The UK’s largest business group is today (February 7) urging the UK Government to look again at its planned increase to National Insurance contributions (Nics).
Reversing the decision to raise Nics and going even further by removing all employer contributions for apprentices will result in more workplace opportunities for young people as part of levelling up efforts, the Federation of Small Businesses (FSB) says.
‘Levelling up’ training ambition
Last week, the government set out its aim of having “200,000 more people successfully completing high-quality skills training annually, driven by 80,000 more people completing courses in the lowest skilled areas,” as part of its Levelling Up white paper.
FSB’s latest Small Business Index shows the proportion of small firms citing lack of access to appropriately skilled staff as a barrier to growth has risen 10 percentage points to 33% over the past year.
Plunge in apprenticeships
Though exemptions do exist, FSB estimates employers are paying Nics for most apprentices throughout the UK.
Government figures show apprenticeship starts have dropped from just under 500,000 a year in 2016-17, before the introduction of the apprenticeship levy, to fewer than 325,000 in 2020-21.
To address these trends, FSB is urging policymakers to:
- Remove all employer Nics costs for apprentices to spur role creation.
- Cancel planned increases to Nics across the board and also dividend taxation to free up funds for recruitment and training among entrepreneurs.
- Reintroduce the £3,000 incentive to hire an apprentice that ran until January of this year, targeting the funding at small businesses.
FSB chairman Mike Cherry said: “Apprentices are our future business leaders and innovators, and that’s why we should be doing all we can to create more of them.
“By looking again at its approach to Nics, the government can make a real difference here – directly by bringing down the immediate costs of taking an apprentice on, and indirectly by freeing up more funds for recruitment and training at a moment when cash reserves are depleted.
“Small businesses disproportionately hire young people and those from disadvantaged groups when they create apprenticeships, so a targeted reintroduction of the hiring incentive that existed over lockdowns makes sense in the context of the levelling up agenda.”
