Small business chiefs make fresh calls for apprenticeship and T Level cash incentives return

One in five small businesses would take on an apprentice with the cash boost, FSB says

One in five small businesses would take on an apprentice with the cash boost, FSB says

t level

Financial incentives for small firms to employ apprentices and provide T Level placements should return under the new education secretary, a business group has said, as it will help one in five small employers to fill skills gaps.

And calls have been made for other measures to boost skills prospects such as free bus passes for apprentices, introducing skills bootcamps for people aged 50 and above to retrain, and a Kickstart-style scheme to help disabled people into work.

The Federation of Small Businesses has today published its Scaling up Skills report, and has called upon the new education secretary, to be appointed under a new prime minister next week, to help small businesses with their recruitment struggles by bolstering support and incentives for skills training.

The research said that 78 per cent of small firms were struggling to fill vacancies, with a lack of relevant qualifications and a lack of applicants among the problems.

It also found just 17 per cent of small business owners engaged with further education colleges or schools – half the 33 per cent the FSB found in similar research in 2019.

It has called for the current £1,000 financial incentive for employers hiring an apprentice under 19-years-old to increase to £3,000 for apprentices under 25 – an incentive that was in place during the pandemic – and make it exclusively for small and medium-sized enterprises (SMEs).

In addition, it says the £1,000 incentive for employers to host T Level placements – which were offered between May 2021 and July 2022 – should also return.

The FSB’s research found that one in five (21 per cent) would hire additional apprentices over the next 12 months if the £3,000 incentive returned.

Financial support to host T Level placements would encourage 22 per cent to provide more.

Paul Wilson, FSB policy director, said one in five small firms taking on an extra apprentice would equate to thousands of new apprentices.

“That incentive is the thing that would take them over the line,” he said.

“Because there is such a large number [of employers] that employ very small numbers [of employees], we are talking about a large potential impact. I think the Treasury would take that as a good take-up.”

Wilson said the FSB did not think a larger incentive would help, as the £3,000 balances “a good return of additional employees and value for money for the Treasury”.

FSB figures suggest that as of the start of 2021 there were 1.4 million small firms with employees, and 4.2 million with no employees.

The Department for Education originally said T Level incentives would not be extended beyond the July 31, 2022, close date, but in June then-higher and further education minister Michelle Donelan hinted that more support could be on the horizon. No further news has been heard on that incentive.

The £3,000 apprenticeship incentive meanwhile was available between August 2020 and the end of January this year.

DfE data published in July found that more than three quarters of the near 200,000 incentive payment claims were for apprentices aged 16 to 24, and prompted the Association of Employment and Learning Providers to renew its calls for the measure to be brought back.

Elsewhere in the FSB’s research, the organisation says a Kickstart-style scheme would help more disabled people into work for the first time, while free bus passes for apprentices aged 16 to 25 would address difficulties for those to get to their courses.

Proposals for cutting apprentices’ travel costs had been worked on by the DfE and the Department for Transport pre-Covid.

Another ask from the FSB has been for skills bootcamps for those aged 50-plus, which would help re-skill or encourage people who became economically inactive during the Covid-19 pandemic back into work in areas employers need them most.

The federation wants the education secretary to ensure that by 2035 no young person leaves education without at least level 2 qualifications, and increase corporation tax relief for employers training low or medium-skilled employees.

FSB policy chair Tina McKenzie said: “We also want more to be done to upskill groups further away from the workplace, such as ex-offenders, older workers, and disabled people, who could help fill skills shortages and find meaningful employment if given a helping hand.”

McKenzie added: “The challenges involved are huge, but the potential rewards are even greater. If the Government is serious about levelling up every region of England, and rebuilding the economy, our recommendations definitely need to be on the new education secretary’s slate.”

A DfE spokesperson said the department is reviewing further support measures to help employers offer T Level placements, and plans an extra £1.6 billion investment in 16-19 education and training by 2024/25 from last year’s funding levels.

They added: “We are also making sure everyone can access the training they need at every stage of their life, including supporting more adults to upskill or retrain for free, and plug skills shortages in key sectors such as digital, green transport and healthcare.”

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