How to avoid a levy that weighs heavy, and still delivers 3m by 2020

As one of the major employers in scope, Kier was keen to engage with the BIS review of proposals and so responded to a consultation on the levy earlier this year.

Of course it’s well documented that the construction industry is currently facing a serious skills shortage. So we welcome steps being taken to help address this and indeed have made our own commitments to the recruitment and development of new talent at a Group level by signing up to The 5% Club. Currently around 1,200 of our 24,000 employees are either graduates or apprentices.

We have also made sector specific commitments like our pledge through the SCAPE Minor Works Framework to deliver one apprenticeship place for each £1m of development procured through the framework. So there is already commitment and consensus on the importance of apprenticeships.

Given that the apprenticeship levy will have a significant impact on Kier, on the construction industry, and on British business as a whole, there are a number of points of concern that we would like to see BIS address in order to make the levy effective.

The key point for large employers in the construction industry is that it’s critical that the apprenticeship levy works in harmony, not in duplicate, with existing sector-led levies, such as the one collected by the CITB, to avoid financially penalising in-scope construction employers.

The Treasury has said that it’s working with training boards to consult with their members ahead of the introduction of the levy on how their existing arrangements will be affected and whether any changes are required. We would like to see all the contributions of large construction employers who are in-scope channelled back in to the CITB and ring-fenced specifically for the delivery of sector-specific apprenticeships.

Employers must also have control over how levy funds are spent. Government has said this week that it will establish a new, independent, employer-led body called the Institute for Apprenticeships that will set apprenticeship standards and quality.

This is encouraging, but the initial proposals suggested employers would be expected to meet the cost of travel, accommodation and welfare. These are currently covered by the CITB levy for construction employers, so the new levy could mean increased costs and administration, which could dampen some organisations’ enthusiasm if they haven’t the resources to take this on.

By retaining control over how the levy is spent employers would also be able to influence the focus on which types of apprentice should be recruited to best address current project pipelines and particular skills shortages.

In addition we would urge that apprenticeship training for 16 to 18-year-olds should remain fully funded by Government, as set out in the Richard Review, because the alternative option of remaining in full-time education remains fully funded. If employers are expected to fund the training of this group we would expect to see a substantial reduction in the number of apprenticeships offered to 16 to 18-year-olds, as there would be no benefit to employers recruiting school leavers over more mature candidates, which would lead to an increase in the young NEET population.

The Institute for Apprenticeships will advise on the level of levy funding each apprenticeship should receive. We also believe that funding caps will be significantly higher for programmes that have high costs and are of high quality. This is of particular significance to us, given that a one-year course in retail costs around £2,000 to fund, whereas the average cost of a construction apprenticeship in a trade like carpentry is £12,000, going up to £30,000 for a higher apprenticeship.

It is pleasing to see that considerably more high cost higher apprenticeships have been moved in scope of the levy, so employers would be able to claim funding for things like long-term day release HNDs and degrees.

A final concern is that the quality of apprenticeships could be undermined by companies who rebadge existing training as apprenticeships in order to be seen to be hitting targets. This doesn’t have to be a negative thing. We have already seen moves in this direction by firms who are developing new apprenticeships around their training needs in order to maximise the value of the levy.

We are currently looking at converting our highly regarded foundation degree programmes into higher apprenticeships in order to bring them in scope, which would assist the government in meeting its target and also help establish higher apprenticeships as a credible choice for those not going to university.

Where it would be a problem is if smaller companies feel forced into retagging lower quality training into apprenticeships. So the government just needs to be careful that they make the scheme proportionate and viable as was done with the CITB-administered industry levy, in order to ensure the spirit of the levy is properly embraced by all organisations.

I think we would all agree that we need more apprenticeships - we have plans to recruit 400 apprentices a year by 2020 - but we just need to ensure that quantity does not come at the expense of quality.

Nigel Brook Kier Group Written by:

Nigel Brook

Executive Director, Construction and Infrastructure Services, Kier Group