Businesses with an annual payroll bill of less than £3m will have to pay a 10% contribution towards the cost of an Apprenticeship programme from May 2017. Given that the UK economy is dominated by small businesses, this will affect many employers and learners.
The cost is going to be approximately £150 to £500 for each learner over 12 to 24 months, dependent on the programme. And so employers will not have to find the full cost on day one.
It’s easy to look at this as a negative for businesses and training providers alike. However, we believe that there are plenty of reasons to be optimistic about these changes and believe that small and medium sized businesses should continue to participate and seize the opportunities.
Some of the optimism is financial. The Government has introduced employer incentives for 16 to 18 year olds and care leavers aged 19 to 24. Employers will be paid £1,000 for employing Apprentices in these categories, meaning that the 10% cost will be completely offset with a surplus on top.
There are national insurance benefits to employing Apprentices under 25 years too. If you employ an Apprentice on £12,000, employers will save over £500 a year – again, offsetting the employer cost of the Apprenticeship.
If an employer has less than 50 employees and the learner is aged 16 to 18, the programme will still be fully funded, with a £1,000 incentive paid on top. And so there is no better time to give a young person a chance.
A real benefit is the impact that the payment will have on how people value the programme and the training they receive. The payment will seal the commitment that every good quality Apprenticeship programme needs. There needs to be that commitment from the training provider, the learner and the employer.
The cash obligation can be built into a training agreement with staff and into service level agreements with training providers. This can ensure that staff are committed to the programme and the training provider delivers on its promises. Expectations from learners and employers will inevitably rise with the payment, and great providers need to become greater, continuously improving to be successful – this can only be of benefit to learners and employers.
The Government has also relaxed the eligibility criteria, meaning that learners with degrees unrelated to their occupation can now participate on a programme. Employers can reduce their training budgets and sign people up to Apprenticeship programmes where previously they were prevented from taking part, or expensive external training was commissioned.
We need to remind people about how great Apprenticeships are for employers and learners. They give people a chance, new skills and the best start to a rewarding career. They provide employers with talented, enthusiastic and ambitious staff able to grow into and fulfil future resourcing needs. The 10% is, in our view, a relatively small price to pay for the benefits received.
Here at Interserve, we can add value in other ways too. We have Regional Engagement teams operating across the country who offer a full service for new Apprentices. We will get to know an organisation and understand their business needs. We’ll advertise vacancies, source potential candidates, sift and vet them to ensure they are suitable and shortlist them for selection by employers. This ensures they get a pick of the best there is without the recruitment hassle as part of our provision. 10% might seem like a lot of money but there are plenty of ways to ensure that an Apprenticeship takes that investment and produces a return in excess of initial outlay.
As a training provider, we shouldn’t shy away or apologise for asking for this contribution, we should highlight the returns and benefits that everyone gets for a relatively small outlay.
If you want to discuss any of this further, please feel free to get in touch with us.