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Major reform package for SME apprenticeships announced

22 March 2024

The Prime Minister has announced a new plan to support small businesses to offer apprenticeships to young people entering industry.

In his first economic speech since the Spring Budget, Prime Minister Rishi Sunak has set out a major package of reforms to support businesses to deliver more apprenticeship places and cut red tape for SMEs.

The Government will fully fund apprenticeships in small businesses from 1 April, by paying the full cost of training for anyone up to the age of 21 –reducing costs and burdens for businesses and delivering more opportunities for young people to kick start their careers.

This will remove the need for small employers to meet some of the cost of training, and will save time and costs for providers like further education colleges, who currently need to source funding separately from the Government and businesses. 

The move is underpinned by an additional £60 million of new government funding for next year, ensuring that where there is demand for apprenticeships from businesses, that there will be enough funding to deliver them. 

From the start of April, the Government will also increase the amount of funding that employers who are paying the apprenticeship levy can pass onto other businesses. Apprenticeships can currently be funded by a levy paying employer transferring up to 25 percent of their unused levy to a different employer. 

Under the new measures, large employers who pay the apprenticeship levy will be able to transfer up to 50 percent of their funds to support other businesses, including smaller firms, to take on apprentices. This will help SMEs hire more apprentices by reducing costs and enabling more employers to get the skilled workers they need. 

It will also unlock more opportunities for young people in a wide range of sectors, industries, and professions. 

Taken together, these measures aim to create to up to 20,000 more apprenticeships, primarily for young people.

This announcement has been largely well received by the engineering industry, with Kelly Becker, President of Schneider Electric, UK&I, commenting: “Some of the best people I’ve worked with have scaled the ranks by starting out as apprentices. Apprenticeships offer a dynamic and fulfilling career path, fostering both technical and interpersonal skills that will set talent up for success throughout their careers.
Brecker also urged the need for more apprenticeships specifically catered to enabling green growth: “More green apprenticeships will help businesses innovate at every level, supporting the UK’s push to electrify our homes, vehicles and businesses and move away from fossil fuels.
“This will also create robust talent pipelines for key green industrial hubs up and down the country, helping to plug regional skills gaps and future proof workforces for years to come.”

FANUC UK’s Head of Sales, Oliver Selby also welcomed the announcement, highlighting his companies own efforts to recruit the next generation: “For a number of years now, we have been engaging with schools, colleges, universities and training providers to inspire and enthuse young people about careers in engineering and automation,” Selby said. 

“[Support for apprenticeships] will give UK businesses the support they need in finding, adopting and further developing their future talent,” Selby added. “We therefore welcome this latest package of funding – which was announced at the neighbouring Manufacturing Technology Centre right on our doorstep here in Coventry – and are encouraged to see apprenticeships being further supported by the Government.”

Beatrice Barleon, Head of Policy & Public Affairs at EngineeringUK, commended the additional support for SMEs, as well as the focus on young people aged 21 and under. However, Barleon pointed out that more still needs to be done in this area:
“While these measures are certainly a step in the right direction, more still needs to be done to ensure our apprenticeships system is a success. 

“[The] Government needs to consider the recommendations put to them as to how to better support SMEs with the processes surrounding apprenticeships and how to better help young people to be able to access the opportunities available and be ready for work. 

“It’s clear there is still an apparent, and growing, mismatch between levy intake and the apprenticeship budget. In light of apprenticeship numbers needing to grow to meet demand in the engineering and technology sector, we would like to see greater transparency as to how this additional money is currently being spent.”

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