Last editedApr 20233 min read
Apprenticeships are good for business, but don’t take our word for it. Research proves it. A typical apprentice brings a productivity boost worth at least £10,000 to a company - double that in the construction, engineering, and manufacturing sectors. And one in four consumers say they would pay more for goods or services from a firm hiring an apprentice. So, it’s good news apprenticeships are about to become easier for employers to introduce with the launch of the Government’s new apprenticeship levy on April 6.
More than 1.6 million people applied for apprenticeships online in the last year. The overwhelming majority (94%) of employers use an external provider to train their apprentices to some degree, according to the latest government data. This new levy will see thousands more businesses taking on apprentices for the first time.
All those companies face the challenge of finding the right training body both to provide the best support for their new recruit, and to help the businesses themselves with the administration that comes with hiring an apprentice. And what most firms will seek is a quality education provided by a training agency that doesn’t put too much extra pressure on their internal resources.
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How it works
The levy’s core aim is to create three million new placements by 2020, funded by employers themselves. Big organisations – defined as those whose payroll bill is more than £3 million a year - will contribute 0.5% of their annual wage bill to the apprenticeship funding pot through Pay As You Earn. This financial cache is expected to reach close to £3 billion per annum. That money will then be used to top up businesses’ monthly apprenticeship training contributions from May.
Employers too small to pay the levy - about 98% of businesses in England - will have 90% of their apprenticeship training costs covered by the state. But for smaller organisations even finding the money for 10% of teaching bills will still be a considerable expense. This is where education providers can make a big difference by helping employers spread payments through regular, easy-to-use Direct Debit transfers to minimise the economic impact.
Spreading payments, minimising pain
In the past, a persistent barrier to businesses taking on apprentices has been the perception that paying for trainees’ courses will be expensive, plus the belief the process is time-consuming. Clearly, the levy is designed to address the first of these issues, offering many employers considerable financial help with training costs. But having an efficient and automated way of paying for courses, such as Direct Debit, should also serve to reassure companies they can afford to support apprenticeships, since payments are spread out over time.
For those providing courses, the GoCardless payment system has the benefit of being fast and easy to set up. Training providers can see when money is in their account, which is vital to ensure the continued smooth running of the system. GoCardless provides automatic notifications and updates when payments are received, making it simple to manage submissions to the Individualised Learner Record, the compulsory data collection that the Government requires of those providing training in the further education field. This approach to handling payments also avoids credit card issues of cancellation, expiry and high fees, and gives customers the comfort of the Direct Debit Guarantee.
Fast, automated solutions
The problem of time - or the lack of it - is a persistent one for SMEs, in particular. One in four smaller employers told the Federation of Small Businesses (FSB) that not having time to devote to apprenticeships was the reason they decided against taking on a new beginner.
Again, the way training is paid for can be a persuasive counter argument to this assumption. GoCardless’s own research has found that users of Direct Debit say the simplicity of setting up the payment system – providing the necessary details at the outset with no need for subsequent updates – is a major bonus. The entire procedure can be completed online in minutes, so educational bodies can get the required admin sorted in time for the levy’s April introduction.
Educators as advisors
So, education providers should act now – if they haven’t already done so - to make paying for courses as flexible and painless as possible for employers, both those already hiring apprentices, and those with plans to do so. Almost half of the companies the FSB surveyed about apprenticeships sought information and guidance from the education provider itself prior to taking on an apprentice, so training bodies should recognise their role as a trusted advisor, as well as purveyors of knowledge and skills.
The best courses offered at the right price, then paid for in a manner that makes employers’ lives easy. That is the core message apprenticeship trainers should be getting across to businesses in light of the new levy. It’s a formula that – if executed properly – should prove a great success for employers, apprentices, education providers, and the UK economy overall.