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Apprentices: Small Businesses

Question for Department for Education

UIN 122781, tabled on 30 November 2020

To ask the Secretary of State for Education, what steps he is taking to support SMEs in hiring apprentices before the introduction of the extended apprenticeship employer incentives announced in the Spending Review 2020.

Answered on

8 December 2020

The department recognises the importance of small and medium-sized enterprises (SMEs) to the UK economy. We will make sure that training for apprentices in smaller employers is properly funded, to drive up the number of apprenticeship opportunities available in SMEs across the country.

SMEs are a priority focus as we look to rebuild the economy from the effects of the COVID-19 outbreak, and to increase opportunities for young people and people from disadvantaged areas to embark on apprenticeships. The department is making sufficient funding available this year and next to enable smaller employers to access the apprenticeships they need, as they move onto the apprenticeship service and gain greater control over their apprenticeship choices. From August 2020, as outlined in the Plan for Jobs, we introduced payments of £2,000 to employers in England for each new apprentice they hire aged under 25, and a payment of £1,500 if they are aged 25 and over: https://www.gov.uk/government/publications/a-plan-for-jobs-documents/a-plan-for-jobs-2020.

In January 2020, the department expanded access to the full functionality of our flagship apprenticeship service to include employers who do not pay the apprenticeship levy. SMEs can now make up to 10 reservations through the service (increased from 3), enabling them to recruit more apprentices and claim incentive payments through the service. Moving onto the service also increases their choice of training provider and puts them in control of managing their apprenticeships. Further guidance about the incentive payments available for hiring a new apprentice is available here: https://www.gov.uk/guidance/incentive-payments-for-hiring-a-new-apprentice.

Smaller employers can also benefit from transfers from levy-paying employers which do not count towards the reservation cap. In April 2019, the department increased the transfer allowance from 10% to 25% of the annual value of funds entering the apprenticeship service account of levy-paying employers. From August 2021, employers who pay the apprenticeship levy will be able to transfer unspent levy funds in bulk to SMEs with a new pledge function. We will also introduce, from August 2021, a new online service to match levy payers with SMEs that share their business priorities.

The department will continue to work with smaller employers to give them the confidence and support to take on new apprentices. As my right hon. Friend, the Chancellor of the Exchequer, announced in the recent Spending Review, the eligibility period for these incentives has been extended to the end of March 2021, to continue to support employers during the COVID-19 outbreak.