Policy update: Prime Minister announces a reform package to boost apprenticeships

In a speech today, the Prime Minister announced a package of reforms to support businesses to deliver more apprenticeship placements and reduce red tape for SMEs.

Key takeaways from the announcement are:

  • The Government will fund the entirety of the cost of apprenticeship training for small businesses from 1 April for individuals aged 21 and under. The reform eliminates the previous requirement for employers to co-invest at a rate of 5%.
  • This increase in support will not just eliminate the need for SMEs to cover some of the training costs but also save time and expenses for providers, such as further education colleges, that currently need to secure funding separately from the government and businesses.
  • The announcement is bolstered by an additional £60 million of new Government funding for the next year.
  • From 6 April, the Government will also increase the funding that employers paying the apprenticeship levy can transfer to other businesses. Under the new regulations, levy payers can transfer up to 50% to other businesses.
  • Through these measures, the Government anticipates up to 20,000 more apprenticeships (primarily for young people) will be created.

NSAR welcomes the Government’s announcement today on providing more support for SMEs to offer apprenticeships. Skills shortages pose a significant challenge for the rail industry, with NSAR analysis indicating that an additional 153,000 people will be needed in the industry between 2023 and 2030. Primarily, this is due to the high average age of workers in the industry (45 years old). The consequence of this is that 75,000 people are expected to leave the industry through retirement and other forms of attrition. Apprenticeships will be crucial to bridging the gaps this will create. Specifically, 5,000 apprentices per annum will be needed to close the skills gap, effectively doubling the current average level.

However, while today’s announcement represents a positive step in the right direction, the Government must go further. The rail industry requires confidence to invest to meet skills needs, but this can only occur with the assurance of a long-term, stable vision for rail, accompanied by a reliable pipeline of projects and enhancements. This holds for many other infrastructure sectors as well. Stability and skills investment go hand in glove.

Rail will need to play a pivotal role in addressing some of the country’s most pressing challenges, from fostering economic growth to contributing to achieving net-zero emissions and addressing regional inequalities. Therefore, building on today’s announcement and providing stability to ensure the industry can develop the necessary workforce will be essential.

Edward Hughes
Head of Policy and Engagement


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