It’s a common storyline: Organizations are facing recruitment challenges and struggling to source the skills they need. In the UK, continued strike action among sectors such as healthcare and education has made talent shortages even more acute. One way that organizations can solve their skills shortages is by developing their own talent through apprenticeships.
Apprenticeship programs offer a unique set of benefits that can help everyone from the talent to contingent workforce managers. In the UK, apprenticeships have emerged as a valuable career pathway for talent seeking a hands-on approach to skill development and entry into the world of work.
The Chartered Institute of Personnel and Development, a UK-based professional body for HR professionals which also has its own apprenticeship partnership with English training organization Realise, says apprenticeships bring a number of benefits to employers.
For example, after hiring apprentices, many employers have maintained or improved future skills in the business and have seen improvements in the goods and services they offer. Meanwhile, the majority of employers have also experienced improved staff morale, according to the CIPD.
In the UK, apprenticeships are supported by the government and are available at multiple levels, including school leavers, workers upskilling to advance in their careers and those who are seeking to change careers. There are hundreds of programs to choose from, and some even include a qualification, like a degree. Those who are seeking to start an apprenticeship must be at least 16 years of age, although there is no upper age limit.
There are different governmental bodies that handle apprenticeships for Scotland (apprenticeship.scot), Wales (Welsh government) and Northern Ireland (NI Direct Government Services).
Apprenticeships take one to five years to complete, depending on their level. There are also different rates of pay for apprentices, depending on age and the year of apprenticeship. Apprentices are also entitled to:
- Earn the national minimum wage and receive holiday pay and other employee rights,
- Work alongside experienced staff,
- Gain job-specific skills, and
- Receive time for training and study related to their role (at least 20% of normal working hours).
The Apprenticeship Levy
The Apprenticeship Levy was launched in 2017 to create and fund new apprenticeship positions.
The levy is an amount paid at a rate of 0.5% of an employer’s annual pay bill. It applies to all employers, including those in Scotland, Wales and Northern Ireland. Employers must pay the Apprenticeship Levy each month if they:
- Have an annual pay bill of more than £3 million, or
- Are connected to any companies or charities for Employment Allowance purposes and have a combined annual pay bill of more than £3 million.
There is also an allowance that reduces the amount of Apprenticeship Levy employers must pay by £15,000 across the year. However, employers cannot carry over any unused allowance into the next tax year.
Sectors such as recruitment and employment firms and managed services companies also have specific rules for paying the Apprenticeship Levy. For example, recruitment and employment firms must pay the levy if they supply labor (including subcontractors) to a client and pay Class 1 secondary National Insurance contributions on the earnings of those workers.
According to the UK government, employers have 24 months to use their funds once they enter their apprenticeship service account; after this point, their funds will expire. This encourages levy-paying employers to invest in high-quality training and assessment and to prevent levy payers from accruing very large balances. Those expired funds are used to pay for apprenticeship training for smaller employers and for any additional payments needed to support apprentices, training providers and employers.
In terms of the overall apprenticeships budget, 99.6% of the budget was spent in the last financial year.
Government figures for the 2022-2023 academic year show that starts supported by Apprenticeship Service Account (ASA) levy funds accounted for 63.0% (123,310) of apprenticeship starts in England. Notable employers who have used the Apprenticeship Levy include GlaxoSmithKline (GSK), which used it to allow a range of smaller businesses and charities to hire and train apprentices.
However, the levy has been criticized since its introduction in 2017, with many organizations calling for its reform, highlighting its misuse as well as how temporary workers can miss out on training.
“Apprenticeships are a great way to get people into the workforce, some for the first time,” says Kate Shoesmith, deputy chief executive at the UK’s Recruitment and Employment Confederation. “But we must broaden the Apprenticeship Levy so that funds can be used on a wider range of training.”
It is a great pity for many workers that the levy still does not work for much of the recruitment and staffing industry years on from its introduction,” she notes. “This is mainly because the funds are only available to those who have the same employer for at least one year, leaving most temporary workers ineligible despite their considerable value to the labor market.”
“The government needs to reform the levy now because we need more people in work, not least because our national GDP could miss out on up to £39 billion every year from 2024 if we fail to address labor shortages,” Shoesmith says.
CW program managers in the UK should familiarize themselves with the inner workings of the Apprenticeship Levy and stay apprised of any changes.
‘Returnerships’: Accessing Older Talent
The UK government announced in its 2023 budget that it is launching a new apprenticeship initiative. These apprenticeships have been dubbed “returnerships” and are aimed at encouraging adults over the age of 50 to return to the workforce.
The new offer brings together three programs: apprenticeships, skills boot camps and Sector-Based Work Academy Programs (SWAPs).
“‘Returnerships’ will raise awareness of these pathways, providing a clear route back into work and encouraging employers to hire older workers,” the government stated. Returnerships are supported by £63 million of additional funding.
Both returnerships and apprenticeships can offer pathways into work. The UK’s Education Hub offers more information for both.
