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Preparing for the apprenticeship levy
31/03/2017 - 08:14
The apprenticeship levy will be introduced on April 6th and presents an opportunity to employers who do not already offer an apprenticeship scheme to invest in and nurture talent. Andrew McClean takes a look at what it means for operators.
The levy will require all UK employers with a pay bill over £3 million each year to invest in apprenticeships. All employers will be able to select an apprenticeship framework or standard, choose a provider and an organisation to assess apprentices, as well as post apprenticeship vacancies.
Research from hospitality consultancy firm People 1st indicates 80% of companies that invest in apprentices report an increase in staff retention as well as boosting the bottom line.
Annette Allmark, director of strategic policy at People 1st, said: “Apprenticeships are a fantastic route to develop the critical skills required now and in the long-term. They are critical when considering that the annual staff retention bill in hospitality is £274million and the industry needs 1.3 million skilled staff by 2024 to operate effectively and remain competitive.”
The government is applying a monthly 10% top-up to the funds businesses have for spending on apprenticeship training. For every £1 that enters an account, businesses get £1.10. Funds will expire 24 months after they enter an apprenticeship service account unless they are spent on apprenticeship training with a training provider.
Businesses with any existing schemes that started before May 1st will have to continue funding training for apprentices under the agreed terms at the time the apprenticeship started.
There are two different types of apprenticeship training to choose from. Apprenticeship standards cover a specific job role and apprenticeship frameworks are a series of work-related vocational and professional qualifications. Frameworks will be phased out by 2020 as the government moves to employer-led apprenticeship standards.
For those not paying the levy, the government is helping employers prepare with a co-investment initiative. The government asks for a 10% contribution to the cost and will pay the rest.
People 1st offers the following advice to employers:
Understand the apprenticeship levy and the impact to your business
- To make sure you maximise the return on your levy investment, you need to act now. Whilst many employers have their levy strategies well underway, the funds only expire after 24 months so there is still time to put in place a strategic plan.
Develop a well-planned apprenticeship strategy that reflects the needs of your business
- It’s critical that you get the buy-in of the business more widely and that you communicate the goals of the new apprenticeships clearly. Pull in all the relevant stakeholders and ensure that they all understand what the introduction of the levy will mean to the business and are all involved in creating fulfilling programs that meet the standards.
Make it work for you
- Think about how apprenticeships can be used to develop your talent, increase retention and boost productivity: The new-style apprenticeships have been developed by employers and form progressive career pathways. Look across your business and explore the new standards, covering entry level through to managerial roles, to see which of them can be used to develop the skills you need.
Access the available support
- The new apprenticeships present employers with an opportunity to develop skills and improve staff retention, but there’s a lot to think about in preparation - our free network can help
TGI Fridays believe the introduction of the apprenticeship levy will allow the business to invest in high performing talent, enabling apprentices to achieve qualifications and build their careers in the hospitality industry.
Jacqui McManus, culture and people development director, said: “At TGI Fridays during the past three years, we offered our team members an amazing apprenticeship programme with a range of qualifications available, from Level 2 Kitchen Services to Level 3 Hospitality Supervision and Leadership. This year we are introducing additional apprenticeships, including Level 5 ILM Operational Department for our team leaders and management.
“Since launching our apprenticeship scheme in 2013, we have had nearly 300 qualifications completed – an amazing result. We’re so proud of our hard-working team members and the skills they all bring to our business, which makes Fridays what it is today.”
Coffee chain Costa offers a programme that starts with Barista Skills and Customer Service at level 2, progressing into Leadership & Hospitality Management. The programme is looked after in house, which helps Costa guarantee quality and support through the qualifications. Costa currently has over 200 apprentices and plans to reenrol an additional 250 this year.
Russ Hartland-Shaw, WISE by Costa programme manager, said: “Changes to government funding in Further Education means companies must play a bigger role in the education and development of our young people. The levy formalises the way they can do that.
“At Costa, we believe if companies invest in young people, the rewards for the business are enormous. For us, that’s not just about investing the money – it’s about investing the time to build relationships with the local community.
“It’s about offering a credible alternative route to further education and employment, which is part of the government strategy to widening the options available for education. Apprenticeships offer young people the opportunity to develop a career in retail & hospitality and enables us to have a more strategic approach to our future talent pipeline, which is why we are so committed to our scheme.”