Apprenticeships: Is reform of the levy really the answer?

Employers across all sectors have long been saying that the Apprenticeship Levy isn’t working. When the government introduced the scheme, it was with the target of boosting the numbers of people starting apprenticeships by an additional three million by 2020.

If data published last month from the Department for Education is anything to go by, it would seem to support employer feedback. The number of starts fell by 28% between August 2017 and July 2018, to 360,700, compared with 491,300 and 503,700 reported for the equivalent period in 2016/17 and 2015/16 respectively.

Last month the government announced a package of measurements designed to improve the usability of the scheme, including the fact that employers will be able to share 25% of their levy funds with their supply chain. It has also said it will soon be seeking views on the operation of the levy after 2020. But will these changes make any difference to food and drink operators, and is reform really the answer to boosting numbers?

Fuller’s people director David Hoyle told MCA, that the system for claiming the levy back is “clunky and full of information inaccuracies”. “At Fuller’s, we find the scope quite narrow and feel there needs to be more opportunity to offset other training activity and costs against our levy,” says Hoyle.

“In addition, we have had to wait for various trailblazer apprenticeship standards to materialise, many of which have not met the same standards as our own internal training courses. However, despite its limitations, we have embraced it,” he explains.

The brewer and pub operator is employing a number of apprentices across the business including brewers and engineers in Fuller’s Beer Company and 100 chef apprentices every year in Fuller’s Inns.

While it is clear the levy hasn’t been as successful as the government would have liked, says Hoyle, he expects the increase from one year, to two years, for the levy to be claimed back has given companies time to work through the challenges.

“For the hospitality sector, it is critical we make it work. Our sector struggles to attract, recruit and retain people. We need to attract far more people to the opportunities, and chef and other apprenticeships is one of the ways we can do this,” he says. “We have an amazing employment proposition to promote yet, as an industry, we fail to do so.

“The other reason we are so keen to make apprenticeships work harder is that, of course, this issue will be exasperated by Brexit,” adds Hoyle. “In Fuller’s around 33% of team members in our pub estate originate from the EU, increasing to 50% in our London sites. Fully utilising all the apprenticeship routes will be a key lever in increasing the pool of people available, particularly those from the UK.”

The Association of Employment and Learning Providers’ chief executive Mark Dawe describes the Hammond’s announcement regarding the transfer of funds to employer supply chains as “a step towards a de facto removal of the 10% financial contribution that smaller supply chain employers have to pay if they want to take on apprentices”.

He tells MCA that a far bigger impact would be made if the mandatory contribution was simply removed for all SMEs in respect of young people.

“The requirement has had a huge impact on the sector particularly in independent pubs and restaurants and it has come at totally the wrong time as we head towards Brexit and employers are now struggling to recruit EU migrant staff at the lower levels,” says Dawe.

Kate Nicholls, chief executive of UKHospitality agrees that while the introduction of the levy was generally welcomed by the sector as a means of increasing apprenticeships, “it has not been entirely successful”.

“Apprenticeships are a fantastic way for younger people to learn and earn and have been crucial in getting people into the hospitality sector. In 2016/17, 25,000 people joined the industry via an apprenticeship and we want to increase that number,” she tells MCA.

However, she says the levy has disproportionately hit SMEs, squeezing margins further and, in some cases, actually reducing an employers’ capacity to provide apprenticeships.

“Increasing the transfer fund cap will reduce burdens on smaller businesses, but we would like to see this increased to 50% giving larger companies greater flexibility to support smaller ones. Splitting off-the-job training between the employers’ and apprentice’s time will also reduce costs for employers,” says Nicholls.

Better together?

In addition to reform of the system, could the industry work together to boost the number of apprenticeships being taken up? Some operators in the sector have already taken this approach. Greene King, Marston’s and Mitchells & Butlers recently teamed up with each other for the National Apprenticeship Shows. They collectively exhibited under the banner of ‘Loving Hospitality’, in order to get their message out to the masses.

Jan Smallbone, director of learning and talent development at Mitchells & Butlers, says the collaboration is about making sure, as representatives of the industry, rather than individual brands, they can both educate and inspire career advisors and young people about the benefits working in our industry can bring.

“We want to work together to showcase how an apprenticeship in hospitality is rewarding, flexible and can be the right first steps for so many young people looking to make their mark,” she says. “Breaking the stigma around hospitality apprenticeships is so important in tackling the skills shortages challenge facing the industry, as we aim to develop, train and champion the future leaders of hospitality,” adds Smallbone.

“Our mix also means our talent can get exposure to different skills, then decide which role best suits their career aspirations. By joining forces with both Greene King and Marston’s, we are able to show the full range of opportunities an apprenticeship can bring to young people, the variety of roles they can progress into and the ground-breaking businesses they can be involved with.”

Greene King’s HR director Andrew Bush tells MCA the business believes apprenticeships are incredibly valuable for people taking their first steps in hospitality, and employers have an important role to play in spreading this message.

“More than 11,000 Greene King team members have benefited from an apprenticeship since 2011 and we hope to support many more through our programmes, supporting their career aspirations and helping them grow and develop.”

“We undertake a variety of recruitment methods, including career shows, engaging with colleges, and working with education organisations. To help highlight the benefits of hospitality apprenticeships in particular, we partnered with Mitchells & Butlers and Marston’s for the Loving Hospitality project, engaging young people to help them realise what hospitality has to offer them as a career choice.”

Perhaps less focus should be given to the levy, and more on how the industry can work together to promote the sector as a hub of opportunities for those young people looking to get a step up on the career ladder.