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PM announces major apprenticeships reform and cut red tape for SMEs

By March 21, 2024No Comments

In his first economic speech since the Spring Budget, the Prime Minister set out a major package of reforms to support businesses to deliver more apprenticeship places, cut red tape for SMEs and leverage more private investment in female founders.

The Government will fully fund apprenticeships in small businesses from 1st April by paying the full cost of training for anyone up to the age of 21 – reducing costs and burdens for businesses and delivering more opportunities for young people to kick start their careers.

This will remove the need for small employers to meet some of the cost of training and saves time and costs for providers like further education colleges who currently need to source funding separately from the government and businesses.

The move is underpinned by an additional £60 million of new government funding for next year, guaranteeing that where there is demand for apprenticeships from businesses, the government will ensure there is enough funding to deliver them.

From the start of April, the government will also increase the amount of funding that employers who are paying the apprenticeship levy can pass onto other businesses. Apprenticeships can currently be funded by a levy paying employer transferring up to 25% of their unused levy to a different employer.

Under the new measures, large employers who pay the apprenticeship levy will be able to transfer up to 50% of their funds to support other businesses, including smaller firms, to take on apprentices. This will help SMEs hire more apprentices by reducing costs and enabling more employers to get the skilled workers they need while unlocking more opportunities for young people in a huge range of sectors, industries, and professions.

Taken together, these measures are expected to enable up to 20,000 more apprenticeships, primarily for young people.

The Prime Minister is also announced further deregulatory measures to simplify both non-financial and financial reporting for SMEs which is expected to save thousands of businesses across the UK around £150 million per year.

This includes increasing the number of companies which qualify as a smaller or medium sized business through a 50% uplift to the thresholds that determine a company’s size. This is expected to benefit up to 132,000 businesses who will be spared from burdensome form-filling and non-financial reporting requirements.

The Government will also consult on further changes later this year including exempting medium-sized companies from producing strategic reports, which could save them a further £148 million a year and raising the employee size threshold from 250 to 500 employees, which will mean around 1,000 more large companies could become SMEs.

The Prime Minister also announced a new industry led Invest in Women Taskforce to unlock private investment in female business leaders and make the UK the best place in the world to be a female founder.

For too long, innovative, women-led start-ups have been held back due to a lack of finance and the proportion of equity capital investment going to all-female founder teams has been stuck at around 2% in the UK for the past decade.

The core aim of the Taskforce is to raise a bespoke funding pot for female-founded businesses through private capital and address the wider challenges that female entrepreneurs specifically face to help unlock their potential to establish and grow their enterprises.

The new taskforce will be industry led and co-chaired by entrepreneur Debbie Wosskow and Barclay’s Hannah Bernard, with Small Business Minister, Kevin Hollinrake, representing the government. The membership of the taskforce will be set out in due course.

Dawn