Sunak unveils major reforms for apprenticeships with SMEs

This new initiative comes amidst growing concerns over economic stagnation.

From 1 April 2024, the UK government will pay the full cost of apprenticeships for people aged 21 or under at small firms. The government has pledged to put £60m of new investment into the new initiative.

Prime minister Rishi Sunak today also pledged slash bureaucracy for small and medium-sized firms (SMEs) in order to entice smaller businesses to take on more apprentices and boost opportunities for young people.

Recent reporting from FE Week suggests that despite investment last year, the number of apprentices in some key sectors – like care work, which is experiencing a shortage of workers – have plummeted. Although some of this can be attributed to the introduction of T levels, which are an alternative pathway to apprenticeships, it is still a cause for concern.

To address the issue, the UK government will:

Fully fund young apprentices

Sunak’s plan involves the government covering the entire cost of apprenticeships for individuals aged 21 or under at small firms. Previously, the funding might not have covered the full cost, leading to barriers for some smaller organisations who wanted to take on young apprentices.

Increasing investment in apprenticeships overall

The announcement includes a commitment of £60 million in new investment for the following year.

Make changes to the apprenticeship levy

The apprenticeship levy is a tax introduced by the UK government in April 2017. It requires large businesses with an annual payroll over £3 million to contribute towards funding apprenticeship training.

The levy encourages employers to invest in apprenticeships, because they can put this towards training and assessing apprentices within their own organisation. If they don’t spend that money, the tax goes towards expanding apprenticeship programmes across various industries.

Sunak has proposed increasing the flexibility of the apprenticeship levy, allowing businesses to share up to 50% of unspent funds with other employers. This contrasts with the previous system, which limited the transfer to 25%.

Make changes to the threshold for SMEs

The government also plans to raise the thresholds that define a company’s size, potentially allowing more businesses to qualify as small and medium-sized enterprises (SMEs). This adjustment aims to reduce reporting requirements and save SMEs an estimated £150 million annually.

Will this new government investment in apprenticeships work?

The truth is, the success of initiatives like these depends on a lot of different factors, including how long it takes to implement; whether businesses newly qualified as SMEs take on apprentices; and wider economic conditions. However, increased funding and flexibility in the apprenticeship levy have the potential to stimulate apprenticeship opportunities and support small business growth. So, in short, time will tell.

Image: Canva
Dive Right in, Start Your Apprenticeship Search Now

Or still want to find out a little more first? Read our FAQ’s or visit our guidance section.

Follow our socials for apprenticeship tips and resources: