Manufacturers: How are you using the Apprenticeship Levy?

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Unlocking the potential of the Apprenticeship Levy
21st century manufacturing is not dirty, dull or dangerous. It does, however, require a specific set of skills. And these skills are in short supply. According to the EEF, 72% of manufacturers are concerned about finding the skills their businesses need; and three-quarters struggled to recruit highly-skilled engineers in the past three years.

If prompt action isn’t taken, this can only get worse. After all, with technology evolving more rapidly than ever before, there’s a widening gap between the skills individuals possess, and the skills manufacturers are looking for. If the UK is to become a leading player in advanced manufacturing, the industry desperately needs to overcome the skills shortages which already hamper it so much.

One solution: Apprenticeships

Apprenticeships are one way that manufacturers can overcome these skills shortages. They’ve been around for a long time, but they were transformed when the Apprenticeship Levy was introduced six months ago.

Let’s quickly recap on what changed. Under this new legislation, all employers operating in the UK with an annual pay bill of over £3 million have to pay a 0.5% Levy, which can be used for the training of apprentices. Those organisations who are not liable to pay the Levy can share the cost of training and assessing their apprentices with Government, who will pick up 90% of the costs. On top of this, there are no longer any restrictions on the age of apprentices and fewer restrictions on the previous qualifications an apprentice can possess.

The Levy represents the most fundamental overhaul of the apprenticeship system to date. It was a major legislative change, designed to incentivise employers across all sectors to invest in apprenticeships. It can be used to train new recruits, or it can be used to upskill the existing workforce. Either way, employers across all sectors can use it as a mechanism to address skills shortages.

What do manufacturers think?

When this legislation was introduced, there was a lukewarm response in many areas of manufacturing. In a survey of 600 manufacturing professionals, 40% said they didn’t know if the Levy is a good thing; while another survey found that two-thirds of manufacturers don’t believe it will impact apprenticeship numbers at all.

Nonetheless, a well-planned apprenticeship programme could be a major factor in helping manufacturing to thrive in the long-term. Those that make the most of their Levy funds can begin to identify and address the skills gaps they have today, as well as those they are likely to have in the future. This will put them in the best possible position to respond to changing market conditions.

It’s critical that manufacturers harness the opportunities the Levy presents, rather than viewing it as another box that needs to be ticked. There are countless benefits that can be reaped from this new legislation – so long as manufacturers harness it correctly.

Four ways to unlock the potential of your Apprenticeship Levy fund

Make sure you’re making the most of the Levy by following these four steps:

  1. Identify ways the Levy can be used to enhance your wider workforce strategy – While the Levy may be considered a financial burden to some, the new apprenticeship model offers manufacturers of all sizes the opportunity to review their current and future skills requirements, identify gaps, and plan the best ways of preparing their workforce for tomorrow’s challenges.
  2. Undertake an audit to identify training requirements within your organisation – Remember, the Levy doesn’t just need to be used to recruit new additions into your workforce, it can be used to enhance the skillsets of your existing workforce too. Look for opportunities where you could convert existing training programmes to apprenticeships. You’ll be able to use your Apprenticeship Fund if you’re a Levy-paying employer, or you can have 90% of the training costs paid if you’re not.
  3. Develop an attraction strategy to secure apprentices – With an increasing number of apprenticeships on offer, many manufacturers are fishing in the same talent pool. So it’s important that organisations understand what motivates and appeals to their ideal candidates, and tailor their attraction strategy accordingly. And remember, the strategy you harness to attract skilled workers may not be right when recruiting apprentices.
  4. Reconsider your selection processes too – The very nature of apprenticeships means you can’t judge someone by their existing skills and experiences. You’re looking for a blank canvas that you can nurture. Building a hiring process that unlocks an individual’s hidden potential will be vital. Skills and experience take a backseat to aptitude and learnability when hiring an apprentice.

At Manpower, we’ve been advising a number of our clients on how to navigate the new apprenticeships and funding system. From recruiting apprentices directly into their organisation, to supplying apprentices and managing their training – we are working to help them understand their Levy bill and how to spend it to have the greatest impact.

To find out more about our expertise in manufacturing recruitment and workforce planning, visit manpower.co.uk/manufacturing or email us at [email protected]