The new Apprenticeship Levy has been designed to boost the UK’s commitment to apprenticeship programmes. The move coincides with a significant shortage in tech skills, which is threatening to hamper businesses’ productivity. With the Government also announcing a raft of educational reforms in the Spring Budget to boost technical skills in the UK, it is clear that ministers are committed to tackling the issue.

Since its launch in April 2017, every employer with a wage bill of over £3million will pay a new 0.5% Apprenticeship Levy on their annual pay bill to help fund this new initiative, increasing training for millions of apprentices. Despite the potential impact of this scheme, which aims to create three million new apprenticeships by 2020, recent research revealed that two thirds of UK organisations remain in the dark about how it will affect them and how the funding system will work. Only 51% of large companies surveyed were aware that they would have to pay the levy at all.

Why today’s tech skills will be outdated tomorrow

With technology evolving more rapidly than ever before, employees across all business areas will need to be upskilled. For example, coders must constantly learn new programming languages to meet the latest requirements for developing apps and services. As a result of this constant progress, there is an increasing gap between what individuals are taught when in full-time education, and the knowledge they need to progress in the workplace. This issue could be addressed by introducing more short-term placements and on-the-job learning via apprenticeship schemes.

Businesses should see the Apprenticeship Levy as an opportunity, allowing them to train new recruits and also upskill their existing workforce. This applies even more widely now that the age and previous qualification criteria have been further relaxed.

Maximising the opportunity

A well-planned apprenticeship programme could be a major factor in helping businesses to thrive in the long-term. Organisations that make the most of the levy funds now can begin to identify and address the skills gaps they have today, as well as those they are likely to have in the future, putting them in the best possible position to respond to changing market conditions. And, with 37% of those employers who are aware that they will need to pay the levy, believing that the number of new apprenticeship hires will increase, there are encouraging signs that the funds made available through the tax will be put to good use.

Whilst uncertainty remains over how the Apprenticeship Levy will affect many British businesses, what is clear is that organisations who take advantage of the change in legislation have a lot to gain. Apprenticeships can be a valuable way for employers to develop a workforce that is fit for purpose, both now and in the future, as well as helping apprentices to gain vital experience and certified qualifications. Those who see the levy as just another tax will ultimately lose out at a critical time for skills in the UK.