From April 2017, all businesses with a wage bill of over £3m will pay an annual levy of 0.5% of the total. The levy will establish a national fund from which employers can draw to pay for apprenticeship training. The new levy will apply to the new higher and degree apprenticeships as well as intermediate and advanced level apprenticeship schemes.
There will be ninety per cent funding for businesses that are too small to pay the apprenticeship levy; large businesses will have 24 months to use their apprenticeship levy before it expires; and there will be funding for individuals to undertake an apprenticeship at the same or lower level than a qualification they already hold (if this allows them to acquire substantive new skills.
In addition, apprenticeships now apply to any job role – including management, financial and digital – and can be used as a route to a degree or even a master’s qualification.
So the combined impact of the new apprenticeship levy and new degree-level apprenticeships is set to transform graduate recruitment.
• Degree apprenticeships with the best employers could become as sought after as places on degree courses with top universities.
• Levy-paying organisations are investing in degree apprenticeships and as a result are set to abandon their graduate scheme programme.
• Degree Apprenticeships are a substitution threat to traditional on-campus degrees rather than just offering the opportunity of additional student numbers.
• Degree Apprentices will split their time between university study and the workplace and will be employed throughout – gaining a full bachelor’s or master’s degree from a top university while paying no fees, earning a wage and getting real on-the-job experience in their chosen profession. The cost of course fees is shared between government and employers, meaning no cost to the student
• Recruiting students on to Degree apprenticeship courses will require a partnership between employers and universities, with joint development of programmes, agreed numbers of students per employer and recruitment and assessment carried out by Universities.
• Degree apprenticeships are likely to be lower margin than traditional degree programmes
• Even more so than with traditional degrees, schools and parents will have a major influence on the take up of the degree apprenticeships
Many Universities, understandably, are putting considerable effort into degree apprenticeships.
They are gearing up to supply the right programmes, to partner with prestigious employers and to put people and systems in place to recruit students.
This is partly in response to a commercial opportunity, and partly in response to their mission to act as catalyst for their regions and support regional development.
However, there are strategic marketing questions that need to be answered such as:
• What level of substitution will there be as opposed to genuinely new business? Has the University “done its sums” and come to a view about the likely level of substitution and the impact on the bottom line?
• What will the market look like in five years time? Has the University got a plan to deal with the impact?
• To what extent do Universities need to invest in educating the market about the new apprenticeships as well as recruiting their own requirements?
• Whom will these programmes appeal to? What are the likely profiles and locations of the target market?
• Which employers do Universities wish to partner with? Other Universities will be chasing them too – so what is the USP that will make employers choose one University over another?
• What will be the impact on the overall University Brand?
• Is there a need to differentiate degree apprenticeships from traditional degrees so that the £9000 fee can be sustained?
• Will the content of the degree apprenticeships need to be adjusted to recognise the vocational/training/skills development requirements?
• What process, people and skill sets do Universities have to develop business with employers and recruit, assess and mentor students?
• How important will the University’s brand be in student choice, versus the brands of its partner organisations?
Universities need to look at the questions above (by no means an exhaustive list) and review the potential for Degree Apprenticeships in a rigorous marketing framework covering:
Markets and market segments;
Routes to market;
Impact on the bottom line.
This is a classic marketing case study and – for those Universities thinking of offering a Degree Apprenticeship in management- they could do worse than test out their proposed programme on the rigour of their own planning process.