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How does the Apprenticeship Levy affects agencies?

January 11 2018  ·  5 min read

The Apprenticeship Levy was a new tax introduced in April 2017 to help reinvigorate apprenticeships and to put the responsibility of hiring new talent back in the hands of employers. It's fair to say that there has been a mixed response to the levy, but all in all the key beneficiary still includes young people but has now also branched out to anybody that is keen to continue their personal development. 

What is the Apprenticeship Levy?

As of 1st April 2017, all employers with a payroll over £3 million have been taxed 0.5% of their annual payroll each month. The money from the tax is then available for the employers to redeem back in the form of digital vouchers that can only be spent on apprenticeship programmes that are delivered by a training provider that is on the Register of Approved Training Providers (RoATP). A huge majority of agencies will pass the £3 million thresholds making it critical that they act now before they lose out any more. It is especially important for complex agency networks that may be split as organising the levy proportionately across all their agencies can be a lengthy process.

Why was the Apprenticeship Levy introduced?

Interest in apprenticeships has steadily increased the past few years, especially with the rising cost of tuition fees - many young people aren't seeing university as a desirable choice. With the widening skills gap in a variety of sectors, especially in fast-paced industries like digital and IT, the Government looked to apprenticeships as the solution to both issues. Before the levy, employers were often holding off apprenticeships due to the strict funding rules set out by Government and also have difficulty mapping the programmes to the roles in their business. Previously agencies were slightly behind in comparison to other industries in taking on apprentices, and so the Apprenticeship Levy has now put it in the forefront of their talent acquisition and learning & development. 

What are the major changes since the Apprenticeship Levy?

The big shift with the levy is that employers are now funding apprenticeships with the tax, meaning that Government's strict funding rules no longer apply. Age limits were lifted and now the only prerequisite is that the apprentice cannot hold a higher qualification in the same industry than the level of the apprenticeship they would like to go on. This has allowed for agencies to not only bring in fresh, young talent regularly but to incentivise existing employees to continue their development and promote lifelong learning across the agency. 

The other major change that came along with the Apprenticeship Levy is the focus on improving the quality of the apprenticeship programmes and to make them more relative to industries. To do this, the Government introduced Apprenticeship Standards and began moving away from the old Apprenticeship Frameworks. Programmes that were on frameworks were often too general, with apprentices gaining a general grasp of the industry but not learning specifics that would be right for particular job roles. Apprentices were also assessed differently. They would simply complete units as they went along without needing to recap or reassess at the end of the apprenticeship. 

Apprenticeship Standards are programmes that teach apprentices how to become a particular job role, examples of standards including Data Analyst and Junior Content Producer. These standards are created by trailblazers, who are groups of employers that come together and decide what job roles are needed and what skills, knowledge and behaviours a person needs to be in order to be successful in that job role.

We now deliver thirteen Apprenticeship Standards and plan to deliver more in the future, you can find out what we currently offer here. 

How do agencies benefit from the Apprenticeship Levy?

Similar to other industries, agencies struggle with attracting and retaining diverse talent. AdLand's mission is to focus on diversifying advertising, and apprenticeships are a fantastic way to do that. Apprenticeships are accessible to young people and help them have the confidence in starting their careers knowing they will be nurtured and mentored throughout their journey. The Apprenticeship Levy has created an agency-wide initiative, from finance directors to heads of L&D, to either begin creating a strategy or to further develop their current one. Either way, the focus is on bringing in young new talent that grows with them as well as continuing the learning of existing staff so that both groups begin developing skills that are specifically tailored to your agency's needs. Therefore, building a workforce that is sustainable. 

We work with agencies of all sizes, including agency networks Omnicom and Dentsu Aegis, to help them manage their levy. If you would like to find out more about how the Apprenticeship Levy affects your agency then please get in touch.

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