Welcome to our latest Policy Update. In these updates, The Entrepreneurs Network focuses on recent policy changes and sets out (nearly) everything an entrepreneur needs to know about the topic. If you’re joining us for the first time, you can read our past updates here. If you were forwarded this update, you can sign up here.
Through the course of July, the Government has moved to put apprenticeships and vocational training at the heart of its plans for jobs. New incentives and rule relaxations have been introduced to encourage firms of every size to bring on apprentices and help those young people most likely to be hit by the COVID related downturn. This update sets out what those measures are, and how startups and entrepreneur-led firms can utilise them.
Bonuses for hiring apprentices
In his Summer Statement, Rishi Sunak announced a series of cash incentives for any firm that hires a new apprentice. The purpose was to create new opportunities for young people and help firms grow with skilled employees targeted at areas of business need. As the Chancellor put it in his statement, 'we know apprenticeships work'. For six months from August 2020, the Government will pay bonuses to companies for hiring new apprentices at a rate of £2,000 for an apprentice under 25, and £1,500 for an apprentice over 25. Apprentices between 16-18 years old already benefit from a £1,000 bonus, so the total available support for these apprentices will be £3,000. Firms will also pay no employers' National Insurance contributions on apprentices under the age of 25. While apprenticeships can also be started by existing employees, these bonuses are only available to new hires.
Greater access for SMEs
Later in the month further relaxations were made to make it easier for small firms to use apprenticeships. Smaller firms, those who do not pay the Apprenticeship Levy because their annual payroll is below £3m, were previously capped at 3 apprentices, funded through the Digital Apprenticeship Service. That cap has now been increased to ten. This will allow SMEs to both recruit new staff and upskill existing employees through apprenticeships, with training paid for via the Levy.
Dropping the 50% university ‘target’
To signal the direction of future policy, the Education Secretary Gavin Williamson gave a speech to formally ‘drop’ the target for 50% of school leavers to attend university. The speech prompted intense debate about whether there had ever been a meaningful target in the first place, but what mattered was the commitment to a Further Education White Paper, to give greater parity to technical, work-based routes, to be published later this year. To highlight the value that apprenticeships can give to society, Williamson pointed to the fact that ‘a work-based, technical apprenticeship, lasting around 2 years, gives greater returns than the typical three year bachelor’s degree’. With a White Paper and Spending Review expected in the Autumn, the spotlight on apprenticeships isn’t going away.
Tim Smith is Director of Communications and Public Affairs at WhiteHat, a tech startup building an outstanding alternative to university through apprenticeships.