Opinion

Are you clued up about the apprenticeship levy?

5 min read

08 January 2019

Real Business columnist Charlie Mullins discusses some shocking figures around the apprenticeship levy.

Apprentices are a vital part of Pimlico’s future success. I know it works because that’s how I got my start in the trade.

Having been raised in a less than salubrious area of Elephant & Castle, south London, I chose the profession because a bloke living round our way when I was at school was a plumber. He could afford a car, a motorbike and go on holiday.

I left school with no qualifications and after my apprenticeship ended, I scraped enough money up to buy a van at auction. With a few second-hand tools, Pimlico Plumbers was born.

But it was thanks to my apprenticeship that I gained the necessary ability and expertise which set me on the way to becoming a millionaire. It helped me create a thriving and successful business.

As a former apprentice, I’m a strong advocate of the system and appreciate the benefits it brings, not only to the business but to those involved. That’s why I created Pimlico’s Apprenticeship Training Academy to develop youngsters into highly skilled professionals.

So it’s disappointing – but not surprising – to learn over half of employers and employees in the retail sector have not tapped into the government’s apprenticeship levy.

According to YouGov research conducted for the Alliance Manchester Business School, 43% of retailers are unaware of the levy – compared with an average of 38% in other business sectors.

This might be because many of the so-called retail apprenticeships on offer are in low-skilled roles. They don’t set people up with the necessary skills to last a lifetime and that add value to the business.

The levy requires all companies with an annual wage bill exceeding £3 million to pay 0.5% of their staff costs to the fund, which they can then draw upon to pay for training.

More worryingly, the poll found 29% of those employers who are aware of the levy, see it as a tax on business – with any unspent funds going directly to Treasury coffers after two years.

A report by the OU last year said 17% of business leaders had no expectation of recouping their money.

The lack of foresight over apprenticeships in the UK is reflected by the Department of Education’s own figures, published last month.

It reported there were 375,8000 apprenticeship starts in the 2017/18 academic year, compared with 494,900 in 2016/17 and 509,400 in 2015/16 – a drop of 24.1% and 26.2% respectively.

Perhaps it’s no coincidence that the levy – which created major changes to the whole funding system – was introduced in May 2017.

The importance of providing quality training, together with the opportunity for professional development, is underlined by the fact that a whopping 74 per cent of workers say it’s a crucial factor when it comes to deciding whether or not they stick with their job.

I’ve already gone on the record saying that the levy is unworkable and must be completely scrapped.

While I’m for anything which increases the number of apprentices in the UK, they must be high-value roles – not simply packaging up unskilled jobs which do nothing to develop our young people or improve the country’s future prosperity.

The system is also too complicated for SMEs to navigate and too inflexible as it doesn’t allow employers to access the funds to pay apprentices’ expenses, such as travel and accommodation.

What’s required is a nationally fully-funded scheme so youngsters are able to earn a skilled career for themselves.

This country needs apprenticeships which deliver high-value training as well as equal opportunities to those from disadvantaged backgrounds – especially those 16 and 17-year-olds who deserve a good start to life.

Despite my own success, I remember what it was like to be that 16-year-old who needed an opportunity and a chance to prove myself.

Becoming a plumber’s apprentice was the start of it all.