Small businesses could offer one million new apprenticeships

New research from the Federation of Small Businesses (FSB) shows that 24 per cent of their members would take on an apprentice in the future, potentially creating one million new apprenticeships.

The news comes as the government releases new information about the apprenticeship levy that will be introduced next year.

SMEs pull their weight in terms of apprenticeships

Currently, a quarter of small businesses have one or more apprentices working in their organisation.

If an additional 24 per cent did take on apprentices, it would help the government get closer to its target of three million new apprenticeships by 2020.

The report also shows that small businesses are making an important contribution: the proportion of SMEs with an apprentice is nine per cent higher than the national average.

FSB Policy Director Martin McTague said “Without question, the future success of apprenticeships continues to lie with our members and small businesses.”

Insight into apprenticeships

According to the research, most apprentices are aged 16 to 19 years old, and the main reason that SMEs cite for hiring an apprentice is a commitment to giving young people training opportunities.

However, there’s clearly room for improvement: one in three survey respondents say that a greater financial incentive would encourage them to employ an apprentice.

New apprenticeship levy

The government has today released new guidance on the apprenticeship levy, which will come into force next April.

Each employer will have an allowance of £15,000 a year to offset against the levy, meaning that only UK employers with a payroll of over £3 million will be liable to pay. Most small businesses will therefore be exempt.

The rate is set at 0.5 per cent of an organisation’s annual pay bill, with the money helping to fund apprenticeships. Once employers have paid the levy through PAYE they will be able to access apprenticeship funding.

Smaller businesses not required to pay the levy will instead be asked to make a contribution towards the cost of training. The government will pay the rest, up to the maximum amount of funding available. The guidance released by the government today suggests that employers will contribute 10 per cent of training costs and the government will pay 90 per cent, but views are still being sought on this proposal.

Things to consider if you’re hiring an apprentice

If you’re taking on an apprentice, they should have the same conditions as other employees, including paid holidays, sick pay, and access to any support or benefits you offer.

You will need to sign an apprenticeship agreement with your apprentice, detailing the length of the apprenticeship and the training and qualifications you’re providing.

You can apply for a £1,500 apprenticeship grant if you have fewer than 50 employees and you’re employing an apprentice aged between 16 and 24. You can also apply for funding to cover the cost of training.

Also remember that your apprentice will need to be covered by employers’ liability insurance. If you already have employees, it’s likely that your existing employers’ liability insurance policy will cover your apprentice, but contact your insurer to make sure.

If your apprentice is your first employee, you’re legally obliged to take out an employers’ liability policy. This can pay compensation claims if your apprentice sues your business for injury or illness that’s related to their work.

Would you take on an apprentice? Let us know below.

Looking for employers’ liability cover?

As the UK’s biggest business insurance provider, we specialise in employers’ liability insurance. We’ll run you a quick, tailored quote right now online, and let you decide if we’re a good fit.

Start your quote