Almost 5.7 million employees work in engineering enterprises in the UK, representing just over 19% of total UK employment. However, according to Engineering UK's 2018 report, to keep pace with demand, 203,000 people with Level 3+ engineering skills are required per year to 2024, and 46% of engineering employers surveyed by the IET reported recruitment difficulties.

Many of our experienced engineers are approaching retirement. While in the past, engineer numbers have been swelled by EU nationals, the signs are that this source too is depleting. Indeed, an EEF/Squire Patton Boggs report  – Navigating Brexit: The Migration Minefield – published in May 2018 states that although the slump in job applications from European citizens has slowed, 17% of companies surveyed reported a drop in applications. In addition a further 13% of manufacturers have seen an increase in EU workers leaving their businesses. With ongoing uncertainty about the ramifications of Brexit, Government and industry urgently need to find ways to boost the number of young people choosing engineering as a career, a number that remains inexplicably low.

There are several routes into engineering, one of which is via an apprenticeship. As part of the government's commitment to developing vocational skills, and to increasing the quantity and quality of apprenticeships, it has committed to an additional 3 million apprenticeship starts in England by 2020 and, in 2017, introduced an Apprenticeship Levy on UK employers to fund new apprenticeships. The levy is charged at a rate of 0.5% of an employer’s pay bill. It is returned to the employer through an online account, along with an uplift of 10% from the government. The employer can only spend the money on apprenticeship-based training offered through an approved training provider. However, funds have to be used within 24 months, after which they expire.

According to data commissioned by The Open University, published in April 2018, more than £1.28 billion paid by employers into the Apprenticeship Levy remains unspent in National Apprenticeship Service accounts. Of the £1.39 billion paid in by organisations, only £108 million has been withdrawn – just 8%. 

Bis Henderson Academy delivers training and up-skilling programmes for supply chain and logistics professionals. It recently-published a white paper – ‘Tapping into the great skills dividend' – which considers why businesses are failing to take advantage of the funds available. Sue Byrne, a business transformation and operational improvement expert with wide-ranging board level experience within the logistics sector, says some of the bigger organisations she's worked with have got themselves well organised and are making sure they make best use of the money that is being put aside. However, she says that the challenge comes for smaller organisations: "Nowadays, businesses are cutting back on cost wherever they can. Gone are the days when companies had massive, dedicated HR and training teams. So, whether you are a logistics director or a general manager you will be very much expected to manage all of those kinds of issues yourself. Unfortunately, under these circumstances, training becomes less of a priority and if you have to go through a process where you have to try and access funding and courses, I think managers are putting off decisions and are not utilising the money that is available to them through the Apprenticeship Levy.”

Andy Kaye, CEO of Bis Henderson Group, believes many businesses are still unclear about the Levy and how the funds can be used. He says: “A lot of companies are putting their foot on the ball until they find out exactly how to use the Levy to best advantage.”

Kaye believes there is a huge opportunity for businesses to tap into Levy funds for developing young talent and for up-skilling existing staff, right through all tiers of management: “What is not so widely appreciated is the scope of the term ‘apprenticeship’. Properly structured – using mentoring, paid work experience, on the job training and academic studies – the Levy account can be spent on anything from an NVQ level 2 up to a Masters Degree, addressing skill shortages at supervisory, management, or even Board level,” he says. 

Calls for reforms 

For some companies the Apprenticeship Levy has been fraught with difficulties and many manufacturers are calling for an urgent summit with Government to discuss reforms, both to make the levy work and to ensure the creation of additional numbers of high value manufacturing and engineering apprenticeships.

One organisation calling for Government to sit down with businesses to find a way to rescue the levy is the EEF, one of the UK's leading experts in the field of apprenticeship training. Currently EEF trains more than 1000 apprentices a year for some of the UK's biggest companies at its Technology Training Centre in Birmingham. 

