Chancellor’s Support for Apprentices

What should we make of the Chancellor’s support for apprentices and young workers? An article written by Damar Training's MD and Co-Owner, Jonathan Bourne.

After much speculation, we now know what the Chancellor plans to do to support the labour market. Would we get a cut in stamp duty? Reduced VAT? A job creation scheme? More for apprenticeships? Money for retaining furloughed staff? Traineeships? Yes to all these and a host of other measures too such as building and repair schemes and projects to decarbonise the economy. Oh, and don’t forget the free meals for all in August (well, cut price, Mondays to Wednesdays only). If you want to read it all, from apprenticeships to support for zoos and aquariums, it’s here: A Plan for Jobs 2020.

Before we hang out the bunting and celebrate all this apparent generosity remember one thing. There’s no such thing as a free lunch. The scale of the measures announced is more than matched by the scale of the problems we face. I walked through London on Wednesday afternoon – a long delayed but now legal visit to my parents – having travelled on a near empty train from Manchester. The quiet streets were flanked by deserted offices and sparsely populated pubs and restaurants. A few brave souls, most in facemasks, were out, but 10% of what you’d expect at most.

The kitchen sink has been thrown at the most immediate problem, which is 11.7m people coming to the end of the furlough or self-employed income support schemes. Some (we don’t know how many) are, sadly, in “zombie” jobs that are kept alive by the schemes for now, but not for long. They are about to be joined by the 2020 school, college and university leavers, many of whom want a job or an apprenticeship.

In both the public and the private sectors, a few employers are starting to raise their heads above the parapet and are considering the longer term. For the brave and for those confident that their businesses will weather the storm, Rishi’s box of goodies has some treats. Which of them is right for you will depend on your business of course, but for those engaged in apprenticeships and early careers, here are some of the features of the programmes targeted at you:

  • The Kickstart Scheme is generous but there are catches. Six months of wage costs (national minimum wage) for 25 hours a week including employer’s NI and statutory pension contributions but only for recruits aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Not clear yet how “at risk of long-term unemployment” is defined. However, with no restrictions on prior qualifications, some graduates will be eligible, which will be useful for them.

Someone cannot be on the Kickstart Scheme and be an apprentice at the same time. That’s a shame. But, a promising “Kickstarter” could move on to an apprenticeship although presumably you’d lose the remaining wage subsidy if it’s in the first six months.

We’d be interested at Damar in talking to any employer not ready to take on an apprentice right now but who is interested in using “Kickstart” as a low risk stepping stone for progression to an apprenticeship and a longer term role. We have always been big advocates of progression “ladders” and the Kickstart scheme, will be a good bottom rung for some.

  • For a newly recruited apprentice, the increased grants are useful. £3,000 for employers taking on 16 to 18 year olds (there was already a £1K grant); £2,000 for 19-24 year olds and £1,500 at 25+. The old 16-18 scheme was paid 50% in month 4 and 50% in month 13. We don’t know the payment frequency for the new scheme yet.

The incentive to recruit older apprentices is really good news. Older candidates have long been disadvantaged in apprenticeships but they can be a great tool for re-skilling career changers, particularly in areas such as accountancy, management or law.

Beware though, these additional incentives are short-term – until 31st January 2021. So, if you are hoping to use them, most organisations will need to make decisions well before Christmas. Our recruitment team at Damar has been helping to place apprentices right through the pandemic, so do get in touch if you would like help with sourcing candidates and running a remote, Covid-compliant recruitment process.

The 31st January end-date means of course that Kickstarters who progress to apprenticeships generally won’t trigger an incentive payment (apart from the £1,000 for 16-18 year olds).

  • Traineeships. £1,000 per placement for employers who offer work experience. Work experience has always been a part of traineeships but there’s been little incentive historically for employers. This will make them more attractive particularly where the employer can use traineeships to “feed” their apprenticeship programme.

Although we don’t deliver traineeships at Damar, we’d love to speak to employers wanting to use trainees and work experience as a stepping stone to longer-term skills development and apprenticeships.

These are the biggest changes – there’s more detail in the Plan for Jobs.

This year, the total government borrowing is likely to be over £300 billion. In the main that huge debt burden will be borne, not by 52 year-olds like me (we’ll be long gone before it’s repaid), but by those who are about to join the labour market or are in the first few years of their careers. The decision to hire an apprentice is, rightly, a business decision first. However, for those businesses that can afford to recruit an apprentice, a trainee or a young person on the kickstart scheme and has work for them to do, is there not also a duty to do so? Particularly for businesses that have also benefited from the furlough scheme or one of the other programmes.

I had a call this week from one of our partner-employers about an apprentice based close to them who had recently been made redundant. Our employer was trying to find a new home in their business for the apprentice and wanted to know if Damar could help with the training (we can). I know the employer concerned has been impacted by the pandemic. Their instinctive response – to see how they could support a young person from their community – struck me as exactly what we need right now. If that approach can be replicated wherever possible across the economy, the class of 2020 won’t suffer the long-term “scarring” to their careers and their lives that might otherwise be the case.

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