In April, a new tax will be introduced for all companies with a wage bill of more than £3m: the apprenticeship levy. From the IPA member agencies alone, it will lead to the collection of nearly £4m per year.
So how does it work? For every pound spent on wages beyond £3m, the government will place a 0.5% levy to be taken at source every month. That money will be placed into a cumulative voucher pot from which eligible companies can claim rebates for the investment they make into training apprentices.
We need to put advertising back on the consideration list. For the Snapchat generation, making a nice ad won’t wash
For those learning about the levy here for the first time, be assured – like Brexit, this is really happening.
At the IPA, we have rightly made talent – where, how and who we recruit – a key focus. It was only last month, however, that we revealed representation of black, Asian and minority-ethnic staff has actually fallen between 2015 and 2016 – a sobering fact that shows how difficult demonstrable change can be to sustain.
In addition, we face another challenge: advertising and media are falling out of favour for those entering the job market. Only Sky, Google and WPP feature in the latest top 50 graduate employers survey – a list now dominated by banks, retailers and consultancies. With blue-chip companies investing heavily in recruitment and offering average starting salaries north of £30K, it’s no wonder the draw of our industry is waning as tuition fees continue to rise.
With these factors against us, it would be easy to feel discouraged and pigeonhole this levy as yet more pressure on businesses imposed by an unforgiving government. But to do so would be to miss the underlying opportunities this presents us.
First, the levy is going to force us to consider great talent from genuinely different places, kicking against the "First, Durham, English" CV brigade. Pointing the focus at younger school-leavers will certainly give us opportunities to make a genuine impact on the diversity and background of the talent in our agencies. We want and need better representation of the multicultural society our clients’ brands serve.
Second, this is going to force the industry to put itself out there and work harder to attract the next
generation of advertising stars – something we should be doing anyway. The levy to increase apprenticeships covers multiple industries, not just advertising, so we have to mobilise properly because the competition will too.
Third, in order for apprenticeships to qualify for rebates under the scheme, the qualifications, career options and training offered will have to meet strict government standards. That means we have to invest time in getting our collective sh*t together to ensure our apprentice programmes are world-class. Again, something we should aspire to regardless.
While the levy is new, apprenticeships in our industry aren’t. And the good news is the IPA is here to help. For the past five years, the IPA has run its award-winning Creative Pioneers initiative. The brainchild of Janet Hull, the programme has placed more than 600 apprentices into careers in the creative, advertising and digital arena. Hull estimates that, with the levy in play, the intake via the new IPA Creative Pioneers 2 may well top 500 this year alone and double that in 2018.
Creative Pioneers 2 will be a hugely important source of potential school-leaver candidates that agencies can tap into. The scheme will launch in early March in Metro during National Apprenticeship Week and will provide a platform to help agencies find talent, navigate the levy and understand the training and rebate mechanism.
Moreover, the IPA is building agency consortiums to ensure a range of qualifications are already approved by the time the levy launches. But it may take up to six months to create and seek approval for each additional, more specialised, role. Some agencies and holding groups are forming task forces and three-year plans to address how best to capitalise on the levy.
Finally, I believe this creates an immediate need for advertising to advertise itself. In the year we celebrate the IPA’s 100th birthday, we need to get out of our swanky offices and put advertising back on the consideration list. For the Snapchat generation, making a nice ad is not going to wash.
So, led by the IPA, agencies are coming together to create a nationwide open day in September. Its working title is "Advertising Unlocked" and our plans are ambitious.
Advertising Unlocked will be a day when we open our doors and sell ourselves instead of cars, washing powder or carpet-cleaner. We have the chance to put on a bloody good show, proving why advertising is one of the very best careers you can have.
The IPA Talent Leadership Group will be there to help agencies prepare, connect with apprentice talent pools (such as local schools and youth organisations) and make the most of the opportunity. The early response we’ve had from agencies has been hugely encouraging, with more than 35 already signed up, including 101, Bartle Bogle Hegarty, CHI & Partners, Creature of London, Dentsu Aegis Network, Mother and VCCP. The more agencies get involved, the more profound the effect of Advertising Unlocked could be. We welcome anyone to join in – so get in touch if you’re interested.
Should we as an industry be investing more in apprentices? Absolutely. Would we be doing so with the same urgency if the levy wasn’t landing in April? Possibly not. This means the apprenticeship levy might actually help create positive change in our industry. In my book, that makes it a tax for good – no doubt about it.
Rick Hirst is the chief executive of Carat UK and chair of the IPA Talent Leadership Group