The government’s recent announcement to boost the number of apprenticeships will be music to your ears if you run a small business or want to earn while you learn as an apprentice.
Not only do the package of reforms revealed make it cheaper to take on apprentices, companies that pay the apprenticeship levy can pass on any unspent levy funding to other smaller firms.
So, what are the new measures and how will they lead to more apprenticeships? Here we examine the government’s new plans and explain how they will affect small businesses and individuals.
What’s been announced?
The Prime Minister, Rishi Sunak, announced earlier this month the government’s aim to create up to 20,000 apprenticeships through a series of reforms to be introduced from 1st April including:
£60 million new investment to fund apprenticeships in small businesses by paying the full cost of training for young people up to the age of 21. This will remove the need for small businesses to contribute to training costs.
An increase from 25% to 50% in the amount of funding that employers who pay the apprenticeship levy can transfer to other businesses to take on apprentices.
What do the proposals mean for SMEs?
The apprenticeship levy was introduced in 2017 to encourage more apprenticeships in all industries. Only large companies with a payroll of more than £3 million pay into the levy at a rate of 0.5% of salary costs. Organisations can recover this levy through providing apprenticeship training.
However, with millions of pounds being returned to the Treasury each year, companies have long argued that the levy’s ‘use it or lose it’ rule needed to be overhauled. The proposals will allow more of these unspent funds to be used by smaller firms to create apprenticeships which will bring new skills to the business.
The plans, which are part of an overall drive by the government to boost apprenticeships among small businesses across the country, have been welcomed by Reed Learning’s Managing Director Pierre Vangrevelynghe.
“These reforms create a real opportunity for SMEs to take advantage of levy funding to attract new talent to their business and to upskill existing teams through apprenticeships. With all the available data indicating that apprenticeships improve staff retention, loyalty and job satisfaction, it makes good business sense for all companies big and small to benefit from levy funding,” he said.
“Being able to pass on funding presents win win opportunities to all involved. Large companies are already benefiting from growing their own talent via apprenticeship schemes. Now they can support smaller companies, often in their supply chain, to take on apprentices using government funding,” he added.
Many levy-paying employers have already taken advantage of the opportunity to transfer their unspent levy funds to other businesses. Companies such as ASDA, HomeServe and BT Group have pledged to transfer over £35 million to support apprenticeships in SMEs.
What do the proposals mean for individuals?
Overall, more apprenticeships will be created which means more opportunities in a huge range of sectors, industries and professions for those who want to become an apprentice.
By cutting training costs for apprentices up to the age of 21 and by encouraging employers who pay the apprenticeship levy to transfer their funds to support other businesses, the government believes many more apprenticeship schemes will be introduced around the country. Which is good news if you are someone who wants to learn on the job as an apprentice and good news for SMEs who are looking to expand their workforce.
Not only will owners of SMEs be excited about this announcement, employees will also reap the benefits as well. More hands on deck to support daily tasks and projects benefits the whole team
Apprenticeships are for all ages. There are hundreds of apprenticeships available to suit a range of job roles for most businesses and people of any age can apply. Almost every job role now has an apprenticeship standard attached to it – that includes traditional roles such as hairdressing to becoming an HR professional. The funding can be used to upskill current staff or to recruit new members to the team.
Reed Learning can support you every step of the way
We offer a range of HR, L&D and accounting programmes to support apprentices who are employed by organisations that pay into the apprenticeship levy. As a long-standing approved apprenticeship provider, we have everything you need to ensure you achieve success throughout your programme.
If you do not work for a levy paying organisation, here are a couple of options to consider:
Levy paying organisations can now transfer up to 50% of their training fund to smaller companies. Does your employer supply a larger company and if so, could some of their apprenticeship levy be transferred to fund apprentices in your business? If yes, you could be eligible to apply for an apprenticeship.
We’re urging decision makers within SMEs to get on board now to reap the benefits of this announcement. If you’re an employee, make sure decision makers in your business are aware of this announcement and get in touch with us and we can support you every step of the apprenticeship journey.