Skills: employers have control

Published —
12.10.17
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THE SKILLS shortages in the advanced manufacturing and engineering sector are well documented – we need two million more engineers by 2025.

The government is hoping its latest skills reforms could be the answer – with funding changes, the recently introduced apprenticeship levy and new T-Levels coming soon. But what do these mean in practice for employers, both levy payers and non-levy payers?

SMEs with fewer than 50 staff receive 100% funding for training apprentices aged 16 to 18. Otherwise, non-levy funded apprenticeships are 90% funded by government, so the most an employer will ever contribute to an apprentice’s training will be 10% of the cost.

Government funding can be used for existing employees, no matter what their age, and apprenticeships can now be funded for those who are training at the same or a lower level than their existing qualifications (so long as they deliver ‘substantive new skills’). This provides greater flexibility for employers to upskill their existing workforce through the apprenticeship route.

Using apprenticeships strategically

We are seeing employers utilising apprenticeships and the considerable benefits they offer more strategically as they consider their workforce development strategies – carrying out a training-needs analysis, using it to predict future needs and recruiting or upskilling accordingly.

Alison Parkes
Alison Parkes is chief operating officer, Semta Group

One Nottingham-based company we are working with has formed a levy committee with finance, personnel and training colleagues working together to agree a levy plan. They have taken a single approach across multiple sites to maximise the benefits of apprenticeships and their levy investment. The result is a strategic skills plan underpinned by apprenticeships, covering all areas of the business from engineering to accounts and administration.

Another employer taking a strategic approach is Andrew Churchill, who runs levy-paying aerospace manufacturer JJ Churchill Ltd, which employs 129 people. He is passionate about the business benefits of apprenticeships.

“Apprentices bring new ideas and energy to businesses, are already ‘fluent’ in changing technologies and if looked after, are loyal employees who deliver an excellent return on investment,” he says. “Contrary to what some employers think, apprentices are one of the best investments a business will ever make – with or without the levy.”

Generic image of an apprentice at work in a factory

This is a view shared by non-levy payer Specialist Tooling Technologies, a growing Castleford-based SME. Six of its 16 employees are apprentices. “We found it difficult to recruit the skills we required, so decided to train people ourselves to run the business,” said company director Karl Reindl.

Additional support for SMEs

From next year, levy paying employers will be able to transfer up to 10% of their levy funds to SMEs in their supply chain, which is a further incentive for smaller businesses to engage in apprenticeships.

Some larger employers are already proactively supporting their supply chains. In aerospace, Airbus has been working with its supply chain through the pan-engineering SC21 initiative to spread good practice in apprenticeship training through regional clusters.

Levy payers are in control

Built into the new system is a mechanism of competition – employers can choose the provider they feel is best suited to meeting their needs. Employers are encouraged to look beyond the price tag when selecting their provider and think about added value. This could be levels of service, the extra training delivered above and beyond the confines of the apprenticeship standard, administrative support to manage levy funds, and all the other things that make it simple and rewarding for employers to take on apprentices.

The challenges

A challenge of the new system is the requirement for 20% of funded apprenticeships to be off-the-job. For new engineering recruits, the first year of college training or block release means this may not be too difficult. However, for existing employees it may be harder to design in the required 20% and still ensure they are productive.

It is important that employers understand this up front, so that they can plan in from the beginning of an apprenticeship programme the required off-the-job training element and implement an effective audit trail to evidence that training later.

Funding guidelines say off-the-job training can include ‘practical training, shadowing, mentoring, industry visits and attendance at competitions’ which gives scope for learning that does not have to be classroom-based. However, there has been some debate about what qualifies as ‘mentoring’ and ‘shadowing’ and there are calls for further clarification. My advice is to ensure this is very clearly specified in the training plan, with a good audit trail to verify it.

Apprenticeships are more relevant for employers than ever

Although much of the focus is currently on those employers who are paying the levy, it is crucial that we have a system which meets the needs of smaller employers who don’t pay it.

In the last 18 months we have helped to develop 48 new apprenticeship standards. For new standards to be signed off they have to be approved by small businesses too. So all the new standards have been designed by employers for employers – of every size.

An employer-led approach is also being taken with the development of the new T-Level qualifications, designed to provide an industry-backed technical alternative to A-Levels. The government is calling on businesses to help design the content of the qualifications, set to be rolled out from 2020. If it’s done right this could be positive for our sector, helping to increase the new talent pipeline. But we need to invest the time to ensure the qualifications are fit for purpose – which is why we were pleased when the government recently postponed their introduction by a year.

A worker at the McLaren Automotive HQ in Woking [Image: McLaren Automotive Limited]
READ: Our state of play report into manufacturing

We now have a skills landscape that puts the employer firmly in the driving seat.

They have the power to design the apprenticeship standards they need and can direct funding to the areas where they have skills needs. It’s now in our hands to make a success of it. Large employers should already be using levy funds or putting plans in place to use them, as they risk losing them two years after payment. Small businesses can already take on apprentices at 100% funding for training, next year there will be opportunities for levy payers to transfer funds, and the government is consulting on supply-chain apprenticeships.

If you’re not already planning for your future skills needs, there’s never been a better time to do so. Use the opportunity provided by the new system to take control of your own skills situation.

Engineering skills body Semta offers free advice and support to employers on meeting their skills needs and maximising the levy via customerservices@semta.org.uk or 0845 643 9001.

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