An update to the Apprenticeship Hiring Scheme was announced by the Chancellor in the UK Budget on Wednesday 3rd March 2021. The original incentive scheme was previously extended up to March 31st 2021, however this was then further updated and extended up until 30th September 2021.
The Apprenticeship Incentive Scheme will see employers receive £3000 of government funding for every apprenticeship that is carried out after 1st April 2021. This is on top of the £1000 payment already provided for new apprentices aged 16 to 18 and those under 25 with an Education, Health and Care Plan, resulting in some employers potentially receiving £4000 in total.
The age restriction of 24 years old is now wiped out, meaning anyone above the age of 16 can undertake an apprenticeship. It’s worth noting that 16–24-year olds will also be exempt from National Insurance contributions, benefitting employers even more so. The £3000 funding will be paid directly to the employer once all the relevant proof is shown that an apprentice has been hired.
As well as an extension to the Apprenticeship Incentive Scheme, the Chancellor of the Exchequer, Rishi Sunak, also announced a scheme called Portable Apprenticeships, also known as Flexi-Job Apprenticeships. These are aimed at individuals mostly in the creative sector who benefit from working for multiple companies across many projects, with long-term training provided. This £7 million fund allows employers access to a pool of apprentice talent with the flexibility offering positives for both parties.
Furthermore, the Chancellor also announced the Help To Grow Management Programme, a 12-week initiative for students of business schools. The programme will help learn and develop skills in financial management, innovation and digital adoption with 30,000 places available over a 3 year time period. The government will cover 90% of the costs, with participants needing to be Senior Managers to participate, whilst contributing a £750 sum to the costs of the initiative.
What Is The Apprenticeship Incentive Scheme?
The Apprenticeship Incentive Scheme is for employers who hire a new apprentice between 1st August 2020 and 30th September 2021. The £3000 fund for each apprentice is funded by the government to the respective employer, encouraging them to hire apprentices by covering the bulk of the costs. Employers must pay the apprentices at least the minimum wage according to their age with the £3000 able to be spent on anything to support the organisation’s costs, including uniform, travel expenses etc.
In order to qualify for the scheme, your business will need to set up an apprenticeship service account before applying for an incentive payment once new apprentices are added to your apprenticeship service account. Businesses and firms will need to find a relevant apprenticeship training program for apprentices to undergo whilst working for the organisation, before advertising for the apprenticeship role through the find an apprenticeship service. Once you’ve selected your apprentice, an apprenticeship agreement and commitment statement will need to be completed.
Once verified and financial details are checked over, the £3000 lump sum will be paid in two equal instalments, with the first payment after an apprentice completes 90 days of their apprenticeship and the second after 365 days. The first payment could take as long as 3 months to be paid. A full breakdown document of the rules for employers in relation to the Apprenticeship scheme can be found here.
Who Will The Apprenticeship Incentive Scheme Affect?
The Apprenticeship Scheme is eligible for all businesses providing they are UK registered. The apprentice must work for you, or a connected company or charity as defined by
HMRC, and they must:
- Have the right to work in England.
- Be 16 years of age or over (no upper age limit).
- Spend at least 50% of their working hours in England.
- Work with experienced staff.
- Learn job-specific skills.
- Get time for training or study during their working week (at least 20% of their normal working hours).
- Not be undertaking another apprenticeship at the same time.
- Not in full-time education.
Businesses have until 30th September 2021 to complete all of the necessary processes to hire an apprentice in order to qualify for the £3000 of funding.
Why Have The Government Extended The Apprenticeship Incentive Scheme?
The government chose to extend the Apprenticeship Incentive Scheme in a bid to boost jobs and the economy. It encourages businesses to hire and train workers in the hope they become valuable and qualified assets for future development.
Zlatina Loudjeva, a National Government Services Director, stated, “With some sectors losing jobs rapidly due to the pandemic, these steps are vital in connecting the labour force directly with employer demand – helping address skills gaps at speed. These incentives will also support the transition to the new generation of green jobs that will demand new qualifications, professional standards, retraining of the current and future workforce. Evidence suggests that the impact of the current labour market disruption is being particularly acutely felt by parts of the UK that are targets for the Government’s levelling up agenda so this will especially help people seeking employment in those areas.”
As well as this, in the first two quarters of the 2020/21 academic year (August 2020 to January 2021), there were 161,900 apprenticeship starts. This was a drop of 18% from the same period in 2019/20, with around 36,700 fewer starts. This significant reduction in apprenticeship uptake is predicted to have a possible detrimental effect on many industries down the years, hence why the government have chosen to provide additional funding to get businesses and firms hiring apprentices again.
How Can I Apply For An Apprentice To Join My Business?
If your business is interested in hiring apprentices, all relevant information can be found via the dedicated Apprenticeship Incentive government portal.
We hope this has outlined to you exactly what the Apprenticeship Incentive Scheme is and whether it applies to your business. If you require any more information on apprenticeships, government COVID-19 loans, grants and schemes, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.