Small and medium-sized businesses across England will receive a £2,000 payment for each eligible young apprentice they recruit under a new government scheme designed to expand
access to skilled employment.
The initiative, announced by the Department for Work and Pensions on 1 October, is intended to encourage smaller employers to bring more young people into the workforce while helping businesses meet the costs associated with recruiting and training new staff.
The scheme is aimed at employers that do not pay the apprenticeship levy, which largely covers small and medium-sized businesses. Eligible firms will not have to submit a separate application for the payment. Instead, apprenticeship training providers will identify qualifying hires and transfer the funding directly to employers.
The government says the measure forms part of a broader programme to create 50,000 additional apprenticeships for young people and tackle rising levels of youth unemployment and economic inactivity.
The £2,000 payment will be divided into two instalments. Employers will receive £1,000 once an apprentice has completed their first 90 days and a further £1,000 after one year. For foundation apprenticeships and certain shorter programmes, the second payment will be made after 242 days.
Businesses will be able to use the money for costs associated with employing an apprentice, including equipment, travel and work clothing.
Work and Pensions Secretary Pat McFadden said the government wanted to make it easier for young people to combine employment with training while ensuring smaller companies had the support needed to recruit them.
“To ensure every young person has the chance to earn and learn, we must support small- and medium-sized businesses to take on young people.”
McFadden said the new incentive would help deliver the government's commitment to creating 50,000 additional youth apprenticeships.
Business Secretary Jonathan Reynolds said apprenticeships could give smaller companies access to new talent while allowing employers to invest in the future skills of their workforce.
“This apprenticeship support is a fantastic opportunity for small businesses to get access to exceptional talent,” Reynolds said, adding that the government was working to make information about available support easier for businesses to access.
The Federation of Small Businesses welcomed the introduction of the payment. Its Executive Director, Craig Beaumont, said the organisation had campaigned for the return of a significant financial incentive for employers taking on apprentices.
According to the FSB, the additional funding could help small companies absorb the extra costs associated with recruiting and training apprentices and encourage more employers to invest in young workers.
The organisation also pointed to the possibility of combining the £2,000 hiring payment with other forms of assistance worth up to £6,000, potentially creating a support package of as much as £8,000 per apprentice for eligible businesses.
New online apprenticeship service
Alongside the financial incentive, the government has launched an updated version of apprenticeships.gov.uk, designed to provide employers and prospective apprentices with a single source of information.
Businesses will be able to check their eligibility, estimate the financial support available to them and access practical guidance on recruiting apprentices. The website will also feature examples from businesses that have already employed apprentices.
Young people will be able to search apprenticeship opportunities according to their interests and follow guidance explaining how to apply.
The government says the changes are intended to reduce the administrative barriers that can discourage smaller companies from hiring apprentices.
Who can receive the £2,000 payment?
The hiring incentive is available to non-levy-paying employers when an eligible apprentice begins their training.
The apprentice must generally be:
- aged 16 to 24 when their apprenticeship training begins;
- aged 15 where their 16th birthday falls between the final Friday in June and 31 August; and
- employed by the business for no more than 90 days before starting their apprenticeship training.
The employer must still employ the apprentice when each payment becomes due.
No separate application is required. The apprenticeship training provider will arrange the payments, with employers receiving the money within 30 working days after the provider receives the relevant government funding.
Wider investment in youth employment
The new incentive is part of a wider government programme backed by an additional £2.5 billion investment in the Youth Guarantee and Growth and Skills Levy.
The government says the wider programme will create almost one million opportunities, including the additional 50,000 youth apprenticeships.
The government is also expanding its Apprenticeship Brokerage pilot to all existing Mayors within Strategic Authorities across England.
The expansion is supported by £100 million in additional funding over two years. Ministers say the programme will allow local leaders to work more closely with employers and identify skills gaps in their communities, with the aim of creating apprenticeship opportunities that reflect local labour-market needs.
The measures are intended to increase the number of young people entering skilled careers while giving smaller employers additional financial support to recruit and develop their future workforce.
