Apprenticeships in the UK as the government announced their 2024 Apprenticeship Reforms, pledging £60 million towards a more effective apprenticeship levy system.
This package aims to create up to 20,000 more apprenticeships, targeting younger individuals and small businesses.
Fully Funded Apprenticeships for 21 and Under
This includes no longer requiring a co-investment fee of 5% from small businesses if the apprentice they hire is aged 21 and under, reducing their costs significantly.
Levy Transfer Limit Increased to 50%
Industry leaders and employers have long pushed for the apprenticeship levy to be more flexible and accessible, claiming that it has long-been too restrictive.
Introduced in 2017, the levy requires companies with a payroll over £3 million to contribute 0.5% of payroll costs into a training fund. Although many small businesses do not pay into the fund, they can benefit when larger employers transfer a portion of their unused funds.
To support more businesses, the government will increase the amount of funding employers can transfer to others. This currently stands at 25% of unused levy funds. Instead, employers can now share up to 50% of unspent levy funds with other companies. The government reported that large employers, like Asda and BT Group, have already transferred more than £35 million since September 2021.
Learn more about Levy Transfers here.
Future Plans
The government also have plans to raise the threshold for small to medium-sized businesses from 250 employees to 500 employees, which would simplify financial and non-financial reporting for around 1,000 more companies.
Why Apprenticeships Are So Important
Education Secretary Gillian Keegan emphasised that apprenticeships are a great way for businesses to develop necessary skills, and these new measures will help more businesses and young people benefit from them.
Prime Minister Sunak said: “Growing up in my mum’s pharmacy, I understand how crucial small businesses are. They don’t just drive the economy, but they’re also a source of innovation, aspiration, and key to building a society where hard work is always recognised and rewarded.”
Despite this positive step, some industry leaders suggest that these changes may not be sufficient to address ongoing issues with the apprenticeship levy. Ben Willmott, head of public policy at the CIPD, stated that the expected 20,000 additional apprenticeships might not cover the gap in apprenticeship use among SMEs and young people since 2017. He noted that a more flexible skills levy, allowing employers to use levy funding for other forms of accredited training, could better meet employer and learner needs.
