Chancellor brings forward £700m package to help small businesses take on more apprentices #SpringStatement

Ensuring people have the skills that employers need is vital to creating the workforce of the future.

The Budget set out steps to equip people with the skills to succeed in the modern economy, and during the Spring Statement the Chancellor announced:

• updates to apprenticeship reforms announced at Budget that mean from April 1st employers will see the co-investment rate they pay cut by a half from 10% to 5%, at the same time as levy-paying employers are able to share more levy funds across their supply chains, with the maximum amount rising from 10% to 25%

• to tackle period poverty in schools, the Department for Education will lead work to develop a national scheme in England to provide free sanitary products to girls in secondary schools

• the government has appointed Professor Arindrajit Dube to undertake a review of the latest international evidence on the impact of minimum wages, to inform future National Living Wage policy after 2020

In response to the Spring Statement from the Chancellor Philip Hammond:

Kirstie Donnelly MBE Managing Director City & Guilds Group, said: 

“I’m pleased to hear the Chancellor bring forward the £700m package to help small businesses take on more apprentices that was announced at the last budget. This is as a critical step in addressing the drop in apprenticeship starts we have seen since the introduction of the levy and means we will hopefully see more young apprentices come through the system at intermediate and advanced levels.

“However, more still needs to be done to fix the system as a whole, as while the levy remains rigid and employers face barriers to engaging with apprenticeships, it is unlikely we will see significant change. Our recent research Flex for Success found 93% of levy-paying employers have experienced some form of blocker to investing in apprenticeships, while 92% say they want to see greater flexibility in how they can spend their funds.

“We encourage the Government to remove the current barriers within the apprenticeship system and give employers more flexibility in how they can access and spend levy funds. Only when the Government truly listens to and acts upon the needs of employers will we be able to develop the world class skills system that is so needed by UK Plc.”

Samantha Hurley, Director of Operations at the Association of Professional Staffing Companies (APSCo), comments:

“While yesterday’s statement offered no unexpected revelations, the Chancellor’s admission that ‘investment in people’ is central to boosting UK productivity is a sentiment that we at APSCo whole-heartedly support.

“The announcement that changes to the Apprenticeship Levy – which will allow employers to transfer 25% funds to others in their supply chains – will be brought forward to April 2019 is welcome. As we have repeatedly stressed to HMRC, the fact that a company’s ‘size’ is directly related to its payroll means that many staffing firms have Levy pots so large that they cannot realistically use all the funds to upskill their own people. While not perfect, this new system at least means that more of this money can be directed towards skills development, as the initiative was originally designed to do.

“We also welcome the government’s commitment to build on the UK’s ‘fundamental strengths and competitive advantages’ through embracing the technologies of the future and, crucially, equipping British workers to use them.

“While our members will take heart in assurances that economy remains robust – with a further five years of growth predicted and 600,000 further jobs expected to be created by 2023 – there is no escaping the precarious position we find ourselves in as March the 29th nears ever closer.

“Hammond’s stark warning that a no deal Brexit is likely to result in higher unemployment and lower wages should not be taken lightly. However, the professional sectors that our members recruit into are unlikely to be impacted to the same extent as some others in this scenario. The Chancellor’s resolve that the government remains focussed on attracting those with the skills we need in the UK economy after the UK leaves the EU – no matter where they come from – is promising. As is his commitment to consulting with business to ensure that any new immigration system is fit for purpose. APSCo is, of course, always keen to engage with government to ensure that the interests of our members are represented in parliament.” 

Responding to the announcement that the cutting of the employer co-investment rate for apprenticeships will take place in April, Association of Employment and Learning Providers chief executive Mark Dawe said:

‘Our evidence was that employers were holding back on apprenticeship starts since the autumn budget announcement which might explain the overall falls happening again, so we welcome the fact that this measure is being introduced.  The NAO has highlighted other fundamental issues we need to resolve and we look forward to working with the government on these.’

David Hughes, Chief Executive of the Association of Colleges, said:

“Today in his Spring Statement, the Chancellor recognised that to be successful post-Brexit government must put technical and vocational skills “at the heart of the system.

“As the political debate about our country’s future continues, it’s great to see government recognise this, and colleges will be central to delivering that system. He highlighted T levels, the national retraining scheme and apprenticeships – just a few of the ways in which colleges are driving economic growth, supporting prosperous communities, and empowering individuals.

“The Chancellor also again signalled the end of austerity. Given that he now acknowledges the vital role that colleges play, he must also put an end to the decade of cuts that they have faced. Just last month, 165 MPs, including many from the Chancellor’s own party, wrote to him calling for urgent investment in colleges. They join employers, trade unions, college staff and leaders, parents and students, who have long campaigned for a better deal for further education. Today shows us that government is now listening.

“Is it enough? No. But it is a start.  

“As we now make our way towards the Comprehensive Spending Review and the next Budget, positive words made at the dispatch box must be turned into action and investment. We are eager for the spending review process to start so that the case for investing in young people and adults through colleges can be properly considered and acted upon, and we will keep pushing to make sure that colleges have the investment they need to thrive.

“The Chancellor himself has now made clear that a failure to invest in further education would be a failure to invest in our country.”

Peter Finegold, Head of Education and Skills at the Institution of Mechanical Engineers, comments:

“We welcome the Chancellor’s plan to bring forward the £700 million package for companies to use the apprenticeship levy with greater flexibility, including passing on some of their levy investment to their supply chains.

“Equally, his commitment to exempt PhD roles for visa caps will contribute to maintaining the UK’s world-leading position for research. This will not, however, address persistent shortages of highly skilled technicians that engineering employers continue to face.”

Kevin Courtney, Joint General Secretary of the National Education Union, said: