Immigration Skills Charge (ISC) offers wellspring for apprenticeships

Following the release of today’s figures indicating a 10 per cent decline in apprenticeship starts in March 2023 compared to March 2022, FSB Policy & Advocacy Chair Tina McKenzie, said:

“This downtrend in apprenticeship starts is a glaring signal that small businesses need to be prioritised in apprenticeship reform initiatives.

"The apprenticeship levy should serve as an accelerator for recruiting fresh minds and stimulating growth, and any reform should enhance its core purpose of increasing the number of apprentices.

“But currently, it unintentionally nudges larger firms to invest in upskilling those who already qualified, sometimes overshadowing eager newcomers in SMEs who are ready to learn.

"A clever pivot can address this. The Immigration Skills Charge (ISC) revenue, which jumped from £98.8million to £349million last year, offers a promising wellspring for apprenticeships. Redirecting a portion could supercharge incentives for employers. We propose transforming the £1,000 bonus for hiring under 19 apprentices to a £3,000 bonus for SMEs recruiting those under 25. Our research suggests this move could stimulate 21% of small business employers to onboard apprentices.

“It’s vital to ensure a reliable supply of apprenticeship funding to our thriving small business community. The Government must not burden SMEs with extra costs when hiring new apprentices.

“To avoid a bad situation getting worse, there needs to be a cast-iron guarantee to SMEs that the Government maintains a commitment to covering 95 per cent of apprenticeship training costs.

“Resources set aside for SMEs’ skills development must not be left to the whims of the remaining levy balance.

“Beyond apprenticeships, refining and making tax reliefs more transparent can ignite further training opportunities for SMEs and the self-employed. A brighter future is ahead with these changes.”