Pipe Up: Apprenticeship levy risks unintended consequences

Nick Ellins sets out employer concerns with the new apprenticeship levy, pointing to penitential for increasing the cost of training to industry and subverting better regulation principles.

Skills and employment policy continues to move from an issue primarily for Human Resources departments, to being on the radar of Boards, finance and regulation directors, and those responsible for corporate reputation. 

The recent comprehensive spending review announcement, of an apprenticeship levy of 0.5 per cent on employers’ pay bills from April 2017 will only add to that shift. All employers in England, Scotland and Wales with bills of more than £3 million are currently expected to pay in. With the primary reclaim mechanism currently being digital training-only vouchers, it makes sense for the whole utility sector to act in concert and work together to ensure the best outcome for all.

Two polar schools of thought are already emerging. One sees some employers quietly embracing the government’s ambition to bring in at least 3 million apprentices. They see themselves as pragmatic, proactive and putting aside some of their initial discomfort around the levy in pursuit of wider ambitions. They look beyond the detail to a prize of a new talent pool.

Other employers see it differently, cutting straight to the potentially unintended consequences government has created. Without the required regulatory impact assessment to help the sector understand the costs, impacts and pitfalls, employers are left to work it out for themselves, significantly duplicating effort and increasing the cost to industry.

Despite the origin of the levy coming from the same government department as the Better Regulation Executive, there is no evidence that Better Regulation principles have been applied to reduce the overall regulatory burden.

This leaves employers asking questions such as: Where is the transparency of the non-regulatory options that were examined, tested and rejected before deciding on the levy? If government has a one-in-two-out policy, then where are the two areas of regulatory red tape that will go, and how will those reductions help the levy business case? Where is the wider employment and skills strategy to give context to the very small slice of the career pie that is an apprenticeship?

The Energy & Utility Skills Group is bringing sector employers together to find clarity in these concerns, whilst ensuring a constructive and progressive dialogue with ministers and officials.

Because the end goal that we all strive for – attracting the right talent, with the right skills, in the right roles, at the right price to deliver what is a mouth-watering infrastructure investment programme – remains just as distant today as it was before the announcement.

And if examples were needed to show that utility companies can only deliver the ambitions of the nation with the right number and quality of employees, those attending the recent Smart Metering Forum in London heard the message loud and clear. The unstable smart metering policy environment has led to unwelcome uncertainty.

The 10,500-plus people needed to bring about the programme are yet to be identified, sourced or trained. In a stroke, the value and cost of the available talent pool just went up, previous deadline KPIs will come under the spotlight, and the CEOs responsible for the execution of the business plan will see a bright shining blip on their risk radar.

One live and simple example of why skills and employment is more than ever a Board issue.