EEF conducted a survey earlier this year and found that 95% of manufacturers want changes to the Levy, with just 7% of companies saying that they have had no challenges with it. More than half of the companies surveyed said apprenticeship standards have not been ready for delivery, while two-fifths of companies say colleges and training providers are either unable or unwilling to deliver the apprenticeships that manufacturers want. The survey also found that 11% of companies looking to start an engineering apprenticeship for an existing employee have cancelled or delayed it specifically because of the levy. 

Fortunately, many companies are still forging ahead with their apprenticeship programmes. Steve Richmond, director – Logistics Systems at intralogistics company, Jungheinrich UK, believes the Apprenticeship Levy reflects the need to offer school leavers both more choice and better training. He says: "Jungheinrich offers a series of employment programmes, including its Sales Academy Scheme and International Graduate Programme. It has been committed to engineering apprenticeships for many decades, and the introduction of the Levy has supported the extension of this apprenticeship model. With 50 individuals currently in one- to three-year programmes encompassing three apprenticeships – Engineering Forklift Maintenance and Repair; Business Admin; and Customer Service – the focus will be to steadily introduce more apprenticeship pathways in different disciplines in the future.

Richmond continues: "One of the additional benefits of the new Levy model is that it provides organisations with far greater control over the educational aspect of the Apprenticeship, enabling companies and colleges to foster closer relationships that should result in courses that deliver the skills required by industry."

Global engineering technologies company, Renishaw is a keen advocate of apprenticeships and offers a selection of schemes. In addition, it is keen to do its bit to attract more young people into the industry and was one of several companies that volunteered apprentices to support the Education and Development Zone at the Manufacturing Technologies Association's MACH 2018 event. Apprentices toured the show with students, taking in exhibitor talks, demonstrations and hands-on activities, all designed to educate students about what is happening in the industry.

Tailored approach

Mitsubishi Electric has been coy about promoting its UK  training academy, preferring to wait until it started to deliver real results. This year, however, the company is happy to talk about the success its Diamond Link Training Academy (DLTA) has achieved, both for the company, and its graduates.

Mitsubishi Electric’s divisional manager for Automation Systems, Roger Payne and two other senior colleagues based at UK company HQ in Hatfield were instrumental in establishing the DLTA: “What we know now three years into the project, is that it has worked extremely well for us and for the people that have progressed through it. 

"It wasn’t the lack of technical knowledge in the younger generation that drove the need for the DLTA to be set-up in the first place, it was a combination of sales acumen and technical ability that we needed. We decided to go it alone because we realised that being a good sales engineer or application engineer requires a special mix of talents, education and experience – and no one single course at colleges or universities seemed to offer that combination of learning in their syllabuses. So, we set about starting a training academy."

Another company to launch a purpose-built training facility is Fanuc. The company reports high demand for its robotics, robo-machines and CNC programming courses, as well as its long-standing apprenticeship scheme. Anthony Bentham, customer services manager suggests that a solution to the skills shortage lies in promoting and prioritising practical-based training as a viable alternative to university degrees. He says: “Manufacturing isn’t immune from fast-paced technological change, and this needs to be reflected in our approach to skills and training. Apprenticeships, for example, provide a great opportunity for young people to build practical experience and forge links with industry, yet many young people still see further education as the more advantageous career path.”

“Most of our apprentices go on to achieve successful careers within manufacturing, whether that’s at Fanuc or elsewhere. In fact, we have many senior team members who started as apprentices, and who are now entering their second – and even third – decades of employment here. These are the kind of success stories we need to be promoting to young people if we are to prove that success does not begin and end with a university degree.”

For some companies, the Apprenticeship Levy is working well and helping to raise skills levels. However, to benefit smaller organisations, it urgently needs to be reviewed. Bis Henderson Academy's white paper says that doing nothing simply makes the Apprenticeship Levy a payroll tax. If the skills gap is to be narrowed, we can't afford for that to happen.