In this article, Jess Penny from the award-winning lifting equipment manufacturer Penny Hydraulics shares her thoughts on what the new apprenticeship levy means for your business.
In April, the government introduced an apprenticeship levy that requires all employers operating within the UK with a payroll of over £3 million a year to contribute 0.5% of their total wage bill to training the nation’s apprentices. This levy is being launched to improve both the quantity and quality of apprenticeships in the UK. The money can be recouped (with a 10% top up from government) by levy payers that run government approved apprenticeship programmes, and will help fund apprenticeships for non levy payers too.
The government hopes the new apprenticeship levy will help to close the skills gap and rejuvenate the UK economy by encouraging employers to develop the next generation of talent.
Apprentices make up a good portion of our workforce here at Penny Hydraulics. If you’re an SME like us that wants to know how this new government policy is going to affect you, then read on to find out.
What does the levy mean for your business?
If your business doesn’t meet the threshold for contributing to the levy, then it will only benefit. Any apprentices you take on will be subsidised by the fund, making developing young talent an even more attractive prospect than ever before.
If your business has a payroll of over £3 million, I think it’s counterproductive to begrudge the levy. We have to invest in the future, and the benefits that apprenticeships can bring far outweigh the fee we will have to pay.
Why is the levy important?
It’s well known that there’s a national shortfall of mechanical engineers in this country, and it’s becoming increasingly difficult to find qualified staff in our industry. We currently have to use expensive specialist recruitment agencies that charge huge fees to find talent, or we have to look for engineers from overseas. After Brexit, we no longer know if sourcing staff from overseas will be possible, so we are left with no option but to go through recruiters.
We would much rather play a part in developing homegrown talent from a young age. The levy fees are far less than the premium charged by recruitment agents to find a top-class engineer. Moreover, when we go down the recruitment route, we are competing for talent with some of the big industry players such as Rolls-Royce and Airbus who have much larger budgets than us.
The more businesses that take advantage of the apprenticeship levy to develop young British talent, the better for the UK economy as a whole. By nurturing homegrown talent in the sectors that are in need of serious development, every business will benefit, as the UK’s entire talent pool will be enriched. This will help put our country on the map again in the manufacturing sector, and everyone involved in the sector will reap the benefits.
With all this in mind, we welcome the apprenticeship levy and plan on taking full advantage of it. If you don’t currently work with apprentices, this is a great incentive to start nurturing the next generation of talent, which will help turn the UK’s fortunes around and pull us out of the current skills shortage.