While still far from a well known concept, levy share has the potential to accelerate access to apprenticeships for people from a variety of underrepresented backgrounds.
As it stands, the Apprenticeship Levy means organisations with an annual payroll of more than £3m are taxed at 0.5% of their wage bill. Any unused levy expires after 24 months and is returned to HMRC. Last year alone, more than £250m in unspent levy went back to the Treasury, which could have funded over 25,000 apprenticeships.
Under current rules, levy paying companies can, however, donate up to 25% of their unused levy to other companies to fund apprenticeships.
This is where the Co-op saw the chance to make a difference. Research from the retailer’s Ghosted Generation report shows almost a third (29%) of 13- to 25-year-olds feel the pandemic has made them less likely to continue with further education, while 26% believe their career aspirations have been ruined as a result.
While 40% of young people surveyed by the Co-op want to become an apprentice, uptake of entry level apprenticeships across England has fallen by 25% since 2018.
Armed with these stats, the Co-op team are on a mission to connect large levy paying businesses with SMEs seeking apprentices. The team first began exploring the idea in late 2020 after realising the scale of unspent levy being returned to HMRC, explains Co-op apprenticeships and funded skills lead Lloyd Thomas.
Once you start hiring apprentices, you see the benefit of it… It starts to shift your culture.
Stephanie Bishop, Direct Line
The Co-op approached the growth company managing the then Greater Manchester Levy Match to see how it could throw its weight behind the project. An idea formulated for the Co-op to take over the running of the levy match service, renaming it Co-op Levy Share.
Launched in May 2021, Co-op funded the creation of the match-making platform and the appointment of dedicated support coordinator Sandra Kelly. Whereas the national levy match service is all done online, the Co-op wanted to have a human presence behind the tech helping match donations to opportunities.
The free service focuses on creating opportunities for underrepresented groups in terms of race, gender, disability, sexuality and geography.
Some pledging companies may choose to focus on funding apprenticeships for care leavers, while others might be keen to match with an SME offering opportunities for people from diverse ethnic backgrounds or women in STEM subjects. While the quickest match so far took just 30 minutes, it can be months before the perfect fit is found.
The donating organisation has the final say on who to support, Kelly explains. Once the funds are committed, the money is transferred directly from the large employer’s digital apprenticeship service account to the SME, enabling the apprentice to start immediately.
The pledging business is then committed to pay for the duration of the apprenticeship. However, if the apprentice decides to stop the training, the transfer ceases.
A year on from its launch, Co-op Levy Share had received £10.4m in pledges from almost 40 companies and matched 546 apprentices, with donations ranging from £3m to £3,000.
SMEs receiving apprenticeship funding include care homes, hospices, carpentry firms and autism charities, all of whom are too small to pay into the levy. The Co-op’s first match, for example, was to sponsor 42 apprentice firefighters.
Thomas likens the service to a dating app. The more filters you put on it, the less chance there is of getting a match, which is why he advises businesses to keep their criteria fairly open.
“I would never have said: ‘Why don’t we sponsor 42 firefighters in Greater Manchester?’ But, when the opportunity presented itself we went to our senior leaders and said: ‘This looks like a bit of a no brainer,’” Thomas explains.
From the SME perspective there are only two requirements to access funding – the apprenticeship must tackle underrepresentation and the person receiving the training must be paid the national living wage.
As of January, 37% of people utilising the levy share service were non-white British, while 43% declared a disability and 46% have caring responsibilities. Given the diversity of the people being helped, Kelly sees undeniable positives on all sides of the equation.
“It gives the donating organisation that’s got the excess levy the autonomy to decide on who they want to support. It also gives the smaller organisations in need of that support the platform to promote opportunities,” she states. “There’s plus points to it at every step of the way.”
Thomas sees levy share as a win win for the large employer and small business, although he is keen to see the government commit to greater flexibility.
“If we think of one of our largest employers, with a levy bill of £24m, they’re never going to spend £24m on their own apprenticeships,” he points out.
“We will continue to lobby government around actually why does it have to be 25%? Why can’t it be 35% or 40%? This money is going back and it could be being diverted in the best place to make use.”
The Co-op, for example, pays around £5.3m in Apprenticeship Levy and spends approximately £2m on its own apprentices. Even by donating 25% in unspent levy, every year that leaves £1m going back to the Treasury.
One employer pledging funds to the Co-op Levy Share service is Direct Line. The insurance giant has already committed £325,000 in unspent levy to fund apprenticeships at autism charity Autism Initiatives and is supporting 10 apprentices at Greater Manchester Fire Rescue Service. This is in addition to the 220 apprenticeships currently running within the group.
“We’ve got a huge pot of money expiring each month in our levy pot that we’re not currently utilising, so rather than give it back to the government we wanted to give it to organisations that we’re invested in supporting from a CSR perspective,” explains emerging careers lead Stephanie Bishop.
Direct Line is keen to fund SME apprenticeships which contribute to closing the digital skills gap, as well as helping more broadly to create opportunities for underrepresented talent.
From an internal perspective, Bishop describes Direct Line as being on a transformation journey in terms of its talent agenda.
We will continue to lobby government around actually why does [levy share] have to be 25%? Why can’t it be 35% or 40%?
Lloyd Thomas, Co-op
“We’re moving away from your traditional graduate apprentice type programmes and thinking about how we can attract more diverse talent and how we can ensure there are no barriers to entry. We’re looking at anybody who’s got the aptitude to develop the skills we need for the future,” she explains.
“We’re creating an academy style structure for key areas like data and tech, where we know we struggle to recruit externally. We need to start growing our own talent, so we’re looking at how we attract the right talent, anybody with the aptitude regardless of their background.”
The new recruits may then go on to upskill via an apprenticeship, the idea being to treat everyone joining the business as an individual with a specific skillset. In marketing, for example, Bishop is working with the team on their data strategy to understand how to upskill via apprenticeships.
There are currently two marketing apprentices in the department, while Direct Line has already signed off funds to bring 20 apprentices into the tech team and around 25 into the data team. The software development apprentices will take part in bootcamps and 12 weeks of upfront training on their apprenticeship, meaning they enter the business with some level of knowledge. The insurer also plans to launch a data/customer service hybrid apprenticeship into its call centres.
When it comes to the level of qualification needed, Direct Line is keen to move away from a reliance on degree education. From a social mobility perspective, Bishop wants there to be no barriers to entry for people who can demonstrate they have the aptitude to develop the necessary skills.
“We are doing away with the need for a degree. If they’ve got a degree that’s relevant, brilliant. They’ll need less training and development potentially,” she states.
“But if they’ve got a degree in a not so relevant subject you have to question the value of that. Yes, they’ll have some transferrable skills, but if it’s someone with a degree that’s irrelevant, versus someone with two- or three-years’ experience…”
Bishop urges other brands to start thinking about their future skills strategy and how entry level roles contribute. An advocate for apprenticeships, she insists support needs to come from the top down, with senior leaders understanding the long-term vision for the workforce. The cultural benefits should be obvious.
“Once you start hiring apprentices, you see the benefit of it and it brings different perspectives. Different types of people than you might have hired before,” Bishop adds. “It starts to shift your culture and people usually come in and challenge the norm.”
Marketing Week’s Opening Up campaign is pushing for the democratisation of marketing careers. Follow our coverage of the challenges and opportunities over the coming weeks. Read all the articles from the series so far here.