Hundreds of small businesses utilise removal of apprenticeship cap

More than 250 small and medium-sized employers have already recruited over 10 apprentices since the government scrapped a cap on starts last year.

SMEs were restricted to a maximum of ten apprenticeship starts from 2020 until April 3, 2023.

Ministers finally decided to abolish the cap after consecutive resets amid warnings from FE Week and the Association of Employment and Learning Providers that non-levy paying businesses were being forced to turn apprentices away after hitting the limit.

Skills minister Robert Halfon has now revealed, in answer to a parliamentary question from Grahame Morris MP, that 256 non-levy payers have recruited 11 or more apprentices since the policy change came into force 10 months ago.

The majority – 214 – hired between 11 and 19 apprentices, while 33 had starts of between 20 and 29.

Six other SMEs managed to enrol between 30 and 39 apprentices, another recruited between 40 and 49, and two managed to enlist over 50.

The figures come at the start 17th annual National Apprenticeship Week.

Tina McKenzie, policy chair at the Federation of Small Businesses, said: “It’s great to see so many non-levy payers taking on larger numbers of apprentices since the cap was lifted, bringing in lots of new talent for them to nurture.”

However, McKenzie warned that taking on numerous apprentices is still financially out of reach for most small businesses. She called for the current £1,000 bonus for hiring an under-19 apprentice to be increased to £3,000 for small businesses and expanded to cover under-25s.

The SME cap was originally introduced in January 2020 with a limit of three new apprenticeship starts, before it was lifted to ten in summer 2020.

Small businesses that do not pay the apprenticeship levy receive 95 per cent of training costs from the apprenticeship budget, funded by levy paying businesses.

The rationale of the cap had been that it would help prevent the overall apprenticeships budget from being overspent.

Simon Ashworth, AELP director of policy, said it was “positive that the removal of cap of ten non-levy starts cap has enabled more employers to access the benefits we know that apprenticeships bring”.

However, he warned that although the changes have helped, the government still hasn’t “addressed the wider barrier of employer engagement and accessing opportunities in the first place”.

“It is critical to get the apprenticeship service system working more effectively, for SMEs including by giving providers more autonomy”, Ashworth said, adding that the current “expert” provider pilot has the potential to support this change.