Feature

Food and drink industry prepares for the Apprenticeship Levy

The Apprenticeship Levy is likely to challenge many businesses

While the Apprenticeship Levy – which comes into force in April – has benefits, some fear its challenges may require the help of magic to overcome.

Food and drink has worked as hard as any industry to bring the apprenticeship model into the mainstream. In a sector where 96% of firms are small and medium-sized enterprises (SMEs), that means making them relevant, manageable and affordable even for the smallest.

Having initially advocated a year’s delay to this April’s introduction of the Apprenticeship Levy, the Food and Drink Federation (FDF) has since reconciled itself to the government’s timetable.

Its focus is now on practical measures to smooth the levy’s introduction and maximise benefits for members as quickly as possible, especially given its own target of trebling the 1% of the workforce who are apprentices by 2020.

Under the levy, businesses with payrolls of more than £3M will be required to contribute the equivalent of 0.5% of annual pay outgoings towards the scheme.

Companies now have two years, rather than the 18 months originally proposed, to invest their levy payments in apprenticeships. SMEs exempted from the levy will be able to access funding for 90% of the cost of apprenticeships.

Yet, for many in the industry, concerns about the scheme have not gone away. Some are left wondering who exactly is going to wave a wand to magic away the various barriers to its success.

Very much focused on the opportunities, Justine Fosh, chief executive of the National Skills Academy for Food and Drink (NSAFD), says: food and drink has been at the forefront of developments with apprenticeships, “and we now have new standards for all of the skill sub-sections”.

It is this specialist aspect to these new-generation apprenticeships that appears to offer the greatest potential.

At the FDF, policy manager for growth and competitiveness Caroline Keohane says: “When it comes to cost, you can currently obtain funding of 50% or more. Even so, a lot of companies did not take advantage of these opportunities.”

So, if the old system fell short of its objectives, what is there to suggest that the new version will change attitudes and outcomes?

‘Use it or lose it’ (Back to top)

The largest employers will now pay 100% of the cost via the levy. Presumably, this is designed to encourage an attitude of ‘use it or lose it’.

“But they’ll also have more control,” says Keohane. “They are more likely to get value for money, because they can go to a provider and say: ‘I want engineering, but I want it to be top-quality’.”

She explains: “Historically, members could put apprentices on a generic engineering course, but they would have to cover food safety and other food-specific modules in-house. Now, Food Engineering is a standard in its own right.”

To support the scheme, an Institute for Apprenticeships is being created. Fosh at the NSAFD explains that, among other functions, this will take up the responsibility currently exercised by ministerial officials for approving (or not) new standards.

One of the reasons why the FDF altered its position on the early introduction of the levy was the government’s change-of-mind on maximum funding levels. For engineering, as an example, ministers had set the maximum at just £18,000, compared with the industry-assessed level of £27,000. They have since performed a U-turn and accepted the higher figure.

Overall, Fosh has not been impressed by what the government calls its ‘open policy making’. In practice, she says, this has equated to “making it up as they go along”.

She likens the process to a cartoon character on a runaway train, furiously laying down track just ahead of the wheels. “But a project of this sort needs to be operated as a proper change programme,” she argues.

What, then, are the areas likely to require a touch of sorcery to get the apprenticeship system up and running on time?

“The biggest challenge is that this all goes live in April,” Fosh warns. “Employers are just beginning to appreciate the enormity of what they have to do. There’s a widespread lack of awareness about it.”

For some employers, the logic behind apprenticeships has been so clear that they have forged ahead with their own schemes.

Yeo Valley, for example, began five years ago. “There is a gap in the UK education system for vocational schemes, which replace those offered by polytechnics,” says learning and development manager Henry Laborero.

“More and more young people are channelled towards fields that are theoretical and in the service industry. This leaves a significant shortage of technical skills.”

But many other businesses retain an entrenched, and often negative, image of what apprenticeships entail.

Fosh still hears companies claiming the new system does not affect them ‘because we don’t take on apprentices’, she says. Many need to start with the basic steps of understanding funding mechanisms and visualising how the system can benefit their business.

Apprentices vs graduates (Back to top)

“Historically, we may have relied more on graduates,” the FDF’s Keohane admits. “They are more likely to be ‘ready to go’, while with an apprentice, you are probably looking at raw talent needing more investment. Then again, an upskilled apprentice may prove more loyal than a graduate.”

There have always been high-quality providers of apprenticeship training for food and drink, says Keohane.

But given the large numbers of SMEs spread around the country, they could never service more than a small segment of the industry.

“This contrasts with the automotive sector, for example, where manufacturing has tended to cluster in specific regions, and where one training provider might cater for hundreds of apprentices.”

Some of the fanciest footwork will be required from companies that qualify for the levy but are still relatively small and, therefore, pay modest amounts into the fund.

This group of companies are especially important because they may not have a history of organising apprenticeships. “They won’t be able to access much funding of their own,” says Fosh. “But as soon as they use it up, they will then be able to access government funding.”

The need to adapt to the new system will not end there for levy-paying SMEs. “They will have a digital account, and that will require an administrator,” she says. “And on top of that, they will need to manage the funding of each apprenticeship separately with the provider.”

Keohane adds: “It’s not just about cost for SMEs. It’s the whole perceived administrative burden. The FDF is working with the NSAFD to provide support and ‘hand-holding’ through the process, starting with determining what standards are available and who can provide them.”

Importantly, there is no age limit with the new system, and one of the preconceptions that the NSAFD and others are trying to break down is the idea that apprenticeships only apply to the young.

“This is an opportunity to take people on who are not at the highest skills level and train them up,” says Fosh. “They can be any age.”

One of the most glaring anomalies among current plans is the fact that, while the levy will apply throughout the UK, the direct link into apprenticeship provision will only exist in England.

Food businesses in Wales, Scotland and Northern Ireland will, effectively, pay for a system they cannot use.

“The tax money will go to the devolved parliaments but, in fact, their various policies on apprenticeships are quite different to England’s,” says Fosh.

Scottish policy, for example, has favoured pushing funding towards the training provider, with manufacturers making up any shortfall.

Those able to access the system will find several examples of best practice when it comes to existing apprenticeship programmes around the country.

Weetabix’s programme (Back to top)

Weetabix, for example, launched a new programme in 2016, bringing in four recruits over the course of the year in both engineering and manufacturing.

“We intend to double this intake in 2017,” says business unit operations manager Neil Clarke. “We see a significant benefit to our business by bringing in new talent, as we always have, and would have done so with or without the Apprenticeship Levy.”

In fact, the last time Weetabix ran an apprenticeship programme, in this case engineering-only, was 10 years ago. In the interim, Clarke explains, the company sourced much of its young talent from the local area. This new scheme aims to attract recruits from all over the country.

Companies such as Weetabix and Yeo Valley with a track-record in engineering-related apprenticeships are starting to look beyond this to other areas of the business.

“To date, we have focused on engineering, because there is a skills shortage, especially with regard to production engineering,” says Yeo Valley’s Laborero.

“Now this is embedded, we are moving forward to introduce apprenticeships in areas such as IT, technical, food science and commercial.”

In the future, companies will be able to apply the model not just across their own businesses but, via a transferability mechanism to be introduced in 2018, also to suppliers.

“Up to 10% of the levy fund will be available for use down the supply chain, and we’d love to see that proportion increased,” says the FDF’s Keohane.

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