First announced by then chancellor George Osborne in 2015, the Apprenticeship Levy requires bigger businesses (those with an annual pay bill of £3m or more) to set aside 0.5 per cent of their payroll for apprenticeships. It was officially rolled out in 2017 by then education secretary Justine Greening, and since 2018 has seen 28,003 apprenticeship places transferred from larger to smaller businesses via levy transfers.
Since its inception, however, the levy has been widely criticised by businesses, employers, and training providers. Critics have called for the levy to be reformed in light of its inflexibility, difficulties in understanding how it is used, bureaucracy around the release of funds and the narrow scope of apprenticeship training. Both the government and the opposition are currently considering how it might be changed.
Still, the levy is already helping many small businesses train and develop a new generation of talent with help from larger organisations. On 18 March, Prime Minister Rishi Sunak announced he would be investing a further £60m into the scheme and would increase the amount larger employers can transfer to smaller employers from 25 per cent to 50 per cent of their unused levy funds. According to the government, 530 employers such as Asda, HomeServe and BT have pledged to transfer over £35.39m in unspent levy funds to smaller businesses since September 2021.
This move was welcomed by the sector. Martin McTague, national chair of the Federation of Small Businesses, said at the time: “Apprenticeships are an effective way of allowing small firms to recruit and upskill talented people.” McTague said the Prime Minister’s recent announcement offers a “positive way to bolster the number of businesses taking on apprenticeships”. He added: “Time and resources are in short supply for small businesses and so increasing the amount of funding for training costs will help to improve the number of small firms entering the apprenticeship system.”
This is what Amazon has pledged to do. Since 2013, the company has created more than 5,000 apprenticeship opportunities at Amazon. Its schemes have a 70 per cent retention rate and roughly eight in ten apprentices who have been on an Amazon scheme (80 per cent) have progressed to a permanent role at the company after completing their training. Since 2021, Amazon has also used the Levy Transfer to commit £8m to small businesses. This has helped to fund 900 learners and 400 small and medium-sized businesses (SMEs) in boosting local skills.
One small business that Amazon has worked with is Adopstar. Based in Devon, Adopstar is an organisation specialising in ad operations and marketing. Its head of training, David Bond, explains that “from the absolute outset” of Adopstar’s existence, “apprenticeships were deemed as a really good way of both growing the company… but equally being able to get the skills and knowledge for our staff”.
Apprenticeships are embedded into the way Adopstar works as a company. “It’s a way for us to bring new people in with new ideas and get them up to speed with current industry knowledge,” Bond says.
He says that apprenticeships have helped Adopstar maintain a low turnover rate of employees and have helped staff upskill and progress professionally. “For us to be able to afford that on our own, we just can’t do it,” Bond says, “therefore the levy is really important for us. It enables us to grow and expand our workforce.”
Adopstar has used Amazon’s support to fund a range of roles. “For a company to get someone qualified through a degree-level qualification, you’re paying up to £1,000,” Bond says. But the company has used the levy funding it has received to offer staff the opportunity to achieve high-level qualifications while working on the job. For example, a former funded apprentice is now the operations manager for Adopstar (and is also Bond’s boss).
However, while Amazon has made good use of the levy transfer scheme, recent research from the Department for Education shows that this is not the overarching trend. In 2022-23, just 2.7 per cent of levy-paying businesses allocated part of their funds to non-levypaying employers.
Bond is clear that more effort needs to be made to raise awareness of apprenticeships and the positive impact they can have. He explained that the process of taking up the levy is “relatively straightforward”, but the biggest barrier is that many small companies are not aware of what the levy is. He says a more targeted communications campaign and information from government could help to increase uptake and awareness.
“I’m a massive advocate for apprenticeships,” Bond says. “It’s an opportunity, it’s a window.” He says more work should be done by schools and the government to position apprenticeships as a valuable career path for young people and people of all ages looking to retrain or upskill.
He explains that apprenticeships have advantages that are not as applicable to those taking a traditional university route. “It’s a massive benefit to a company to know that someone has been able to put themselves through a degree-level qualification while holding down a full-time job,” Bond says.
The financial support Amazon has provided has been essential. “Particularly with the economic climate as it is,” he explains, Adopstar would not be able to run the programmes that it does without levy support.
“We don’t have a huge profit margin at the moment because we’re still growing,” he says. “We just couldn’t put people through and train people in the same way in our own right.”
“And big companies like Amazon are superb to support us growing,” he adds. “We couldn’t grow without their support.”
This advertorial was first published in a sponsored report by Amazon on 26 April 2024. Read it in full here.
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