Why Apprenticeships Are A Great Business Investment?
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Why Apprenticeships Are A Great Business Investment?

Each year the UK celebrates National Apprenticeship Week – an annual event to shine a light on apprenticeships, showcase the fantastic benefits they offer, and highlight their importance to the UK economy.

Apprenticeship schemes have a deep-rooted history in the UK. The first national apprenticeship scheme dates back to the 1500s, and since then they have evolved to become a key route to employment in over 170 different industries.

The experience that people can gain through the on-the-job learning that comes with apprenticeships while also earning a wage means they have become a popular option for school leavers and even those looking for a career change.

However, the benefits of apprenticeships go beyond just skills, with some other huge benefits on offer for businesses.

Taking on an apprentice is a fantastic way to expand your workforce and kickstart your growth plans, but hiring staff is an investment and a big decision for any business owner to make. Our business loan is a great way to boost working capital and many small businesses have used our loan to grow their workforce.

With new incentives and increased government funding for employers taking on apprentices, there has never been a better time to think about investing in apprenticeships.

How an apprenticeship works

Apprenticeships combine a job with structured training, meaning that apprentices earn a wage whilst becoming qualified in their chosen career.

An apprentice can be anyone aged 16 or over (who isn’t enrolled in full time education) and can be a new or current employee to your business. In recent years, there has been an increase in the number of adult learners doing apprenticeships to retrain in a new skill. According to a study by Aviva, more than half of UK workers plan to make changes to their career in the next 12 months as a direct impact of the coronavirus pandemic, with the majority of them opting to retrain.

As an employer, you’ll need to be able to provide at least 30 hours of work a week and must pay your apprentice at least the minimum wage. For apprentices aged under 19, or in the first year of their apprenticeship, the current minimum hourly rate is £4.15. For apprentices who are over 19 who have completed the first year of their apprenticeship, they are entitled to the minimum wage for their age.

There are apprenticeships available in more than 170 different industries, and the government has tools available to help you find the right course to suit your business. The qualifications apprentices can gain through training can range from the equivalent of GCSE or A-levels right up to a post-graduate degree.

Whilst an apprentice should be treated as a normal employee, unlike other workers they will also have to follow a structured training programme. This means that 20% of an apprentice’s paid working time must be spent on their studies.

The funding available for employers

The government provides support to employers who take on an apprentice, including a financial incentive of £1,000.

Then in August last year, as a result of the coronavirus pandemic, the government announced it would be extending these incentives. From August 2020 until March 2021 employers will receive an additional £2,000 for apprentices aged 16 to 24 and for 25 and over, they will receive £1,500. This is on top of the £1,000 that they already receive for hiring an apprentice.

If you’re a small-medium sized business that has pay bills under £3million (so aren’t eligible to pay the Apprenticeship Levy) then 95 per cent of the training costs are covered by the government, with the remaining five per cent paid by the employer. Different training courses will vary in cost, so you’ll need to research this.

As mentioned earlier, as an employer you are responsible for paying the apprentice’s salary but for most apprentices, the minimum wage is less than it would be for other employees.

The business benefits

Hiring an apprentice is a fantastic way to grow your business, develop talent and build a highly qualified workforce. Some of the key business benefits include…

  1. Increased productivity

Taking on an apprentice is a cost-effective way to create a motivated and highly skilled workforce and create a more productive environment. A study by gov.uk reported that  78 per cent of employers said that apprenticeships helped them improve productivity.

  1. Develop your team

Employees are the most important asset within any business and will have a direct impact on your businesses’ success. Through the apprenticeship scheme, you’re able to train highly skilled and qualified staff, whilst also making sure they align with your businesses’ values and gain skills tailored to your specific job roles.

  1. Retain loyal staff

As well as helping you to gain the skills you need for your business, taking on an apprentice can also aid staff retention, helping to future-proof your business. According to the Skills Funding Agency, 80 per cent of companies who invest in an apprentice, report an increase in overall employee retention.

  1. Tackle a skills shortage

Often businesses will be faced with a need for a specific skill or job role that they may find hard to fill through traditional recruitment methods. When taking on an apprentice, you have the ability to adapt their training according to the needs of your business whilst also developing a highly qualified and engaged workforce.

  1. Increase your bottom line

Data released by the National Apprenticeship Service has shown that 74% said apprenticeships helped them improve the quality of their product or service. This combined with the recruitment and salaries for apprentices being lower means that investing in staff trained through apprenticeships will likely have a positive effect on a company’s finances.

How a business loan could help you invest

With increased incentives and a potential post-covid skills shortage, there may never be a better time to take on an apprentice. Investing in your business now could help you to achieve your future business goals.

A Capify small business loan could give you the much-needed working capital to carry out your business plans. Unlike a traditional loan, you pay a Capify loan back in small, regular repayments, without needing to save for large lump sum payments.