeship programmes, and to date only 27 of the 75 standards submitted have been approved for delivery. This is all disappointing news not only for business but for the thousands of young people looking to make their way forward in the construction industry. An apprenticeship has so many advantages for both the employer as well as the apprentice. Many companies that take on apprentices report that years later, the now qualified apprentice is still part of their workforce and is slowly working their way up the career ladder. Their knowledge of the company, their hands-on experience and their adaptability to life in the workplace makes them valuable team members, and having invested in their training programme, companies work hard to retain that knowledge and experience. Recent reports also demonstrate that the earning potential of an apprentice versus a university graduate is higher and in addition to this the apprentice does not have the debt that a graduate has incurred from university fees.

So, when we look at all the factors that make apprenticeships such an attractive option for both the apprentice and the employer, it is a shame that this new system is possibly not working as well as it should be. The Government needs to sit up and take notice of the rather substantial drop in the number of apprenticeships and put measures in place to ensure that all industry has the necessary tools to make this Levy work. The purpose of the Levy was to ensure more funds for the right training but appears to have resulted in complicated red tape and a stalling of standards approvals.