Government Unveils Apprenticeship Boost

New Plans To Benefit Smaller Companies Outlined

26.03.2014

Fergal Dowling, Partner | +44 (0)121 214 5476

The government has unveiled details of its plans to double the number of apprentices being taken on, with the measures focused on the smallest companies.

Encouraging small businesses to take on more apprentices was an aim emphasised in chancellor George Osborne's Budget speech and details of the government's plans to double the number of apprentices being taken on have now been published.

Mr Osborne told the House of Commons this will involve new funding to incentivise small businesses to take on more apprentices. This has now been quantified as providing £170 million of extra money for the Apprenticeship Grant for Employers (Age) scheme, which will be applied to firms with fewer than 50 employees from January next year.

The funding will be equally split into two annual amounts of £85 million in 2014-2015 and 2015-2016, with the cash being channelled through the Department for Business Innovation and Skills and the Department for Education.

Under the terms of the scheme, employers who did not take on any apprentices last year can receive £1,500 for up to the first ten they take on. By extending the grant to 2016, the government hopes the scheme will provide greater support for firms planning to offer apprenticeships.

Business secretary Vince Cable said Age has already been "very successful" and could be even more so now.

"With the appetite for apprenticeships growing, this new £170 million investment and programme expansion will give a boost to smaller businesses and enable us to meet the higher-than-anticipated demand for the scheme over the next two years," he remarked.

In addition to the extra funds for apprenticeships, the government is to provide another £20 million over the next two years to fund degree-based and postgraduate apprenticeships, with this being designed to enable apprentices to earn a wage while acquiring a higher education-level qualification.

Dr Cable noted that these measures aim to make it "the norm" for young people to either opt for an apprenticeship or university when they leave school.

Other announcements that may encourage the growth of SMEs included the raising of the Investment Allowance to £500,000 from the start of April, with the scheme - which had been due to expire at the end of this year - being extended until December 2015.

Expert Opinion
For so many small businesses, one of the key factors in expansion plans is being able to grow and develop a workforce. Taking on apprentices provides such employers with a chance to do this in a manner which allows them to also train new staff to meet their needs.

"There can be many benefits to this and, if the potential is harnessed, can lead to the development of workers who are able to not only contribute effectively to the business but also go on to develop innovative new ideas that will push services forward further.

"We would urge small businesses to carefully consider the benefits of taking on apprentices and also seek legal advice regarding any regulatory and employment law issues they may need to think about while going down this route."
Fergal Dowling, Partner