UK government announces plans to create 20,000 more apprenticeships

3 mins read

Yesterday, British Prime Minister Rishi Sunak announced a major reform package to boost apprenticeships and a package of reforms to support small businesses.

Speaking at the Business Connect conference in Warwickshire, he revealed a £60m new investment to enable up to 20,000 more apprenticeships, including for young people and small businesses and "unnecessary regulatory burdens to be slashed through Brexit freedoms" saving around £150m per year for thousands of small businesses

The government said it 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 saves 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 £60m of new government funding for next year, guaranteeing that where there is demand for apprenticeships from businesses, the government will ensure there is 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% 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% 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 while unlocking more opportunities for young people in a huge range of sectors, industries, and professions. 

Hundreds of large levy-paying employers have already taken advantage of the opportunity to transfer their unused levy funds to other businesses. As of [December 2023], 530 employers have pledged to transfer over £35.39m to support apprenticeships in businesses of all sizes since September 2021.

Taken together, these measures are expected to enable up to 20,000 more apprenticeships, primarily for young people, and is part of our plan to build a stronger economy and deliver a brighter future where hard work is rewarded and young people get the skills they need to succeed in life.

The government said it also builds on our record of transforming apprenticeships over the last decade. Since 2010, the government said it has helped 5.7 million people start an apprenticeship, working with employers to develop almost 700 new high-quality standards and increasing the funding for apprenticeships to over £2.7bn from next year.

Beatrice Barleon, head of policy & public affairs at EngineeringUK said: “We welcome the Government’s commitment to offer more support for apprenticeships, particularly recognising the need to support small to medium sized enterprises (SMEs) with taking on more apprentices.

“We are particularly pleased to see the focus for the support is on young people aged 21 or under. Refocusing some of the apprenticeship budget money for young people is something we have called for in our recent ‘Fit for the future’ report with Lord Willetts and Lord Knight.

“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. 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.”

Stephen Phipson, CEO of Make UK, said: “Industry will welcome this boost for Apprenticeships, for whom they are heartbeat of many companies. We now need to build on this with a skills revolution, starting with substantial employer-driven reforms of the Apprentice Levy and, a complete review of the vocational skills system within a long-term industrial strategy.

“This must be a national endeavour to equip the current, and next, generation workforce with the digital skills they will need for the many jobs of the future that have yet to be invented. This revolution must also start within the education system so that we have a constant pipeline of talent to fuel the expansion of manufacturing.”