2021 Autumn Budget and Spending Review: What does it mean for apprentices? By Michael Lemin - Head of Policy at NCFE
16th November 2021
After many years without one, the recent Spending Review was welcome. This outlines the government’s spending plan over the next 3 years. The signals are clear that apprenticeships remain the cornerstone of the government’s vision for technical education.
Chancellor Rishi Sunak talked about moving to an “economy of higher wages, higher skills, and rising productivity,” and announced a range of investments to support this.
Apprenticeship policy seems to be moving towards a period of relative stability, after significant reforms over the last few years. Despite many calls to reform the levy, the Chancellor held firm, and announced that apprenticeships funding for the UK will increase to £2.7b, which is a result of an increased yield through the apprenticeship levy. The government is continuing to meet 95% of the apprenticeship training cost for employers who do not pay the Apprenticeship Levy. It remains to be seen whether there is appetite in government to reform the levy, but it is increasingly evident that it will be difficult to do so in a way that is popular with all parties.
The focus instead, was on driving more take up of apprenticeships and piloting new approaches. There was an extension of the £3,000 apprentice hiring incentive for employers until 31 January 2022. Mention was also made of supporting flexible apprenticeship training models to ensure that apprenticeship training continues to meet the needs of employers. The £7m earmarked may be modest, but shows the government’s commitment to trialling new approaches, and we await the response to the consultation on Flexi-Job Apprenticeships with interest.
The rise in the National Minimum Wage from April 2022 was welcome news for many workers, at a time where the cost of living is soaring. This is likely to have two main impacts on apprenticeships – increasing the apprenticeship programme budget through bringing more money in through the apprenticeship levy, and putting downward pressure on apprenticeships starts as some employers struggle with rising costs. There is little doubt that the Chancellor will be paying close attention to the number of apprenticeships starts over this period.
Overall, the Budget and Spending Review had little news for apprenticeships. The policy seems to be in a phase of evolution, rather than revolution, and given the scale of reform in other areas of Post-16 education, such as T levels, all signs are that apprenticeship funding and structure is unlikely to significantly change for the foreseeable.