Adding skills to your workforce

The new government apprenticeship scheme will require businesses to contribute more to training their employees

Next April, apprenticeships will take on a new significance for businesses. From then, all employers with a total payroll of more than £3m will have to pay 0.5% of their salary bill as an apprenticeship levy, with no upper limit. That means an employer with a £50m wage bill will have to pay £2.35m a year.

The charge is part of government reforms aimed at increasing the number of apprenticeship starts to three million between 2015 and 2020, 25% above that achieved in the five years to April 2015. But it should also focus employers’ attention on how they can use apprenticeships to train their employees because, whether the company employs them or not, the levy has to be paid. 

Happily, the charge is part of a package of changes designed to make apprenticeships more relevant to business needs, and more attractive to employment candidates. The reform was sparked by the Richard review of apprenticeships, published in 2012, which found that the definition of 'apprenticeship' had been stretched too far and standards of training grown too lax. The new regime puts employers at its heart and includes rigorous standards as well as a significant increase in funding – the £3bn a year which the levy will raise is almost double the £1.56bn public spending on apprenticeships in 2014/15 – and extension of age and skill levels. The new regime will remove age limits for apprentices and even those educated to degree level can be funded. The funds, which will be held in a digital account, can be spent from next May, and will be held in a 'digital apprenticeship service' (DAS) account. 

An apprenticeship funding update, published in August, gives more detail of how the levy will operate. It brings good news for small firms whose wage bill puts them outside the levy: they will have to fund just 10% of apprenticeship training and assessment costs, with the remainder coming from the government – a big reduction from the current 33% funding requirement. Very small businesses, employing fewer than 50 people, that employ an apprentice aged between 16 and 18, will receive government funding of 100% of the cost, and there will also be additional incentives for all businesses employing those in this age group. Funds can be used to train existing staffPotentially the most significant proposal in the apprenticeship update, however, is that the funds can be used to train existing staff “provided the training will allow them to acquire substantive new skills, and the content of the training is materially different from any prior training or a previous apprenticeship”. 

Mike Thompson, Head of Apprenticeships at Barclays and member of the Apprenticeship Delivery Board (pictured right addressing the Apprenticeships in Financial Services Conference in London in January this year), said: “I would be surprised if any company can say there is not an opportunity [to spend the levy] given the breadth of standards which have been developed." The opportunity to use the levy on training existing staff is “very useful,” he adds. “Companies which do not hire large numbers of new staff could struggle to spend their funds so the opportunity to tackle skills gaps across their existing workforce is very welcome.” He says that even businesses which have traditionally focused on graduate recruitment, such as investment banks, fund managers and insurance companies, will find training opportunities under the new regime.

Apprentices are already aware of the advantages which combining study with hands-on experience can bring. Charlie Head joined IFDS last September as an apprentice, choosing not to go to university after studying politics and sociology at college for two years. He is now in a full time position in client services. His apprenticeship was due to last 18 months but he is in the rare position of finishing it early.

He said: “In four years’ time (when I would have completed my degree) I will have four years’ worth of experience, my CISI and NVQ qualifications from my apprenticeship plus any extra CISI qualifications I may have completed, and the skills and knowledge necessary to excel in the finance industry – the latter something I may not have got at university. No amount of university study can give you the skill and experience I have got from my apprenticeship.”

With university fees likely to rise from the current £9,000 a year, interest in well-designed, rigorous apprenticeships is likely to grow. Joseph Hall, a 20-year old apprentice who joined consulting firm Mercer in October 2015 to train as an Investment Operations Technician, said: “The thought of being able to get my foot on to the corporate ladder without going through university really appealed to me. The apprenticeship scheme is the perfect way to gain a professional industry qualification while gaining creditable experience along the way. I think that experience is just as well valued as the qualifications themselves.”

The government reforms have already sparked a rush of activity among training providers and professional bodies. All apprenticeship training schemes have to be registered with and approved by the government – and existing providers still have to go through this process. While firms can establish an in-house training provider, this is likely to be appropriate only for large companies with a high number of trainees, and particularly those with very specialist requirements. New training programmes are being developed across financial services, as with all other industries. The CISI, for example, is in the process of establishing three new standards, covering investment banking, banking and financial advice, which will replace the old apprenticeships on providing financial services.
"I didn’t want to embark on a career or a degree in something I wasn’t sure I wanted to do. The opportunity to gain further qualifications while working really attracted me to do an apprenticeship" The CISI’s standards are already helping firms attract staff. Charlie said: “Reading through the CISI’s website, it was clear their qualifications were very much recognised and valued. The chance to gain on the job experience accompanied with skills and knowledge that I would naturally collate during my day-to-day role really excited me and I knew it would give me an opportunity to develop myself and further my own career aspirations.”

