When the levy breaks

Apprenticeships returned to the top of the agenda last month following announced changes to the Apprenticeship Levy. Is it working for you?

Published:  27 November, 2018

As the song goes, “When the levy breaks, I’ll have no place to stand.” Well, it doesn’t go exactly like that if you are a spelling pedant, but has the Apprenticeship Levy worked for you? Has it helped your business find suitable young people during its existence. Equally, when it was announced that it was going to be reformed, did you feel the floodwaters rising?
    
Maybe the government did feel their feet getting wet recently. At the Conservative Party conference at the end of September, Chancellor of the Exchequer Philip Hammond announced a number of measures to reform the Apprenticeship Levy, and a review into the scheme, which was launched in April 2017. This followed criticism from business regarding the difficulty of dealing with the system and falling numbers of young people seeking the career option.

Strategy
The Apprenticeship Levy was launched with great fanfare as part of the government’s industrial strategy, but it has been slogging through the mire since then. According to the Daily Telegraph, in the first three months after the introduction of the Apprenticeship Levy, there was a 60% drop in the number of people starting apprenticeships. This fall was subsequently partly made up, but the scheme has still not been providing the service  it was intended to give.
    
The Open University published a report into the Levy in April 2018. It found that of the £1.39bn paid into the system by English businesses, only £108m has been taken. This would seem to suggest that businesses  have been having trouble working with  the system.
    
On the other hand, the study also found that 84%of business leaders in England that were asked the Apprenticeship Levy in principle and, despite some negative preconceptions at the start, 54% felt more positive about the scheme in 2018 compared compared with 2017. That said, the study also found that 40% of business leaders still saw the Levy as little more than a tax, and 17% did not believe it would recoup its costs.
    
Considering the reach of the Apprenticeship Levy, that could be a problem. It is paid to HM Revenue & Customs by all UK employers with an annual wage bill of over £3million via the PAYE process. This enables organisations in England to take funding from the National Apprenticeship Service to spend on apprenticeship training. According to the Open University, there are still a number of barriers to get over for the scheme, including managing apprenticeship programmes, associated costs and apprenticeship content.
    
Not all businesses have to pay into the Levy, but according to the study, those that do have to pay in are more supportive of the scheme than those that do not. 92% of those in charge at businesses where they do pay in agree with the Levy in principle, but 43% of these want changes. Support for the scheme in businesses not covered is lower, with just  72% in favour, and 34% saying it would offer no benefits.
    
While this is not exactly a hostile environment, it’s not entirely welcoming either. Did someone say ‘quagmire?’

Flexibility
It is in this context that Philip Hammond announced changes that will aim to open up access, and make the scheme work for businesses and employers. This would include more flexibility and expand apprenticeship courses in science and other STEM subjects. Specifically, the proposals would  allow large employers to transfer up to 25% of their Apprenticeship Levy funds to businesses in their supply chain from April 2019.
    
In his speech at the conference, Philip Hammond said: “We have heard the concerns about how the Apprenticeship Levy is working, so today we’ve set out a series of measures to allow firms more flexibility in how the Levy is spent. But we know that we may need to do more to ensure that the levy supports the development of the skilled workforce our economy needs. So, in addition to these new flexibilities, we will engage with business on our plans for the long term operation of the Levy.”

Widening
It seems like a positive step. But what are the possible implications for the automotive sector?
    
Responding to the speech, Steve Nash, Chief Executive at the IMI, said: "Philip Hammond has set out the Conservative party’s wish to be considered the ‘party for business’. And the widening of access to the Apprenticeship Levy, to those businesses in the corporate supply chain, is excellent news.  For some time, at the IMI, we have been hearing from businesses that they believed the scope of the Levy was too limited."
    
“But we urge caution when it comes to reviewing the apprenticeship model in 2020, which was also proposed by Philip Hammond. Of course, it’s important to listen to business and address any barriers to apprenticeship take-up. But by 2020 the new reforms will be fully bedded in – wholesale change would therefore be a disaster. The last thing businesses need is to have to start all over again.
    
