There needs to be a step-change in the way England approaches incentivising apprenticeships and the government could make a start by matching Scotland’s level of funding, writes the HomeServe Foundation’s Helen Booth. If it fails to take action a highly damaging trades-skills gap could develop post Brexit.
In December 2020, Nicola Sturgeon neatly side-stepped the UK government with a £25m funding pledge to help more employers north of the border take on and upskill apprentices.
In this new post-Covid reality we are all facing, Sturgeon said she was seeking to create opportunities for every young person in Scotland and – as part of a package of new measures – announced a new £15m Apprenticeship Employer Grant to provide £5,000 for employers taking on or upskilling a 16- to 24-year old apprentice, or those aged up to 29 years who were disabled, care leavers or minority ethnic.
She announced too that employers would receive £3,500 for taking on or upskilling an apprentice aged over 25.
These are bold pledges, and they are both much higher commitments than the current funding measures we have in place in England, due to end in March 2021, announced by prime minister Boris Johnson and chancellor Rishi Sunak, as well as in Wales and Northern Ireland.
So what is available in England?
In July 2020, chancellor Rishi Sunak announced a six-month bonus, which was extended to March 2021 in his recent Spending Review, for employers to hire apprentices.
Incentive bonuses in England are £2,000 for employers taking on or upskilling a 16- to 24-year-old apprentice, with those hiring apprentices aged over 25 receiving grants of £1,500 until 31st March 2021.
What are the UK’s other devolved states offering?
In Wales, employers of any size can benefit from an incentives scheme that runs from 1 August 2020 to 28 February 2021. It offers up to £3,000 for employers taking on an apprentice aged 16 to 24, or up to £2,000 for those hiring a new apprentice aged 25 or more. Economy Minister Ken Skates also announced an incentive of up to £2,600 to employers for reemploying a redundant apprentice, as well as £1,500 for employers taking on an apprentice with disabilities.
In Northern Ireland, Economy Minister Diane Dodds announced a new retention incentive initiative from early November offering £3,700 to employers for every apprentice they bring back from furlough and retain until they have completed their training.
Additionally, employers can receive up to £3,000 for each new apprenticeship opportunity they create between 1 April 2020 and 31 March.
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What’s needed in England and why?
The HomeServe Foundation, a not-for-profit arm of home repairs and improvements company HomeServe, is campaigning for a better deal for SMEs and UK businesses, including employers and HR teams seeking to hire and upskill apprentices. Key to this is the funding available to them, as we know the current financial incentive arrangements are a barrier for many businesses when it comes to taking on an apprentice.
We know too from our own research in the trades sector that by increasing financial support for employers, up to £7,000, the government could tip the balance and help create a much-needed boost to the sector and for young people seeking employment. So, matching Scottish incentives would certainly be a good start.
With Brexit imminent, a dramatic decrease in apprenticeships and ever-increasing demand for skilled tradespeople, we are facing a trades skills gap that could have damaging economic consequences for the UK.
Recent government figures on monthly apprenticeship starts show they are likely to be 46% lower in 2020 than the same period in 2019, with a staggering 68% drop in apprenticeship starts for under-19s.
Apprenticeship starts in the construction, planning and the built environment alone are down 56% year-on-year.
These factors converging are causing us a challenge we must face head-on, but it’s clear there needs to be a step change in the approach to incentives in England as well as Scotland.
We need to make this important investment in our future skilled workers now in order to make taking on a training an apprentice worth it for UK business, for HR leaders and for the SMEs that make up the bulk of UK businesses.
What is the government doing?
It was positive to see the UK government prioritising apprenticeships in the most recent Spending Review. They are right to, as having the right skills in place, while supporting young people to find employment is critical right now and for the future.
As an employer in the home repairs business, the trade sector is something HomeServe obviously focuses on very closely. What we see is that SMEs need increased financial support, but we also see that it needs to be made easier for HR leaders in large companies to use or share (of they choose to do so) their spare levy with businesses.
This extra flexibility is the apprenticeship levy could make a big difference in the number of apprentices created, for example in emerging areas such as green skills, installing and repairing renewable boilers or installing electric vehicle charging devices.
So, although we were pleased to see SME incentives extended from January to March, we would like to see the level increased in order to achieve the uptake we need to see – that means matching Sturgeon’s pledged as a minimum; or meeting the demands of SMEs for up to £7,000.
More needs to be done – now
More needs to be done and it needs to happen now so we can give apprentices and employers the opportunities they need to grow. We really need to see progress being made in cutting the red tape and increasing the incentives here in England to ensure our SMEs can train and support the next generation of skilled tradespeople that this country needs.
Now is the time to make these changes, and our call to the prime minister and chancellor is to at least match Scotland’s level of funding in England and extend the pledge beyond March, in order to drive the impacts we all want and need.
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This is a campaign we’re aiming to rally everyone behind, and we’re actively looking to partner with HR teams in big companies, as well as leaders of SMEs, to drive more change in this area.
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