One challenge for the new regime will be to change the perception of apprenticeships, which are often, and incorrectly, associated with low-level, manual skills. Some, however, already recognise that. Sean Turner, Head of European Cash Management at BNY Mellon, joined the company as an apprentice a decade ago. He said: “I didn’t want to embark on a career or a degree in something I wasn’t sure I wanted to do. The opportunity to gain further qualifications while working really attracted me to do an apprenticeship. One of the things which appealed about BNY Mellon’s apprenticeship scheme, and which many young people might not realise is an option, is the opportunity to study for a degree as part of the training if this is something which you are keen to do.”
The annual amount the new levy will raise

There are, in fact, a number of degree-level apprenticeships available in the industry – for example in IT and leadership – through universities like Manchester Metropolitan, Aston and John Ruskin while, earlier this year,  Goldman Sachs launched a degree apprenticeship programme in conjunction with Queen Mary University in London.

The reforms could lead to a big expansion in degree-level apprenticeships. The financial services industry is working on a banking and finance degree programme, which should be ready for launch at the beginning of 2017 and will be taking its first students in September. Already, says Thompson, 22 firms are involved in drawing up the programme with a further 40 interested in joining, and a number of universities have expressed an interest in offering such programmes. There are also plans for a Masters, which could be attractive for those who joined the industry at degree level. 

The levy has been criticised as another government tax – particularly given the lack of a cap on payments. Thompson, however, advises seeing it as “an opportunity to look across the workforce, including both new and existing employees, to decide where to invest to add the skills the business will need for the future”.

The basics of a City career
Thinking of a career in the City? There are a wide range of routes you can choose from, whatever your level of education.

School leavers can take up an apprenticeship with a wide range of companies from Barclays to M&G. These can be combined with an industry-based qualification, like those on offer from CISI. A growing number of organisations, now offer sponsored degrees, or the new apprenticeship degrees being introduced as part of the recent reforms.

For apprenticeship opportunities see the National Apprenticeship Service

Information on CISI programmes is available here.  

Sponsored and apprenticeship degree information is available via the scholarship hub at The Scholarship Hub

Many financial services firms will also offer training programmes to meet their own specific needs, often in conjunction with qualifications from a professional body like CISI. For information on these, contact your chosen company or ask your local careers service. Details available here.

Graduates: Most major financial services organisations have graduate training programmes. Your university career service should have information or you can browse websites such as Milkround.

An internship can boost your chances of getting on to a graduate scheme, or even an apprenticeship or school leaver job. Details of internships are available at websites such as Prospects.

Apprenticeship name  Apprenticeship level   Apprenticeship duration  CISI qualification (one per apprenticeship) available as part of the apprenticeship
Relationship Manager – Banking  level 6  48 months
  • Investment Advice Diploma (IAD)
  • Private Client Investment Advice and Management (PCIAM)
Financial Services Administrator  level 3  12–18 months
  • Investment Operations Certificate (IOC) with the following modules: Introduction to Investment; Regulations
Senior Financial Services Customer Adviser  level 3  12–24 months
  •  Investment Operations Certificate (IOC)
Investment Operations Administrator  level 2  12–18 months
  •  Fundamentals of Financial Services
Investment Operations Technician  level 3  18–24 months
  •  Investment Operations Certificate (IOC)
Investment Operations Specialist  level 4  18–24 months
  •  Investment Operations Certificate (IOC)
  • Managing Operational Risk in Financial Institutions
  • Investment Advice Diploma (IAD)
  • Certificate in Investment Management (CertIM)
 Paraplanner  level 4  24–36 months
  •  Certificate in Paraplanning
 Compliance/Risk Officer  level 3  15–18 months
  •  Combating Financial Crime
  • Global Financial Compliance
  • Risk in Financial Services
  • Managing Cyber Security
Senior Compliance/Risk Specialist  level 6  36–42 months
  •  Diploma in Investment Compliance
 Financial Planner  level 4  24–30 months
  •  Investment Advice Diploma (IAD)
Published: 15 Sep 2016
  • Wealth Management
  • The Review
  • Operations
  • Compliance, Regulation & Risk
  • Capital Markets & Corporate Finance
  • trainee
  • apprenticeships
  • apprentices

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