The UK Apprenticeship Levy and One Business School's Strategy to Capitalize On It

The UK Apprenticeship Levy and One Business School's Strategy to Capitalize On It

A new U.K. employer tax provides funds for apprenticeships, or internships, and creates opportunities for business schools to engage with employers and help launch graduates into the workforce with real-world experience.

The Apprenticeship Levy, which came into effect on April 6, 2017, is a tax on all U.K. employers that will support the funding of apprenticeships, or internships. The U.K. government’s promise of three million new apprentices by 2020, across a variety of industries, was inevitably going to mean a funding dilemma, hence the launch of the levy.

How the Levy Works

Both private and public companies that pay more than 3 million GBP (over 4 million USD) in wages are now liable to pay 0.5 percent of their payroll into a fund. Employers can then use this fund—to which the government in England adds an extra 10 percent—to spend on apprenticeship training. On a rolling basis, companies will have 24 months to make use of their apprenticeship funds.

All employers will receive a 15,000 GBP (20,321 USD) annual allowance, to be offset against the bill. This effectively means that employers with an annual payroll of 3 million GBP or less pay no levy.

Employers can use the online digital service to pay for apprenticeship training for apprentices that work for at least 50 percent of their time in England, which will be limited up to certain maximum funding bands. When the apprentice training starts, funds (in the form of vouchers) will be taken from the account.

Impacts and Opportunities

New apprenticeship standards and increased funding from the levy will give employers more control over designing training and development programs, both for credit and not for credit, to suit their requirements. The levy will help double the annual level of spending on apprenticeships to 2.5 billion GBP (close to 3.5 billion USD) by 2019–20, compared to 2010–11 levels.

To date, over 215 “trailblazer” groups, involving more than 1,400 employers, have developed close to 500 new apprenticeship standards. Of these, 157 are now approved for delivery. This unique engagement with industry allows employers to design the training most relevant for their industries.

As of today, 15 different bands of apprenticeship funding are available, ranging from 1,500 GBP (2,032 USD) to 27,000 GBP (36,578 USD). In general, engineering and technology-focused apprenticeships tend to be more expensive. There is clearly an opportunity for business schools to leverage their program delivery and capitalize on the explosion of apprenticeship-related training in the U.K.

The Henley Strategy

I recently had the opportunity to travel to the Greenlands campus in Henley-on-Thames to meet with Tim Sellick, executive director of degree apprenticeship programs, and John Board, dean of Henley Business School at the University of Reading, to discuss their focused strategy of engaging with the business community around apprenticeship training and development.

What impressed me so much with the Henley strategy is that it is tied to both credit and non-credit program delivery and that it targets a range of apprenticeship options as well as links with the professional credentialing sector in the U.K. Specifically, Henley has structured programs to deliver to:

  • Level 5: higher apprenticeships—non-credit bearing. Free for students and fully levy-funded for employers. Amount funded: 9,000 GBP (12,193 USD)
  • Level 6: degree apprenticeships—graduate diploma or bachelor’s degree. Free for students and fully levy-funded for employers. Amount funded: 27,000 GBP (36, 579 USD)
  • Level 7: post-graduate degree apprenticeships—master’s degree. Free for students and fully levy-funded for employers. Amount funded: to be determined

The Level 5 program is anticipated to begin in the first quarter of 2018. It is targeted to front-line managers and leaders and will involve one and a half years of part-time study. Much of the training is delivered online, and companies with large cohorts can customize program elements. One of the brilliant components of this program is that graduating students are accredited by the Chartered Management Institute (CMI).

The level 6 program results in the delivery of a BA in applied management from Henley and the University of Reading. Students are also accredited by CMI and the program runs for three years. Cohorts are restricted to a maximum of 50 students, but Henley will accommodate up to four intakes per year. This meticulously designed program includes three work-based projects and an impressive annual focus on “personal effectiveness,” including self-awareness, leadership, and growth and change, over a period of three years.

The level 7 program involves middle- and senior-level managers with two cohorts per year. The program length is two to three years, and, at program completion, students receive either an MBA or MA in leadership and accreditation from CMI.

What Henley argues as the benefits to the corporate sector is the essence of engagement, innovation, and impact. Specifically, companies are assured of:

1. A team of leaders equipped to meet business challenges and drive growth in the organization
2. More well-rounded employees who contribute to innovation and culture change
3. Improved Employee recruitment and retention and world-class training
4. Maximized return on the apprenticeship levy investment
5. Access to Henley Business School's global alumni network

The link to CMI also reinforces the strategy of connecting the business school with employers and professional certification. This “trifecta” clearly reflects an intentionality that defines the best business schools in the world, operating at the intersection of theory and practice.

Tim MesconTimothy Mescon is executive vice president and chief officer of Europe, the Middle East, and Africa at AACSB International. Follow him on Twitter @timmescon.