Budget: Employer apprenticeship contributions cut

Chancellor Philip Hammond announces move to reduce cost of apprenticeship training for small businesses

George Ryan & Stephen Exley

Chancellor Philip Hammond has announced a change in the contribution for SMEs

The amount that non-levy-paying companies have to contribute towards the cost of apprenticeship training will be halved, the chancellor of the exchequer has announced in his Autumn Budget.  

Philip Hammond said that the amount small and medium-sized enterprises have to contribute towards apprenticeships will be reduced from 10 per cent to 5 per cent – a package that will cost £695 million. 

Mr Hammond said the system has to work for employers, adding: "So today, in addition to the flexibilities I announced earlier this month, I can announce that for smaller firms taking on apprentices we will halve the amount they have to contribute, from 10 per cent to 5 per cent."


Sticking with 3 million apprenticeships target

The chancellor also outlined the government's other priorities for further education, including a recommitment to create 3 million new apprenticeships by 2020.

"As well as backing businesses to invest and grow, we will also make sure British workers are equipped with the skills they need to thrive and prosper," he said.

"We’ve introduced a new system of T-level vocational training, have put the first £100m into the new National Retraining Scheme, and through the apprenticeship levy we’re delivering 3 million high-quality apprenticeships in this parliament."

'Major and positive shift'

Mark Dawe, chief executive of the Association of Employment and Learning Providers (AELP), said: "This is a major and positive shift, which the AELP has been pushing hard for since before the levy was introduced, and it should enable providers to work with smaller businesses to start getting back to offering apprenticeships to young people and local communities. We are grateful to [apprenticeships minister] Anne Milton and [former skills minister and current chair of the Education Select Committee] Robert Halfon for their significant efforts in making this happen."

The "great" news was also welcomed by the CBI.

Ben Rowland, the co-founder of apprenticeship providers Arch Apprentices, said he was "delighted" by the chancellor's proposals.

He added: "We have been strong advocates of the apprenticeship reforms that the government has introduced, and truly believed that they will have a big impact on resolving the growing skills gaps in the UK. The country is facing major issues surrounding productivity and a lack of skilled workers. We see the government’s belief in apprenticeship as the real solution to these problems. Through these changes, we will train a workforce fit for any future."

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George Ryan & Stephen Exley

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