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Impact of Apprenticeship Levy on Business Services

Improving skills, improving productivity

As some of the largest employers in Britain, organisations in the Business Services sector will be hugely impacted by the Apprenticeship Levy. How can HR Directors prepare – and turn it into an opportunity?



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I was delighted recently to host the Business Services Association lunch with the former Prime Minister’s advisor on apprenticeships, Nadhim Zahawi MP. We discussed the introduction of the Apprenticeship Levy in April 2017.

We were joined by 10 HR directors from some of the largest businesses operating across the business services sector.

Nadhim explained some of the key elements of work he did for David Cameron. Above all, he saw it as a means of meeting the challenge the UK has in raising productivity – the better trained workers in the business services sector are, the more chance the country has of making the step change in productivity needed.

Companies in the business services sector are some of the largest employers in Britain and it was clear that the HR directors present had done substantial work to prepare for the introduction of the Levy. Three particular points stood out for me:

  • The levy should be seen as an opportunity to really invest in the skills needed to increase productivity, make businesses a success and should be part of a broader workforce planning strategy;
  • However, infrastructure, technology, governance and processes need to be in place to help move organisations forward. Planning now is essential and thinking of a blended approach to delivery should also be part of any strategy (looking at specialist providers, outsourcing, in-house provision and bigger players); and
  • Sharing learning and communicating fully the benefits of apprentice schemes, within industries as well as across society, will help drive engagement and demand - which will ultimately help increase the skill base in the UK.

We are stressing to our clients that if they treat the introduction of the Apprenticeship Levy as a chance to improve substantially the skills of their workforce, and as a means to drive productivity improvements, rather than just treating it as another tax, we believe despite the additional costs, it could drive real long-term benefits to UK Plc. At KPMG, we are working with clients to help them prepare for the levy by developing the skills and training frameworks which will do just that. 

Our joint publication with the Open University offers some practical guidance for employers when considering how to maximise the use of apprentices within their organisations. It touches on many of the themes we covered at our lunch regarding identifying the skills gaps in an organisation, the need to engage across your business and the requirement of diligence when selecting apprenticeship providers.  

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