“Already recruiting 12,500 apprentices each year, the motor industry is wholeheartedly committed to futureproofing apprenticeships and has already engaged as positively as it can with the reforms introduced last year. Indeed, we believe that the motor industry is one of the most engaged sectors when it comes to adopting and promoting the new apprenticeship model.
    
“The IMI therefore urges government to stick with the new model already introduced and to focus its efforts on ensuring businesses fully understand how they can maximise the levy for the benefit of their organisation.” Steve added: “The skills gap in the motor retail sector is already critical. Young blood is, therefore, vital as the rapid development of new technology around electric, autonomous and connected vehicles changes the face of motoring, opening up a world of exciting new career opportunities.”

Summing up
Considering the sheer scale of the automotive aftermarket and the large number of smaller businesses within it, it’s fair to say for a great many of our readers, the Apprenticeship Levy is something that happens to someone else. Widening access to funding for apprenticeships though is vital, so the government has the right idea. It would be great if more garages were accessing the funding. Getting access to the right kind of young talent is a topic we often come back to. We look at it from the school leaver perspective, the employer perspective, the educational establishment perspective, and here we are looking at it from a legislative and political perspective.
    
We end up coming back to the fact that there are just not enough people coming our way, so then we end up asking ourselves again, “are we paying enough? Do the teachers understand what we do?” There is the argument that apprenticeships have not been run right for decades, but of course on an individual basis there are thousands of garages out there providing a solid grounding in the sector for bright and eager young people. It’s a complex picture, but more support would definitely help.



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    Marketing can be hard to grasp, even for the most experienced business operator. This made it an ideal topic for Andy Savva to cover as part of his 2019 training course schedule. Andy's one-day Marketing Essentials course provides an overview of what marketing actually is, looks at key approaches and how to apply them to a garage business.
        
    Aftermarket sat in on a sold-out session held in Crawley in February. In front of a packed room, filled with garages owners and staff, Andy dispelled some myths and misconceptions surrounding the discipline: "Marketing is one of the most misunderstood functions found in business. Whatever the reasons for any negative image that marketing may have, it is essential to realise that marketing is vital to ensure the survival and growth of any business. Marketing cannot be ignored and needs to be a part of the culture of any successful organisation.
        
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    Andy added: "Marketing should concern everybody in a business as it sets the context in which sales can take place. Whatever your role, you play a part in setting that context."

    Interaction
    As Andy got into the meat of the marketing matter, he led the delegates through what marketing is, and how they need to approach it and enact effective marketing within their businesses. Even the most experienced business owners and managers can get a little confused when asked to distinguish between marketing, advertising and sales. After asking attendees to pick where they would plant the marketing flag, with a few near misses along the way, Andy went through the specifics:
        
    "Marketing is a systematic approach aimed at bringing buyers and sellers together for the benefit of both. Many people confuse selling and advertising with marketing but they are not the same. Marketing is about promoting goods and services that both satisfy customers and also bring profits to the business.
         
    "Selling is the interaction that takes place on a personal level with potential customers. Marketing on the other hand is aimed at generating those potential customers in the first place. Many people confuse selling and advertising with marketing but they are not the same. Advertising is part of the marketing function, but never the other way around."
        
    For marketing to succeed, there needs to  be a goal and a way of achieving it, which Andy went on to cover: "Any marketing campaign needs to have a clear focus and this is why it is so important to make the right choices. Will the business compete across the entire market, or only certain parts? It is also a good idea to ensure all employees know the strategies being adopted, so that everyone works together to achieve the same goals." Andy then asked a question of the group: "Do you know what your garage business is trying to achieve and how it is trying to achieve it? In most cases the answer is no."
        
    The goal influences the method, and vice versa. From this point, Andy covered the classic four Ps of marketing – product, price, place and promotion – and went from there to the more recent extended marketing mix, incorporating people, process and physical evidence. Beyond this he laid out transactional marketing, which is sales-focused, and relationship marketing, which takes a much broader view including customer service, and quality presentation and results.
        
    Next he took on the thorny issue of branding as part of the marketing strategy, and why a strong brand is so important for recognition, financial value, motivation and loyalty. All of that was just the pre-lunch session. After lunch, Andy went into even greater detail on areas such as the marketing triangle, SMART objectives and SWOT analysis. It's heady stuff, but Andy made it approachable and applicable to the sector.

