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Budget 2018: Small business apprenticeship fees halved to 5%

The chancellor has announced that the 10-per-cent fee that small businesses must pay when they take on apprentices will be halved

In the Autumn budget speech, the Treasury has announced the apprenticeship fee for small businesses is cut to 5 percent with the change coming into effect at some point in 2019.

It comes after the skills minister Anne Milton told the Association of Employment and Learning Providers conference in June that issues with the fee have been “noted”, but there would be no announcement on a rule change anytime soon.

Announcing the change in his Budget speech, Mr Hammond said: “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.

“We’ve introduced a new system of T-level vocational training, introduced the first £100 million into the new national retraining scheme and through the apprenticeship levy we are delivering three million new high-quality apprenticeships in this parliament.

“That system is paid for by employers and it has to work for employers.

“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.

“In total this is a £695 million package to support apprenticeships.”

Presumably, the change to a 5 per cent contribution will only apply to new starters when the change comes into effect.  It is, however, not yet known if the contribution will also apply to levy-paying employers when their levy pot is empty.

The AELP feels this is a positive change as the fee can be off-putting to some SME’s.  Its chief executive, Mark Dawe, is particulary happy with the announcement.

“This is a major and positive shift which 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,” he said.

“We are grateful to Anne Milton and Robert Halfon for their significant efforts in making this happen.”

Shadow skills minister Gordon Marsden welcomed the change but said it was only a “minor improvement”.

“This responds to the strong lobbying there has been from the sector, and in particular the AELP,” he said.

Marsden feels there are many more issues that need to be addressed saying, “It’s a minor improvement but it doesn’t address some of the key issues for small businesses with back-office admin or the failure of government to incentivise small businesses by creative use and support of the apprenticeship levy.”

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