How To Prepare For The Apprenticeship Levy

The new Apprenticeship Levy scheme promises to radically alter the shape of the UK workforce, and with it, the role of the recruitment industry. As the levy rolls out across the country, we ask ‘how can recruitment businesses prepare?’

One thing we can be sure of is that clear client communication will be essential if we want to maximise the opportunities the new focus on apprenticeships will bring. Communication will also play a vital role in navigating potential financial difficulties the levy poses for agencies and businesses alike.

Who pays what?

Only businesses with an annual payroll of over £3 million have to pay the tax, which is 0.5% of their annual pay bill. This includes contingent labour payrolls for agency and contracted staff.  Businesses earning less than £3 million per annum don’t have to pay, as the levy has a £15,000 per annum allowance.

Although the majority of businesses will not have to pay the tax, there could be complications for recruitment businesses who employ high volumes of temporary or agency staff on their payroll. This is an area where recruitment agencies and their clients may need to come to some kind of agreement.

From 2018, levy-payers will be able to transfer at least 10% of their apprenticeship fund to other employers, apprenticeship training providers, or their supply chain. Could there be room for negotiation between recruitment businesses and levy-paying clients in this scheme? We will have to wait and see…..

Candidates, clients and new career paths

The number of people planning on attending university already at a record low, according to a report published by the Sutton Trust earlier this year. Could the increased funding for apprenticeships be a tipping point in school-leavers’ career choices?

With years of expert knowledge on their respective fields of industry, recruiters will be able to offer career guidance and industry knowledge to candidates. Employers, too, will need assistance in deciding which training schemes are most compatible with their business, and the type of employee they are looking to recruit. From this, we anticipate that employers will be more open to upskilling new and existing employees through the scheme, offering an alternative route to university.

The key to maximizing the apprenticeship funding scheme for agency workers will lie in how you negotiate training schemes with your clients. In order to provide quality training, apprenticeships traditionally last at least 52 weeks, which is far longer than the average agency contract. The Recruitment and Employment Confederation (REC) has already flagged this issue up with the government and encourages recruiters to prioritise communication with clients on how to manage the process.

Planning for success

It’s uncertain just how much the levy will impact on recruitment agencies financially. However, we are confident that with a creative approach that focuses on long-term career management, recruitment agencies will be in a strong position to help employers and candidates maximise the new opportunities available.