Apprenticeship and traineeship grants explained
Chancellor Rishi Sunak made employment, and youth employment in particular, the main focus of his Summer Statement back in July. As part of his £3.2 billion Plan for Jobs to invest in workers, he announced up to £3,000 in financial incentives for employers taking on apprentices and creating traineeships, boosting opportunities for young people across the country. This is all part of aiding the UK’s recovery from coronavirus and avoiding high unemployment for 16-24 year olds, as 770,000 young people left school this year in one of the toughest job markets to date.
The Government will give £2,000 per apprentice to every business that takes one on between the ages of 16 and 24, and £1,500 for anyone over 25. The Treasury will also pay £1,000 for every trainee offered a work placement. These payments are on top of the existing £1,000 offered for new 16-18 year-old apprentices and anyone under 25 with an Education, Health and Care plan (EHC).
Apprenticeships are hugely valuable, not just for those in training but also for employers. They offer an adaptable and flexible way to motivate and develop the exact skills you need. In short, they:
- Develop and upskill your workforce in a cost-effective manner
- Help you recruit and develop ambitious, motivated staff
- Retain talent and provide access to a broader talent pool
- Tailor skills to your business requirements
These incentives are driven by creating employment opportunities and are a quick response to the demands of the labour market. Apprenticeships help close the skills gap and they’re proven to be effective: 91% stay in work or go on to further training.
The Chancellor announced a £111 million investment specifically in traineeships, tripling the preceding scheme. For the first time ever, the government is paying employers £1,000 to take on new trainees. The scheme is limited to 10 trainees per employer, and the government is more than doubling existing training provider payments for young people aged 19-34 from £970 to £1500.
A traineeship is different to an apprenticeship in that it targets younger people who require a little more training, including maths and English as well as workplace skills. Positions can last for between six weeks and six months and are unpaid, but employers tend to pay expenses and cover the cost of some courses. They help young people become ‘job-ready’ by developing their skills and help them into apprenticeships, education or employment. The original traineeship programme was launched in 2013.
Like, apprenticeships, they’re proven to be effective. In 2019, the Department for Education released statistics showing that three-quarters of young people who completed a traineeship went on to start an apprenticeship, further study or get a job within 12 months.
The number of traineeships has declined since the scheme’s inception 7 years ago. In the past 5 years, the number of traineeships has fallen from 24,100 at its peak to just 14,900. The government will fund up to 36,700 more traineeships by including people who have level 3 qualifications and making three times more funding available to providers.
These funds are available from now until January 2021 and there’s no limit on the number of apprentice incentive payments you can claim for. As long as the apprentices you take on meet the relevant criteria, hire away. Most notably, it’s important that they’re a new employee.
In order to take on an apprentice, you usually have to cover some of the training costs in order to access the levy fund. If your business has more than 50 employees then you pay 5% of the training costs, and the government pays the remainder. However, if your business has fewer than 50 employees, then you’ll be eligible for the Small Business Waiver. In this case, you don’t pay any costs associated with training for any apprentice aged 16-18 or someone 16-24 who has an EHC.
The first payment of £500 is made once the apprentice has been on the programme for 90 days, and the remaining £500 is paid once the apprentice has completed their first year. In some cases this will be in addition to the additional £2000 grant. Employers of apprentices under the age of 25 don’t pay National Insurance employer contributions for their apprentices.
You’ll have to choose a training provider to partner with to deliver an apprenticeship programme. All training providers must be on the government’s Register of Apprenticeship Training Providers.
Earn while enhancing the skill sets on your team
The schemes can be hugely beneficial in the long-run in terms of the skills you can develop and retain amongst your team, and an extra cash injection will be welcomed by many in current circumstances. If you haven’t been thinking about apprenticeships because of the pandemic, now’s the perfect time to (re)consider.
Find more information and advice on navigating the current business landscape on our COVID-19 Impact Support Hub.