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How will the apprenticeship levy impact tech employers?

The government has changed the way apprenticeships are funded in the UK, but how will this affect the technology industry?

The government’s new apprenticeship rules came into effect at the beginning of April 2017, requiring firms with a payroll worth over £3m to contribute to the apprenticeship levy.  

In England, firms will be able to claim some of this money back using an e-voucher system to fund apprentice training.

The government hopes its new strategy will create three million apprenticeships by 2020 and says the new system should help to fund higher-quality science, technology, engineering and maths (Stem) apprenticeships.

But among IT industry professionals, there are concerns that firms will not focus on using any benefits from the apprenticeship levy to develop the right skills to fill both immediate and future skills gaps.

Russ Shaw, founder of Tech London Advocates and Global Tech Advocates, said the levy could be an opportunity to train young people and develop a more digital workforce capable of filling the country’s skills gaps, but the government needed to show the appropriate leadership to point companies in the right direction.

“The prime minister should draft a tech-focused apprenticeship framework to complement the levy, covering a wide range of specialisms from basic digital literacy to advanced training in sectors such as cyber security and big data,” said Shaw.

Highly skilled individuals such as cyber security specialists and data scientists are currently in demand as firms react to high-profile cyber attacks and the importance of data analytics.

The introduction of a computing curriculum in UK schools was also designed to feed the tech talent pipeline, but these changes are not providing skilled staff at the speed the industry requires.

Jobs young people will fill in the future do not yet exist, and Shaw said the government needed to offer the correct guidance to ensure that digital training offered as part of apprenticeship schemes was “fit for purpose” to address the skills that firms need now and in the future.

Read more about technology apprenticeships

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“Technology is driving our economy and creating rewarding and well-paid jobs, but our education system has not caught up,” he said. “The jobs of the future are still being created. The apprenticeship levy is an opportunity to empower the private sector to create and fill the highly skilled jobs that will drive our economy – but only if our government is willing to commit to it.”

Levy-paying employers can sign up to the new apprenticeship service the government is offering, and use the funds relating to their account to pay for apprentice assessments and training as long as the cost falls within one of the funding bands laid out by the government.

Currently levy funding cannot be used for other costs associated with apprenticeships, such as setting up apprenticeship programmes, wages, travel and subsidiary costs or work placement programmes.

But many firms are still unaware of the apprenticeship levy or the rules governing how apprenticeship funding can be used, making it unclear to employers whether they can use this funding to train existing staff.

John Pritchard, head of apprenticeships at BCS, said firms should use levy funding to upskill current employees as well as new starters, to fill in the transferable skills many firms say the current pipeline is lacking.

“Tech employers do not need to fill gaps left by graduates, they need to grasp the opportunity now available with the levy to upskill graduates to enhance their competencies and enable them to have the work skills of today,” he said.

Return to the workplace

The government should also allow funding to be used to train people who aim to return to the workplace after a career break, said Pritchard.

But Charlotte Holloway, policy director at TechUK, said the levy was not currently set up to properly to address technology employers’ skills needs.

The UK is currently suffering from a technology skills gap, with firms unable to find employees with the right skills to fill vacant roles, and because of the nature of these roles, advanced training is required.

According to Holloway, if the levy does not allow flexibility over who can receive training, the government risks creating a system that encourages apprenticeships in low-skilled roles rather than addressing long-term skills issues.

She said the government’s apprenticeship plans should focus on creating a culture that encourages “lifelong learning” in a world that is becoming increasingly automated. “This matters for companies right across the economy and also the public sector, where jobs will rapidly need to change over the coming years,” she said. “An overly rigid apprenticeship levy will not give employers the opportunity to reskill existing staff in new and emerging digital skills rapidly enough.”

To make it easier for firms to use levy funding to find talent, the government has created a digital apprenticeship service that levy-paying employers can use to claim apprenticeship funds, pay training providers and manage their apprentices.

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