The Tech Partnership

After the Funding Guidance consultation - what next for the levy?


After the Funding Guidance consultation - what next for the levy?


Sian Wilson, Head of Apprenticeships on behalf of the Tech Partnership, looks at employers’ views on the latest round of funding guidance on the apprenticeship levy.

When the latest Apprenticeship Funding Guidance was released this August, the Tech Partnership launched a consultation survey with employers. The findings, passed to the Department of Education, were clear: Clarification re-skilling rules are welcomed, but there is still uncertainty over much of the detail. Digital employers will be contributing between £120m and £150m to the levy, so they’re understandably keen to ensure an output of highly capable, well-trained employees with the skills their businesses really need. There’s broad support for apprenticeships, but a fear that the emphasis on quantity – to meet the Government’s stated target of three million starts by 2020 – will detract from a necessary focus on quality.

The big picture

If there’s an overriding message from the consultation, it is to focus on quality and not quantity but employers expressed other concerns too:

  • The lack of emphasis on digital careers and apprenticeships in schools, meaning that the talent pipeline is compromised.
  • The lack of high quality digital skills training and development across the UK. And finally that Clarification re-skilling rules are welcomed, but there is still uncertainty over much of the detail.

Transfer of the Levy

The Tech Partnership has urged the government to allow levy-paying employers to transfer part of their levy pot to partner organisations. This would help non-levy paying employers with their contributions, and encourage organisations to share best practice, materials and resources.

The new guidance offers the prospect of 10% of the pot being available to share with supply chains. The survey showed that employers are keen take advantage of this, but as well as transferring funds for delivery costs, they want the flexibility to help non-levied employers with the administration, management and employment costs of taking on apprentices.

The amount an employer is able to transfer should certainly be higher and more flexible in use. This would drive more non- levy employers to take on apprentices, and give employers greater control of how their levy is spent – together raising the likelihood that the levy will drive development of industry valued skills. 

Funding Bands

Employers and providers have welcomed the protection of the degree apprenticeship funding band. The digital sector has been a trailblazer for these qualifications, which have produced clear business and learner benefits. Other findings include:

  • Most employers are happy with the Level 2 and Level 3 funding bands, but felt that higher levels were too low.
  • The hidden cost of the management of the levy, infrastructure and support has not been taken into account. Many employers believe that the costs of set up will exceed their levy pot, meaning that they will treat the levy as a write off rather than investing in skills.
  • Employers are concerned that cuts in funding for training, and a lack of flexibility on how funding can be used, will mean an inevitable fall in quality, and high quality provision will be hard to come by.

Employer Provider proposals

The ‘Employer Provider’ concept is welcome, giving employers the ability to use their levy funding to train new apprentices and existing staff themselves. However, many employers want to be able to share delivery between themselves and other complementary partners, and the proposed limit on subcontracting makes this hard to operate.

  • To create the highest quality programmes for apprentices, employers need to have the flexibilities to deliver part of the programmes themselves, while engaging specific expertise through other providers. The limits on subcontracting need to be reviewed.
  • Clear advice is needed for employers wanting to become an employer provider, with significant support on set up, systems and compliance. Many employers are reluctant to take this step without clear information on what would be expected of them.

Incentives for 16-18 year olds

The incentives to take on 16-18-year-old apprenticeships - £1000 each for employers and providers - are welcome, but most employers felt that this amount was too low to encourage smaller employers to recruit this age range. Additionally:

  • Schools need to be persuaded to allow access to information on apprenticeships – this age range is still under-informed about the options available to them.
  • A more flexible and scalable incentive model could take into account factors like areas of high deprivation, areas of particular skills shortage, and difficulty / duration of certain apprenticeships.

Levy rules

Employers are genuinely concerned about the lack of flexibility in spending levy funds. In particular:

  • They want to be able to use levy funds for the management and administration of apprenticeship programmes, and to subsidise recruitment costs and salaries for apprentices. This is critical if SMEs are to be able to take on apprentices.
  • Employers who use Apprenticeship Training Agencies (ATAs) want to be able to use their levy funds to train their ATA apprentices.

Each business is different, say employers, and each needs to have the flexibility to spend its levy money in a way that makes sense for its own needs.

Digital Skills in the UK

The consultation survey asked whether the levy would have an impact on the number of digital apprenticeships in the UK. The majority of respondents believed the levy would increase the number of opportunities in the UK, and indeed many Tech Partnership employers are either creating apprenticeship programmes for the first time, or are widening their graduate programmes to include degree apprenticeships.

  • With acute skills gaps in digital, the availability of high quality training in priority areas is the primary concern.
  • 16-18 recruitment is still a challenge in digital roles, with employers finding that the pipeline of quality candidates is far too narrow. Schools and colleges need to support apprenticeships much more strongly.
  • Finding good quality training is a key concern to employers. Training providers and FE colleges do not always offer the appropriate programmes, and some delivery teams are insufficiently skilled.
  • There is still a lot of work to be done to encourage women to enter a career in digital. Apprenticeships could be a new and attractive route for women to join the profession, but more needs to be done to reach out to potential female candidates.

So what are the next steps? The Tech Partnership will continue to monitor announcements on the apprenticeship levy closely, to represent employers’ views to the Government, and to keep you up to date with news and comment.


View the full survey results here