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.”
Why not use the money towards funding the actual qualification rather than systematic funding cuts and giving employers incentives when there are plenty already.
Apprenticeships are funded through the government. An employer would usually pay a small contribution for a employee who is over 19 or if they already have over 50 employees. If they are a large organisation they will be required to already pay part of their tax bill into the Levy which then covers the costs of their apprenticeships.
If they do not use their Levy they lose it. I suspect this is where the funds have come from?
The increased employer incentives for new 19+ Apprentices is most welcome as we start to emerge from the pandemic. However, many non-levy employers are being excluded from this scheme because they are capped at 10 Apprentices when using the digital service and only digital service funding attracts the incentive payments. Surely, we all want the same thing – high quality Apprenticeship job creation for people of all ages – the cap of 10 for non-levy employers needs to be removed or significantly increased for the benefit of all.
This is useless. We are a group of children’s nurseries and are non-levy paying. We essentially need to use the Early Years L3 facility but cannot claim anything more as capped at 10 apprentices on the portal and stuck that way for the next 2 years until our apprentices on the portal have completed their courses. Because we cannot replace an apprentice on the portal with another, we currently have 2 slots blocked by apprentices who stopped. Until the limit of 10 is removed this is of NO benefit to us. We currently are actively recruiting apprentices and can only get training outside the portal because of these HMRC portal restrctions. Therefore we have NO access to the incentive payments as claims cannot be processed through the portal.
In an industry that desperately needs to attract workers, how absurd is all this.
I look forward to being allowed to add as many apprentices as we wish under our PAYE reference with immediate effect.