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Autumn Statement 2014: National Insurance relief for businesses taking apprentices under 25

4 min read

03 December 2014

Although there has been much talk about business rates and tax cuts, possibly one of the almost important announcements was that of a new apprenticeship system.

In his speech, George Osborne explained that the government has tried to deliver fairness to those who aspire to work, and that includes young people. The aim, of course, is to encourage more businesses to take on apprentices by providing a more efficient and beneficial system.

And although small businesses have been responsible for the majority of the jobs created in the last few years, many still struggle to find young people with the skills they need. 

“The number of young people on unemployment benefits has halved. Our goal is to abolish youth unemployment altogether,” he said. “To support businesses who take young people on we are already, from next April, abolishing national insurance contributions for employing anyone under the age of 21.”

This decision has been met with praise. Indeed, John Allan, FSB national chairman said: “The National Insurance relief for businesses taking on apprentices under the age of 25 will encourage businesses to take on even more young people and tackle the UK’s skills gap head on.

“However, this will need to be supported by a reformed apprenticeship framework and funding mechanism that does more to encourage small businesses to invest in developing their workforce through high quality apprenticeships.“

But that’s not all. “Today, I can go further,” Osborne exclaimed.

Since 2010, almost 2m people have taken up an apprenticeship. And now “the Prime Minister has set this country an ambition of 3m apprentices in the next Parliament,” said Osborne. “So we back the businesses who employ apprentices, especially young apprentices under the age of 25.

“When a business is giving a young person a chance in life we’re going to support them not tax them.”

The chancellor has also stated that an extra £40m will be provided to increase the number of people starting higher apprenticeships by 20,000.

According to the director of PwC’s Public Sector Research Centre, Nick C. Jones, “for the recovery to be lasting we need more good jobs; ones that are productive and rewarding in all senses. Therefore, today’s revelations are a step in the right direction. 

“We need good growth that delivers good jobs which pay enough to enable a decent standard of living and also a stream of tax revenue to help pay for our public services.”

However, Peter Burgess, managing director at Retail Human Resources, believes that in order to fund these measures, the government should have looked at further restrictions on benefits.

“This is the right time to make such a change,” he said. “The key desired outcome from the Autumn Statement is that the current economic confidence continues to be built upon so businesses can carry on building their workforce and investing in growth and this announcement is a step in the right direction. 

“We’ve heard from the chancellor about how SMEs are the lifeblood of the UK economy. By abolishing employer National Insurance contributions for apprentices aged under 25 on earnings up to the upper earnings limit this will help increase competitiveness and have a direct impact on job creation. In order to fund these measures, the government should have looked at further restrictions on benefits. 

“In particular, the triple lock on pension increases is completely unsustainable and should be curbed now before it becomes politically impossible to change.”