Major Package Of Reforms To Support Small Businesses In PM’s First Economic Speech Since The Spring Budget

In his first economic speech since the Spring Budget, the Prime Minister set out a major package of reforms to support businesses to deliver more apprenticeship places, cut red tape for SMEs and leverage more private investment in female founders at the Business Connect conference in Warwickshire yesterday.

The Government will fully fund apprenticeships in small businesses from 1st April by paying the full cost of training for anyone up to the age of 21 - reducing costs and burdens for businesses and delivering more opportunities for young people to kick start their careers.

This will remove the need for small employers to meet some of the cost of training and saves time and costs for providers like further education colleges who currently need to source funding separately from the government and businesses.

The move is underpinned by an additional £60 million of new government funding for next year, guaranteeing that where there is demand for apprenticeships from businesses, the government will ensure there is enough funding to deliver them.

From the start of April, the government will also increase the amount of funding that employers who are paying the apprenticeship levy can pass onto other businesses. Apprenticeships can currently be funded by a levy paying employer transferring up to 25% of their unused levy to a different employer.

Under the new measures, large employers who pay the apprenticeship levy will be able to transfer up to 50% of their funds to support other businesses, including smaller firms, to take on apprentices. This will help SMEs hire more apprentices by reducing costs and enabling more employers to get the skilled workers they need while unlocking more opportunities for young people in a huge range of sectors, industries, and professions.

Hundreds of large levy-paying employers have already taken advantage of the opportunity to transfer their unused levy funds to other businesses. As of [December 2023], 530 employers including ASDA, HomeServe and BT Group have pledged to transfer over £35.39 million to support apprenticeships in businesses of all sizes since September 2021.

Taken together, these measures are expected to enable up to 20,000 more apprenticeships, primarily for young people, and is part of our plan to build a stronger economy and deliver a brighter future where hard work is rewarded and young people get the skills they need to succeed in life.

This also builds on our record of transforming apprenticeships over the last decade. Since 2010, we’ve helped 5.7 million people start an apprenticeship, working with employers to develop almost 700 new high-quality standards and increasing the funding for apprenticeships to over £2.7 billion from next year. The National Centre for Universities and Business said the announcement is a positive signal of continued support for a co-delivery education model across universities and businesses. Numbers progressing through the Apprenticeship route, particularly in higher and degree programmes, continue to soar, showing how impactful and valued direct engagement with employers is within learning.

However, the Apprenticeship Levy continues to be too inflexible and this is a huge barrier to further growth. Companies face acute skills gaps, and are unable to use their levy funds to up- and re-skill their workforce.

Dr Joe Marshall, Chief Executive of the National Centre for Universities and Business (NCUB), said: “Support for small and medium businesses in accessing apprentices is welcome. These businesses often grapple with smaller training budgets, and their engagement with universities is still recovering post-COVID 19.

“However, our larger businesses and employers face significant skills gaps which they alone are unable to resolve. With four in five businesses facing recruitment issues, the nation needs a comprehensive plan to address the crisis. Reforms to apprenticeships must be at the heart of this, transforming the Levy into a resource to enable comprehensive workforce skilling.”

This is the third Business Connect conference to take place since it was launched by the Prime Minister last year and is expected to convene over 150 SMEs, as well as government ministers to discuss how we can further support businesses to grow and thrive in the UK.

The Prime Minister also announced further deregulatory measures to simplify both non-financial and financial reporting for SMEs which is expected to save thousands of businesses across the UK around £150 million per year.

This includes increasing the number of companies which qualify as a smaller or medium sized business through a 50% uplift to the thresholds that determine a company’s size. This is expected to benefit up to 132,000 businesses who will be spared from burdensome form-filling and non-financial reporting requirements.

The existing onerous and outdated thresholds were previously set by the EU, but our Brexit freedoms mean we can now raise the thresholds to ensure they’re more proportionate and better reflect the needs of British businesses. This has also allowed us to go further than the EU, who recently raised its thresholds by 25%.
Speaking directly to businesses and delegates at the event, the Prime Minister underlined the government’s plan to create the economic conditions to encourage entrepreneurship and drive growth. As part of this, the Prime Minister announced a new industry led Invest in Women Taskforce to unlock private investment in female business leaders and make the UK the best place in the world to be a female founder.

For too long, innovative, women-led start-ups have been held back due to a lack of finance and the proportion of equity capital investment going to all-female founder teams has been stuck at around 2% in the UK for the past decade.

The core aim of the Taskforce is to raise a bespoke funding pot for female-founded businesses through private capital and address the wider challenges that female entrepreneurs specifically face to help unlock their potential to establish and grow their enterprises.

The new taskforce will be industry led and co-chaired by entrepreneur Debbie Wosskow and Barclay’s Hannah Bernard, with Small Business Minister, Kevin Hollinrake, representing the government. The membership of the taskforce will be set out in due course.

Hannah Bernard OBE, Co-Chair of the Invest in Women taskforce and Head of Business Banking, Barclays UK said:

"This is an area I am incredibly passionate about, so it is a privilege to be offered this position.

"I believe that the key to the UK’s growth will be enabling every single entrepreneur in this country to thrive; female entrepreneurs face significantly higher barriers to get their businesses the support and investment they need, from seed funding for start-ups, through to the challenges of gaining scale-up investment.

"I’m really excited to be working with Debbie who is an ideal partner given her entrepreneurial credentials and I believe together, we can make a real difference."

Debbie Wosskow OBE, Co-Chair of the Invest in Women taskforce and multi exit entrepreneur said:

"Women leading businesses shouldn’t have to face funding challenges to build and grow their business, because of their gender.

"As an experienced entrepreneur, who founded her first business 25 years ago, I know first-hand the importance of breaking down barriers and making meaningful change for female led businesses. "

Last month, the Department for Business and Trade held the first meeting of the newly established Small Business Council which acts as a powerful voice for small businesses within Government and has been tasked with overseeing three key areas for small firms – access to finance, skills and support as well as removing barriers.

The Help to Grow campaign website has also been relaunched and refreshed, as a one-stop shop for SMEs to find the information they need to grow and scale up. This includes helping small firms to clearly identify what funding they can access, helpful webinars as well as the basics of how to set up a business for the first time.