In a speech on the 18th March 2024 at the Business Connect conference in Warwickshire, Rishi Sunak announced several changes set to come into effect this year designed to support SMEs.
Most notably, Sunak announced that the government will fully fund apprenticeship training for those 21 and under working in small businesses, subsequently minimising paperwork and streamlining the recruitment process.
On Thursday 28th March 2024, the Education and Skills Funding Agency (ESFA) confirmed this will apply to ALL non-Levy paying employers hiring under those 21 and under – including micro, small, and medium-sized businesses, from 1st April 2024.
“The thing all of us need to do is change the culture of this country. We’re going to do that and do our bit, but all of us need to make sure that young people know that having an apprenticeship is a fantastic route into work and to build their life and career.”
– Rishi Sunak, Business Connect Conference
Previously, for SMEs, the government covered 95% of apprenticeship training costs. The employer then paid the remaining 5% of the training costs upfront. From 1st April, to reduce financial burdens for employers, the government will now pay the full cost of apprenticeships for 21-and-under at all non-Levy paying businesses.
To financially support this new training initiative, the government is pledging £60m of new investment for the next financial year. Between updates to the Apprenticeship Levy and the increase in investment in apprenticeship training, Sunak pledged to help create 20,000 more apprenticeship opportunities.
Alongside the new apprenticeship funding announcement, the Prime Minister made clear there will be additional changes to support businesses, and encourage more businesses to hire young apprentices.
50% Increase in Levy Transfers
Businesses have long called for reforms to the Apprenticeship Levy as millions of pounds are unspent and returned to the Treasury every year.
Due to come into effect from 6th April 2024, the government will raise the proportion of Levy funds that employers can transfer to another business.
The amount was previously capped at 25%, but in his speech, Sunak announced that to combat unspent Levy funds the government will increase the transferable amount to 50%.
More Companies to Qualify as SMEs
There are strict definitions of what defines small and medium-sized businesses, and Sunak touched upon his plan to increase the threshold that determines a company’s size.
“The definition of small business matters, because if you don’t qualify suddenly you’re hit with a load of extra paperwork. […] We’re changing the rules to ensure far fewer businesses are hit by these burdens.”
– Rishi Sunak, Business Connect Conference
This change is due to come into effect in the autumn and will make up to 132,000 businesses qualify as SMEs – avoiding non-financial reporting requirements.
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