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The apprenticeship levy: a success or missed opportunity?

The apprenticeship levy was introduced by the Government with the aim of improving the quality and quantity of apprenticeships. Over two years later, has this ambition been achieved and what impact has the biggest shake-up in training and apprenticeships had on the hospitality industry?

Within this article Jill Whittaker, Managing Director of HIT Training, explores the benefits and challenges of the legislation. From the increase in management-level apprenticeships, to the decline in SME’s running apprenticeship schemes and the effect on entry-level hospitality qualifications, is there more that the sector can be doing to maximise the apprenticeship levy funding and tackle skills shortages across the industry?

“The apprenticeship levy has now been in place for over two years and within this time there has been much debate around the benefits and pitfalls of the legislation. In January 2019 just 22% of the £3.9bn funding had been used, meaning around £300m of unspent levy goes back to the HM Treasury every month.

“With so much potential yet to be unlocked, there’s a huge opportunity for the hospitality industry to maximise its unspent funds – especially as the industry is facing a significant skills shortage.

“The reality is that organisations large and small are struggling to attract and retain the talent they need to help their business not only run effectively, but to grow. Recent analysis has shown that the hospitality industry has a high proportion of ‘hard to fill’ positions, and it’s clear the industry needs to work together to attract, retain and train talent in order to protect and futureproof businesses for times ahead.”

So, how is the levy being spent currently?

“Recent figures show advanced, higher and degree-level apprenticeships are proving popular. In fact, nearly 70,000 people have started a degree apprenticeship since August 2018, compared to only 44,000 in the year ending July 2016[1] and it's great to see employers investing in higher level skills. This will benefit the industry by giving younger employees high-level qualifications to aspire to, helping to forge more attractive, long-term career paths for those who want to continue developing their career and learning new skills.

“On the other hand, uptake of entry-level training has declined. In fact, SMEs – typically the largest employer of entry-level apprentices – have all but stopped offering these training positions. This is down to the fact that smaller employers, with tight budgets and less resources, tend to face a range of challenges associated with supplying the 5% contribution to each programme and navigating the processes involved with offering apprenticeships.”

How will these trends in training affect the future of the industry?

“This positive investment in higher level qualifications is great to see, but more can be done to solve the industry-wide skills shortage in the long run. As a whole, the sector needs to offer a range of different training opportunities to maintain a talent pipeline that will support the future of the industry effectively. That means appealing to professionals young and old, experienced and low-skilled.

“The decline in entry-level apprenticeships means that, as an industry, we run the risk of freezing-out the younger generation, or those without the relevant skills who are looking to retrain and embark on a career in this vibrant sector. This is resulting in a barrier to social mobility and a significant risk to the future of the industry. By not providing these entry-level positions, the talent pipeline is not being filled and the sector cannot grow.”

How can the industry maximise the apprenticeship levy? 

“To ensure the sector can thrive in the future, the industry needs to work together to plug the skills gap and encourage social mobility. At HIT Training, we’re eager to ensure the industry doesn’t waste the opportunities presented by the apprenticeship levy by maximising training opportunities to fill the talent pipeline.

“To support the hospitality industry in overcoming this challenge, we’ve launched Don’t Waste: The Future of Hospitality, a campaign aimed at bringing the trade together to champion the varied career opportunities.

“As part of this, we are calling on levy-paying businesses and suppliers in the hospitality sector to pledge to transfer a percentage of their levy fund to an SME and help provide high-quality development opportunities through apprenticeship programmes across the industry. This comes as our research revealed that 65% of levy-paying hospitality businesses are currently unaware they can transfer 25% of their funds to help support other businesses[2].

“The bigger picture is that if businesses encourage training and long-term career prospects within the industry, skilled professionals are more likely to remain within the industry and support a range of businesses throughout their career. 

“Now is the time to ensure there are collective opportunities across the sector to attract and build the workforce of the future by investing in training.”

For more information on Don’t Waste: The Future of Hospitality or to pledge a percentage of your Levy fund, please visit: https://hittraining.co.uk/dont-waste-campaign

[1] Gov.co.uk, Apprenticeship and levy statistics, August 2019

[2] Survey of 250 HR managers or senior figures working in hospitality. 3GEM in collaboration with HIT Training, November 2018

 

[3]file:///G:/Commercial%20and%20Membership/PR%20&%20Comms/INNfocus%20EMAIL%20-%20NEWSLETTER/December%202019/16.12.19/Article%203%20-%20INNfocus%20December%2016th%202019%20-%20The%20Apprenticeship%20Levy%202%20years%20on.docx#_ftnref2 Survey of 250 HR managers or senior figures working in hospitality. 3GEM in collaboration with HIT Training, November 2018