In a move aimed at bolstering the UK economy and supporting small and medium-sized enterprises (SMEs), the Prime Minister has outlined a package of reforms during the Business Connect conference.
These reforms are designed to enhance apprenticeship opportunities, reduce bureaucratic hurdles for SMEs, and increase private investment in businesses led by women.
Prime Minister Rishi Sunak said: “Growing up in my mum’s pharmacy, I know first-hand how important small businesses are. Not just for the economy, but as a driver for innovation and aspiration, and as the key to building a society where hard work is always recognised and rewarded.
“Whether it’s breaking down barriers and red tape for small businesses, helping businesses hire more young people into apprenticeships and skilled jobs or empowering women to start up their own businesses – this government is sticking to the plan and leaving no stone unturned to make the UK the best place to do business.
“Taken together, these measures will unlock a tidal wave of opportunity and make a real difference to businesses and entrepreneurs across the country.
Key highlights of the economic reform package
Full Funding for Apprenticeships: starting from 1st April, the government will cover the entire cost of training for apprentices up to the age of 21 in small businesses. This initiative aims to alleviate the financial and administrative burden on small employers and education providers, fostering a more conducive environment for young individuals to commence their careers.
Enhanced Apprenticeship Levy Transfer: amendments to the apprenticeship levy will enable large employers to transfer up to 50% of their unused levy funds to other businesses. This increase from the current 25% is anticipated to support SMEs in hiring more apprentices, thereby addressing the skills gap across various industries.
Increased Investment in Female Founders: the Prime Minister announced plans to establish an industry-led Invest in Women Taskforce. Co-chaired by entrepreneur Debbie Wosskow and Barclay’s Hannah Bernard, with representation from the government, the taskforce aims to mobilise private capital for female-founded businesses and address the challenges impeding their growth.
Impact on SMEs and the wider economy
These reforms are part of the government’s broader strategy to cultivate a robust economic landscape that encourages entrepreneurship and business expansion. Notably, the government pledges to fully fund apprenticeships for young individuals in small businesses, removing a significant financial constraint for these entities. This policy is supported by an additional £60 million in government funding, ensuring ample resources to meet the demand for apprenticeships.
By enabling large employers to share a greater portion of their apprenticeship levy funds, the initiative aims to enhance the accessibility of apprenticeships across SMEs, contributing to the development of a skilled workforce tailored to the evolving needs of the UK economy.
Furthermore, the Prime Minister’s commitment to deregulation, particularly in simplifying reporting requirements for SMEs, is poised to yield substantial savings. Proposed changes are expected to exempt up to 132,000 businesses from complex reporting obligations, fostering a more streamlined business environment.
Broader implications and future directions
These measures are expected to facilitate up to 20,000 additional apprenticeships, predominantly benefiting young individuals. This is in alignment with the government’s long-term vision of a stronger economy underpinned by skilled labour and innovative entrepreneurship.
Additionally, the deregulatory initiatives and the establishment of the Invest in Women Taskforce underscore the government’s dedication to creating an inclusive and dynamic business ecosystem. With the 2024 designation as the year of the SME, these reforms affirm the government’s commitment to supporting small businesses as pivotal components of the UK economy.
As the UK navigates its post-Brexit landscape, the recalibration of regulatory thresholds and the emphasis on digital reporting methods reflect a forward-looking approach to business regulation. The projected £150 million annual savings for SMEs and the alleviation of administrative burdens represent tangible steps towards a more agile and resilient business sector.
Education Secretary, Gillian Keegan said: “This Government has built a world-leading apprenticeship system from the ground-up – with apprenticeships now available in around 70 per cent of all occupations.
“Apprenticeships are a fantastic way for businesses to develop the skills they need, and these new measures will help more businesses and young people benefit from them.
“Our plan to deliver a high-growth, high-skilled economy is working, with more opportunities available to young people than ever before.”
Beatrice Barleon, Head of Policy & Public Affairs at EngineeringUK, comments: “We welcome the Government’s commitment to offer more support for apprenticeships, particularly recognising the need to support small to medium sized enterprises (SMEs) with taking on more apprentices.
“We are particularly pleased to see the focus for the support is on young people aged 21 or under. Refocusing some of the apprenticeship budget money for young people is something we have called for in our recent ‘Fit for the future’ report with Lord Willetts and Lord Knight.
“While these measures are certainly a step in the right direction, more still needs to be done to ensure our apprenticeships system is a success. Government needs to consider the recommendations put to them as to how to better support SMEs with the processes surrounding apprenticeships and how to better help young people to be able to access the opportunities available and be ready for work.
“It’s clear there is still an apparent, and growing, mismatch between levy intake and the apprenticeship budget. In light of apprenticeship numbers needing to grow to meet demand in the engineering and technology sector, we would like to see greater transparency as to how this additional money is currently being spent.”