    Inspirational
    Those in attendance found a lot to take away from the day. Dani Comber from Thrussington Garage in East Goscote, near Leicester said: "I find Andy really inspirational. I think he's brilliant. He can come and work at our garage." Commenting on what she was learning about marketing from the day, Dani said it showed the gap between what they were doing at present, and what they should be doing: "I find it demotivating and motivating at the same time. You want to do everything, you've got the intention to do it, but you've not done it. On the other hand you are motivated because you see what you can do."
        
    Elisa Bramall from Scantec Automotive from Hailsham, East Sussex said: "I have attended several training courses with Andy. I only have good things to say about him of course. His passion being the main thing, and that he says it how it is. No beating around the bush. A lot of his values we stand by as well, i.e use of OE parts, tools and genuine equipment. When you attend his training courses, it aligns with what we want to achieve. With all of his experience, if you think you know it all you certainly don't."
        
    Tina Drayson, Operations Manager at CCM Garage, based in West Sussex and Surrey said: "I have done Andy's financial course before. It is phenomenal. I have learned so much from it. It has certainly changed the way we are doing our business. I am hoping that today with the marketing essentials will give us even more direction going forward."
        
    Terry Roberts, owner at  Witham Motor Company in Witham, Essex said: "I have just become a RAC approved garage in the last few weeks, so I am looking at changing my brand. I am really enjoying it. I am learning a lot and have picked up a lot of things."
        
    Commenting on what he was getting from the course, Billy from  Beacon Hill Garage in Hindhead, Surrey said: "It just hammers home that if your standards slip, and your marketing as well, and you take your eye off the ball, things will go wrong. I will be going back to give a few people a kick up the backside to bring standards back up. "
        
    Brothers Mahesh Vekaria and Pravin Patel own a garage each in Harrow. Mahesh, owner of Cardoc said: "What have I learned from Andy today so far? It has refocused and re-energised my enthusiasm for marketing. We do a fair bit of marketing, but coming today, you see a different angle to it."
        
    Pravin, proprietor at Harrow Service Centre, observed: "Today has been interesting. I have learned a lot. In a sense we already do a bit of marketing, but to understand what it really does mean and the ways we are doing it – is it right or wrong? – is really useful. It is something to implement when we go back to work."
        
    In that the pair are brothers and are based just half a mile apart, Aftermarket was curious as to who would get back and implement new marketing initiatives first. "I would say that I would," said Mahesh. Pravin agreed: "Yes  he would, definitely, having said that, he looks after my marketing for my garage as well. So he has double the work really."

    Information
    Edward Cockhill of Uckfield Motor Services in Uckfield East Sussex observed: "It is quite an eye-opener. I saw marketing as just advertising, whereas it is really the whole perception of my company. There is a lot of cogs that are going to be turning when I get home. "
        
    Peter Bedford of GT One Ltd in Chertsey, Surrey said: "We are an independent Porsche specialist. Our business is in need of a bit of a review in its marketing ideas, and we are looking to freshen it up. I have come along to see another angle of it. Some things I think I know and we have applied. Some I know and we have not applied, so you need a kick up the backside. Some things are brand new. On the whole it is brilliant."
        
    Cieran Larkin from Larkin Automotive in Dublin commented: "It is good to get marketing training from a professional who has been in the garage business as opposed to someone who is dealing with generic marketing. Andy's experience is brilliant in that way."
        
    Nick Robinson from Marchwoods in Folkestone had been to Andy's courses previously and was back for more: "I came to Andy's events last year for garage financial understanding and customer excellence. They were real eye-openers so I have come back for another one. I was badgering him earlier to see what is coming up next. I will be at that one as well!"
        
    Meanwhile, for Edward from Swanley Garage in Swanley, it was his first time: "This is the first one I have been to. It is really good. It is about getting all the information and having the guts to go out and do it. We are all guilty of not doing marketing properly, it is about taking that jump to rebrand yourself or say right we are not doing that any more, or we are not doing cut price work, or we are not going to let the customers bargain with us any more, and seeing where it takes you."

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