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Apprenticeship limit scrapped for small businesses

Author: ICAEW Insights

Published: 04 Apr 2023

A cap that limited non-levy paying companies to 10 apprentices has been lifted by the government, it has been announced, with ICAEW among bodies calling for its overhaul.

In a move aimed at boosting the number of people in apprenticeships, the government has announced that it has scrapped the apprenticeship limit. This decision comes as part of the government’s efforts to improve vocational education and to support businesses in developing the skills of their workforce.

Robert Halfon MP, Minister for Skills, Apprenticeships and Higher Education, announced in a letter to the sector that, from 3 April 2023, non-levy employers (those with annual payrolls below £3m) will no longer be limited to a maximum of 10 apprenticeship starts. Instead, “they will be able to recruit as many high-quality apprentices as their business needs.

“We recognise the important role smaller employers play in creating apprenticeship opportunities, particularly for younger people and those in disadvantaged areas, and we want to ensure smaller employers have the access to the apprenticeships they need to meet their ambitions, fill their skills gaps, and grow their business,” he wrote.

The limit was intended to prevent large companies from using their apprenticeship levy funds to train existing staff rather than creating new apprenticeships. However, many smaller businesses found the limit to be a barrier to hiring and training new staff.

Hazel Garvey, ICAEW Managing Director Education and Training, said: “This is great news for small businesses and apprentices alike and we are delighted that policymakers have listened to employers, tuition providers and professional bodies to make this change.

“Market-led apprenticeship policy can deliver a real boost to UK businesses that are struggling to recruit in many sectors, while also improving access to professions such as accountancy and finance.”

ICAEW had called for the cap, which affected firms that were too small to pay the apprenticeship levy, to be lifted in its recent Spring Budget Representation.

The representation stated that the cap of 10 apprentices allowed at any one time for SMEs that don’t pay the apprenticeship levy stifles career progression and limits investment.

ICAEW wrote: “The ultimate goal of apprenticeships is to boost the productivity of UK PLC and although the cap of 10 has been reset to zero in previous years, employers lack the confidence to conduct workforce planning using apprenticeships.”

With more than 650 apprenticeships from Level 2 to Level 7 in almost every sector, the scrapping of the cap on apprentices will mean employers can undertake skills gap analysis or workforce planning without the worry of not being able to invest in training through apprenticeships.

Employers in all sectors are using apprenticeship standards at Level 4 and Level 7 to train the next generation of ICAEW Chartered Accountants. To find out more visit  icaew.com/empoweryourbusiness.

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