As a nation, we urgently need more professionals – engineers, designers, digital wizards and skilled managers – and the new apprenticeship levy has thrown a lifeline to companies scrabbling for talent. Schools and universities just aren’t turning out enough people with the right skills to plug gaps in some sectors, say leading graduate employers.
In a bid to redress this, the government has committed to creating 3 million new apprenticeships by 2020, paid for in part by a new employer levy introduced in April this year. “We’re starting to witness a sea-change in attitudes,” says David Willett, director of corporate sales at the Open University (OU), which now offers a range of apprenticeships, some at degree level. “Employers respect apprenticeships. They’re seen to add real value to a business – having a positive impact on productivity and performance.”
As of April, companies with a pay bill of more than £3m have been charged a compulsory levy of 0.5% of their wage bill, which employers in England can claim back to fund new apprenticeships – the government will top up these funds by 10%, and levy-paying employers have a £15,000 allowance to invest in apprenticeships.
Businesses expect numbers of apprenticeships to rise this year by 59%, boosted by the new levy, research from the Association of Graduate Recruiters (AGR) shows, and employers, including Unilever, Jaguar Land Rover and auditors KPMG, say they’re offering more schemes.
While fewer than 1.3% of employers are liable to pay the levy, the money will also be spread around smaller companies whose pay bill is below the £3m threshold – they’ll receive up to 90% towards the cost of apprenticeships.
“Benefits for us as a business are many,” says Claire Tennant, at marketing and communications agency MC2 in Manchester, which currently has two degree apprentices among 45 staff – paid for by the levy. “We’re able to make sure apprentices get exactly what we need out of the course. It means (apprentices) also bring in new ideas – they’re learning cutting-edge stuff at uni and bringing it back to the business. It helps us stay ahead.”
But a third of big companies still don’t understand how apprenticeships can help their business and probably won’t use the funds, says Stephen Isherwood, chief executive of the AGR. “Another third of companies are very switched on,” he says, “particularly those such as accountancy firms who have long offered work-based training. And the rest are thinking about it but not quite there yet.”
UK skills gaps are acute. British companies are short of some 20,000 engineers and technicians every year and the country will need 1.8 million more by 2025, says the not-for-profit organisation Engineering UK.
And in the wake of some heavyweight cyber attacks last year, the technology sector is desperate for skills to fight cybercrime. New high-level apprenticeships have been designed with digital and other skills shortages in mind. Combining tailored professional training with an academic qualification, they introduce recruits to working life as well as delivering professionally accredited knowledge.
The government hopes the levy will help double the annual level of spending on apprenticeships to £2.5bn by 2019-20, compared to levels back in 2010-11.
More than 80% of graduate employers now offer apprenticeship programmes and they expect between them to hire 12,300 apprentices this year – 4,600 more than last year – the AGR research shows. Most of these are at intermediate level but 3,320 of these are higher apprenticeships – many of which require A-levels. Currently banking and IT and telecommunications offer the most apprenticeships, and numbers are growing fast in the retail sector.
“It takes employers a while to get to grips with major policy change,” says Willett. “At the OU, we’ve made a multimillion pound investment in apprenticeships. Our academics have worked with employers to create relevant content that can be embedded in workplace learning.”
The OU has created three new high-level apprenticeships – in management, digital technology and healthcare, the first two offering honours degrees. These combine work-based learning with flexible online study. Most degree apprenticeships last between three and four years, says Willett, and cost up to £27,000. Typical starting salaries are around £17,000 to £18,000, and three years after completion, some former apprentices are on salaries of £45,000, says Willett.
And the OU is planning to launch more higher and degree-level apprenticeships in the next year or two – in nursing, policing, accountancy and sports coaching, with a postgraduate-level apprenticeship in management.
Reaching young people – and their parents – is a challenge. “We need to get the message through to schools about the opportunities these offer,” says Isherwood. “Employers, universities and schools are going to need to collaborate to make sure students understand all of the opportunities open to them.” Young people who choose this route do value the training it provides: some 98% of industry apprentices said they were happy they’d completed an apprenticeship, according to the Industry Apprentice Council.
Nearly three-quarters of employers surveyed by the AGR say that apprenticeships won’t make a difference to numbers of graduates they hire – typically companies’ annual intake of apprentices represents 1% of the workforce, and graduates 1.9%. But apprenticeships allow companies to hire from a wider pool and complement graduate recruitment, says Helen Alkin, future talent strategy and recruitment manager at Marks & Spencer.
“Apprenticeships are providing us with the opportunity to bring in great talent earlier in key strategic areas,” she says. “Either where we know there is significant competition or where there aren’t enough graduates to fulfil demand.”
And the OU can work with employers to help them publicise new apprenticeships and recruit across a range of levels, says Willett. “We’re seeing an increase in quality and range of students applying. School leavers are realising that a degree from an average university in an average subject doesn’t guarantee you a graduate role. We are witnessing a shift – bright young people making intelligent choices.”
To find out more about OU degree apprenticeships, visit open.ac.uk/business/apprenticeships
