The cash bonus scheme for hiring apprentices aged 25 and over is set to double to £3,000 and will be extended by six months.
Financial incentives were first introduced by Rishi Sunak in August and currently offer firms £2,000 to take on apprentices aged 16 to 24, while those that employ new apprentices aged 25 and over are paid £1,500.
But take-up has been low. Latest Department for Education data shows that 25,420 employers have submitted claims for the bonus as of 1 February 2021. The Treasury had budgeted for up to 100,000 incentive payments for new apprentice hires.
The current scheme ends in March, but the chancellor has new plans which will be unveiled in his budget next week to extend it until September 2021.
From April, the incentives will become more generous with a £3,000 payment per hire, regardless of the apprentice’s age.
This is on top of the £1,000 payment provided for new apprentices aged 16 to 18 and those under 25 with an Education, Health and Care Plan, meaning that some employers could receive £4,000 in total.
Association of Employment and Learning Providers chief executive Jane Hickie said the financial incentives boost could be a “game-changer” and prove to be “particularly attractive to smaller businesses”.
“But if we were in the Treasury’s shoes, we would have channelled the increased incentives to focus on 16- to 24-year-olds only, because that is where the support is really needed and where the stimulus is required,” she added.
The chancellor is also expected to launch a new “flexi-job” apprenticeship on Wednesday.
Under the plans, individuals will be linked to an agency, instead of a single employer, and take on different jobs with multiple businesses in one sector.
This scheme is targeted at industries with more flexible working patterns, such as the TV and film sectors. These industries have struggled to spend their levy funding over the years because most roles are freelance and usually only run for two to three months, rather than the 12-month minimum duration needed for an apprenticeship.
The Treasury said that from July, employers will be able to bid for money from a £7 million fund to create new agencies, with the first “flexi-job” apprenticeships expected to start in January 2022.
Hickie pointed out that the flexi-job proposal builds on a prior announcement about portable apprenticeships which the chancellor announced at the last spending review and “looks like a rebadging of the existing Apprenticeship Training Agency model”.
Sunak is also set to announce in his budget next week an “additional” £126 million to further increase traineeship numbers by an extra 40,000 in 2021/22.
This will include £22 million to continue the employer incentive payment of £1,000. It builds on the £111 million the chancellor set aside in 2020/21 to triple the number of traineeships.
Sunak, said: “Our Plan for Jobs has spread opportunity and hope throughout the crisis – helping people back into work and harnessing their talents for the future.
“We know there’s more to do and it’s vital this continues throughout the next stage of our recovery, which is why I’m boosting support for these programmes, helping jobseekers and employers alike.”