Small firms welcome apprentice levy relief

SMALL businesses have welcomed a move by Philip Hammond to cut the costs they must pay towards apprenticeships.

Firms which pay their staff less than £3m per year in total must stump up 10pc of the cost of any apprenticeships which they run. The Government pays the remaining 90pc.

But from April 2019, companies’ contributions will be halved to 5pc while the Government will pitch in 95pc. The Chancellor has set aside £240m to cover the costs.

Verity Davidge of manufacturers’ organisation EEF said: ‘Reducing the rate for small business from 10pc to 5pc will spur more small businesses to create additional apprenticeships, which in turn will deliver a much needed boost to skills.’

The higher 10pc rate had been criticised for deterring small businesses from operating apprenticeship schemes.

Hammond also promised to give up to £5m to the Institute for Apprenticeships, which advises on the development of training programmes, and the National Apprenticeship Service, the government agency which coordinates apprenticeships. This is to help both bodies identify gaps in the market for training providers.

The funding will also be used to increase the number of courses on offer designed by employers. Hammond said all apprentices would start on these programmes from 2020.

Larger businesses already pay 0.5pc of their wage bill every year as an apprenticeship levy, whether they offer apprenticeships or not.

The Chancellor recently said firms will be able to use 25pc of their levy funds to pay for apprenticeships at another business in their supply chain if they do not need apprentices.