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05 Mar 2021

The Spring Budget: Further incentives for employers to hire apprentices

The Government’s Build Back Better strategy, published alongside the spring budget delivered to the House of Commons on 3 March, aims to create work opportunities to improve skills, particularly among young people and offers incentives to employers to provide these.

The Chancellor noted in particular that the UK has persistent technical skills shortages in key sectors such as construction and manufacturing. Only 4% of young people achieve a higher technical qualification by the age of 25, compared to 33% who get a degree or above.  On basic skills, more than a quarter of the working-age population in England have low literacy or numeracy skills. The Government has identified these factors to explain the significant levels of mismatch between what the skills system provides and what employers need.  With the aim of upskilling and stimulating the economy following the pandemic, a number of new initiatives were announced at the budget as part of the Government’s ‘Plan for Jobs’:

Financial incentives for employers to hire new apprentices doubled

Payments made to employers who hire new apprentices will double under an extended incentive period. Employers in England who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme. This is in addition to the existing £1,000 payment the government provides for all new 16 to 18 year old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies. 

£126m Government Funding for Traineeships

An additional £126 million will be provided in England for work placements and training for 16- to 24-year-olds in the 2021/22 academic year.

The Government hopes to create 40,000 more traineeships with the new investment
Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee. 

A traineeship is a skills development programme that includes a work placement. It can last from 6 weeks up to 1 year (although most will last for less than 6 months). Employers are not required to pay wages to the participant for the work placement, but will typically offer expenses such as transport and meals.

‘Portable’ flexible apprenticeships set to be launched

The government will introduce a £7 million fund from July 2021 to help employers in England set up and expand portable apprenticeships.

The intention is to enable people who need to work across multiple projects with different employers, such as in the TV and film industries to participate in flexible apprenticeships.

The first of these “flexi” apprenticeships are expected to start in January 2022.

‘Help to Grow’ scheme for SMEs to upskill

The Government will offer a new UK-wide management “Help to Grow” programme from June 2021, developed in partnership with industry, with 30,000 places available to small and medium-sized enterprises over three years.  The programme is 90% subsidised by government – participants will be charged £750.
The programme will combine a 12-week curriculum for small businesses with key modules covering financial management, innovation and digital adoption, with 1:1 support from a business mentor, peer-learning sessions and an alumni network.

The aim is that by the end of the programme participants will develop a business growth plan to help their business reach its potential.

The new budget announcements sit alongside the government’s existing Kickstart scheme, introduced in July 2020 to incentivise employers to take young people aged 16 to 24 in receipt of Universal Credit and at risk of long-term unemployment for work placements.

It remains to be seen whether or not the one-off incentive payments will be sufficient to encourage businesses to create new apprenticeships and work placements, however, employers who are placed to take on new apprentices, now have additional incentives to do so and should not overlook the benefits of recruiting new potential talent to their businesses.

Markel users that have access to the Markel Law Hub can download our template apprenticeship contracts and contracts for placements and access our guidance for employers on apprenticeships and the Kickstart scheme.

Our fee protection schemes not only have 24/7 access to the business and legal helpline provided by Markel Law but also our legal portal, Law Hub, which includes templates and guidance around furlough to support you and your clients.

Next article in series

05 Mar 2021

“Whatever it takes”: a summary of 2021’s Budget and its implications