Dismay as apprenticeship funding plan confirms 10% contribution from even the smallest employers, says NHBF

This week’s update by the Department for Education on its new funding model for apprenticeships in England has been greeted with disappointment by the NHBF, as it has confirmed that even the smallest hair salons, barber shops and beauty salons will be forced to contribute 10% towards the cost of training, unless they are taking on apprentices aged 16 to 18. 

The Department for Education has confirmed that 100% of the costs of training will be paid by government for employers with fewer than 50 employees taking on apprentices aged 16-18. This will also be the case when the employer is taking on an older apprentice (aged 19-24) who has been in care or who has an education or healthcare plan. As a further incentive, employers will receive a grant of £1,000 to take on both these types of apprentice.

The government has also confirmed the apprentice “levy” being introduced from next April will only be paid by employers with a pay bill of more than £3m, and will be set at 0.5% of the employer’s annual pay bill. It will apply to the whole of the UK, but devolved nations will be responsible for deciding how the funds can be used.  Scotland has already run a consultation on this, to which the NHBF has responded, but as yet the plans for Wales and Northern Ireland remain less clear.

Although employers that are too small to pay the levy will see 90% of their training costs being subsidised by the government, that still means employers will have to contribute 10%.  The NHBF successfully campaigned against earlier government proposals to force small employers to pay an eye-watering one third of the costs of apprenticeships. 

NHBF chief executive Hilary Hall said: “We are disappointed that unless they are taking on 16-18 year olds, even the smallest employers will have to contribute 10% towards the cost of training, especially as employers constantly tell us that they struggle to recruit 16 year old school-leavers on to apprenticeships. It makes taking on 19-24 year apprentices more expensive, because as well as paying them at higher minimum wage rates employers will also be paying these new additional costs for their apprenticeship training.

“We want to see schools and colleges working more closely with parents and school-leavers to highlight the value of apprenticeships as an alternative career route, especially at age 16. As an industry, salons also need to recognise they will have an important role to play in terms of engaging with schools and colleges to get this message across,” Hilary added.