Apprenticeship Levy & Engineering within the Food Industry

Can the Apprenticeship Levy help close the Engineering Skills Gap in the Food & Beverage Industry?

With the Apprenticeship Levy facing further reform less than 2 years after its introduction, I wanted to ask whether the Levy can adequately support the Food & Beverage industry to recruit and train the Engineers the industry desperately needs, or is the Levy unfit for purpose?

What is the Apprenticeship Levy?

Introduced in May 2017, the Apprentice Levy is a tax on employers with an annual payroll bill of more than £3 million, with a figure equivalent to 0.5% of monthly payroll collected by HMRC through the PAYE system and paid into a digital account to spend on apprenticeship training. Any unspent funds will be reclaimed by HMRC after 24 months and employers receive an annual allowance of £15,000 offset against their levy payment. 

Apprentice Levy funds cannot be used to pay for wages, travel costs, managerial costs, work placements, or the cost of setting up apprenticeship programs.

The Apprentice Levy only applies to employers in England and its estimated that just 2% of employers are liable to pay the Levy.  Companies with an annual payroll of less than £3 million are currently asked to “Co-Invest” by paying 10% towards the cost of apprenticeship training and the government will cover the remaining 90% of training costs, unless an apprentice is aged between 16-18 years, in which case the Government covers 100% of the training funding.   

Chancellor Philip Hammond announced in his Autumn 2018 Budget that from April 2019, contributions for smaller firms will decrease from 10% to just 5% in a £695m package to support apprenticeships.

How has the Apprenticeship Levy been received by the Food & Beverage industry?

There has been mixed feedback from employers within the Food & Drink industry. Some businesses have praised the scheme, whilst others have raised concerns about the functionality of the Apprenticeship Levy and the quality of courses and training available under the scheme’s previous formats.  These concerns have been echoed by Sir Vince Cable who stated that the implementation of the Apprenticeship Levy “has been just awful” and within the wider UK economy many businesses are not using the funds available in their digital accounts.  

However, some companies within the Food & Beverage industry are taking advantage of the Levy and fully utilising the funds available to spend on the training of Apprentices. Businesses such as Cargill, Hilton Food Group and Bakkavor are embracing the Levy and viewing it as an opportunity to reinvigorate and enhance their Apprenticeship offering.  

For example, Seachill (Part of the Hilton Food Group) has used the Apprenticeship Levy to support its Grimsby site expansion by taking on new staff and offering further training and progression to current employees who want to progress. Other Food businesses utilising sizable Apprentice Levy funds include Cargill who have launched new learning and development programs, and Bakkavor Bread, who have established new Bakery qualifications under the Apprenticeship Levy.  Degree Apprenticeships are also proving popular, with Sheffield Hallam University reporting an increase in enquiries for their Engineering Degree Apprenticeship offered in conjunction with leading Food & Drink Manufacturers. 

How can the Apprenticeship Levy support the Food & Beverage Industry?

Historically, student demand dictated what Apprenticeship courses would be offered by colleges, with this approach resulting in a shortfall in Apprenticeships in some of the STEM subjects (Science, Technology, Engineering, Mathematics), including the widely recognized Engineering ‘skills gap’ as reported by the Institute of Mechanical Engineers which costs the UK £1.5 billion per year. 

An aim of the Apprenticeship Levy is to redress the imbalance in Apprenticeships and shift from a student-demand model to an employer-demand model, to ensure that Apprenticeships offered meet the needs of businesses and fill key skill-gaps. With employers being more involved with the design and development of apprenticeships it is hoped they will become more relevant to the needs of the Food & Beverage industry and provide students with better quality training. 

If executed correctly, I believe the Food & Beverage industry can greatly benefit from the Apprenticeship Levy. Over the next 5 to 8 years, ‘skill gaps’ should close and some of the difficulty employers face to recruit should ease off. However, this is subject to the Food & Beverage industry recruiting Apprentices in sufficient numbers now. If they act now they will benefit from a pipeline of high-quality apprentices in disciplines such as Engineering which desperately needs an injection of well-trained and competent Engineers. 

I would welcome your thoughts and comments on the Apprenticeship Levy and would be grateful if you could please click the poll below and answer one question: 

Has your business taken on more or fewer Engineering Apprentices as a result of the Apprentice Levy?

Click this link to take part in our Poll, it only takes 30 seconds: 

Please only take part in this Poll if you work within the Food & Beverage Industry.