education

Investing in apprenticeship training is about to become easier for businesses


The Covid-19 pandemic has been brutal for many small businesses. But there is cause for optimism. A recent Goldman Sachs survey of 10,000 SMEs found that for every two businesses that had cut jobs, another had increased its number of employees. And 79% of entrepreneurs had identified new skills gaps which needed to be filled.

Apprenticeships could play a big part in helping this recovery, and new measures are already in place. Under chancellor Rishi Sunak’s Plan for Jobs, employers who hire an apprentice between 1 August 2020 and 31 March 2021 can claim a £2,000 incentive payment for any apprentices aged 16 to 24, and £1,500 for those aged 25 and over.

The employer can decide how best to spend the money, and it’s in addition to any payments already made to support specific groups such as those leaving care, or those with disabilities. Young people taken on through the Kickstarter scheme could also progress on to apprenticeships.

Improvements to the apprenticeship funding model could also help. Since 2017, apprenticeships have been funded through the apprenticeship levy. Only employers with a pay bill of more than £3m have to pay the levy, and they pay 0.5% of their total pay bill.

That funding is available to all employers, not just the ones who pay the levy. In fact, just 2% of employers have to pay. But any funds that don’t go towards supporting their apprentices go back into the pot. In fact, big employer contributions support around half of all apprenticeships.

This means that smaller employers can access apprenticeships for less. Employers with a total annual pay bill of less than £3m only pay 5% of the cost of their apprenticeship training: the government pays the rest.

There’s a lot of money available: £2.5bn in 2020, which is double the amount of a decade ago. However, the system can be unwieldy. In September, during a speech during his visit to further education college Exeter College in Devon, Boris Johnson announced that changes were coming.

“We will be expanding apprenticeships, reforming the system so that unspent funds can be used more easily to support apprenticeships – not just in big companies, but in the SMEs where there is so much potential for job creation,” he said.

These reforms will include an online matching service, which will enable large businesses to identify small businesses to work with and support. The West Midlands Combined Authority, for example, has helped 1,300 apprentices to be supported by helping big players to transfer levy funds to small businesses in the area that align with the area’s priorities, including the automotive industry, digital and construction.

The Department for Education (DfE) says it’s also now looking at improving flexibility around apprenticeships, making it easier for non-traditional labour market models, such as the creative sector or the digital sector, to engage with them more easily.

“Training is seen as being the key to unlocking productivity,” says a DfE spokesperson. “Apprenticeships are recognised as representing really good value for money, for the employer, for the apprentice and for the country as a whole.”



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