Chloe Aldred: Is the apprenticeship levy the solution to skills gaps in the workplace?

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    A recent survey conducted by the British Chamber of Commerce demonstrates that a large number of firms across the country are finding it difficult to employ people with the correct skills to successfully fulfil job requirements.

    As a result, this is holding back the productive potential of many businesses. To help remedy this, the government is currently creating feasible solutions in order to help businesses flourish.

    In part to finding a credible solution, the government has announced a commitment to providing three million extra apprentice placements by the end of parliament in 2020, with a new apprenticeship levy to help fund this. The levy will take effect from April 2017 and a full draft funding guide for the levy has already been published and can be accessed at

    The apprenticeship levy will require all UK employers with a pay bill of over £3 million a year to make an investment in apprenticeships, and will charge businesses at a 0.5% rate of their annual pay bills. Initially, this indicates that only large businesses will be affected, but what does this mean for small businesses?

    Marcus Mason the Head of Skills and Education with the British Chamber of Commerce said: “Smaller businesses will not be directly affected by the levy, but the recently issued guidance does suggest there will be other funding changes that will impact on smaller businesses. For example, the ‘co-investment’ set by the government states that smaller businesses are expected to pay 10% of apprenticeship training – a big change for many businesses who currently don’t pay any anything towards apprenticeships”.

    But, many businesses are wondering whether apprenticeships will actually help close the current skills gap issue.

    Marcus Mason provided some insight saying: “Potentially it will help, but it’s really important that it is delivered the right way. Recent survey work does show that employers are finding it increasingly difficult to hire people at all levels, and we also know businesses think more can be done to prepare young people for the world of work. Apprenticeships can be a really good solution to tackling such problems as they provide tailored pathways into new roles.

    “I would say it is really important not to chase or focus on the numerical target too much because, with that, there is a risk of quality suffering as a result.”

    Marcus stresses the importance of businesses thinking more broadly about the actual requirements and responsibilities of job roles, from which they can match a more significant and tailored type of training to increase productivity and employee retention, ultimately helping minimise the skills gap.

    With the funding guidance now in place, businesses should keep an eye out for the following upcoming announcements as they prepare their budgets for the new financial year. Such announcements will include, further detailed guidance on funding, eligibility rules, guidance from HMRC on how to calculate contribution funds to the apprenticeship levy, and details on how levy payers in England can register to create their online digital account.

    The Lincolnshire Chamber is recommending that local businesses look at the funding guidance now, to ensure they are financially prepared for when the process goes live in April 2017.

    Businesses are also reminded that apprentices are now available for anyone between the ages of 16 and 65 years. To chat through training solutions or access more information about the apprenticeship levy, contact Shirley Bates, the Chamber’s Apprenticeship Specialist on 07912 579881 or email Shirley at [email protected].

    Chloe Aldred, PR & Marketing Executive with the Lincolnshire Chamber of Commerce, supporting a number of exciting and upcoming projects and events we have currently have going on at the Chamber, Visit Lincoln/Lincolnshire and Select Lincolnshire.