Major package of reforms to support small businesses in PM's first economic speech since the Spring Budget [Monday 18th March].
- Major package of reforms to support small businesses in PM's first economic speech since the Spring Budget
- £60 million new investment to enable up to 20,000 more apprenticeships, including for young people and small businesses
- Unnecessary regulatory burdens to be slashed through Brexit freedoms saving around £150 million per year for thousands of small businesses
- New taskforce to be established to boost private investment in women-led businesses and make the UK the best place in the world to be a female founder
In his first economic speech since the Spring Budget, the Prime Minister is expected to set out a major package of reforms to support businesses to deliver more apprenticeship places, cut red tape for SMEs and leverage more private investment in female founders at the Business Connect conference in Warwickshire today [Monday 18th March].
The Government will fully fund apprenticeships in small businesses from 1st April by paying the full cost of training for anyone up to the age of 21 - reducing costs and burdens for businesses and delivering more opportunities for young people to kick start their careers.
This will remove the need for small employers to meet some of the cost of training and saves time and costs for providers like further education colleges who currently need to source funding separately from the government and businesses.
The move is underpinned by an additional £60 million of new government funding for next year, guaranteeing that where there is demand for apprenticeships from businesses, the government will ensure there is enough funding to deliver them.
From the start of April, the government will also increase the amount of funding that employers who are paying the apprenticeship levy can pass onto other businesses. Apprenticeships can currently be funded by a levy paying employer transferring up to 25% of their unused levy to a different employer.
Under the new measures, large employers who pay the apprenticeship levy will be able to transfer up to 50% of their funds to support other businesses, including smaller firms, to take on apprentices. This will help SMEs hire more apprentices by reducing costs and enabling more employers to get the skilled workers they need while unlocking more opportunities for young people in a huge range of sectors, industries, and professions.
Hundreds of large levy-paying employers have already taken advantage of the opportunity to transfer their unused levy funds to other businesses. As of [December 2023], 530 employers including ASDA, HomeServe and BT Group have pledged to transfer over £35.39 million to support apprenticeships in businesses of all sizes since September 2021.
Taken together, these measures are expected to enable up to 20,000 more apprenticeships, primarily for young people, and is part of our plan to build a stronger economy and deliver a brighter future where hard work is rewarded and young people get the skills they need to succeed in life.
This also builds on our record of transforming apprenticeships over the last decade. Since 2010, we've helped 5.7 million people start an apprenticeship, working with employers to develop almost 700 new high-quality standards and increasing the funding for apprenticeships to over £2.7 billion from next year.
Prime Minister Rishi Sunak said:
Growing up in my mum's pharmacy, I know first-hand how important small businesses are. Not just for the economy, but as a driver for innovation and aspiration, and as the key to building a society where hard work is always recognised and rewarded.
Whether it's breaking down barriers and red tape for small businesses, helping businesses hire more young people into apprenticeships and skilled jobs or empowering women to start up their own businesses - this government is sticking to the plan and leaving no stone unturned to make the UK the best place to do business.
Taken together, these measures will unlock a tidal wave of opportunity and make a real difference to businesses and entrepreneurs across the country.
Education Secretary, Gillian Keegan said:
This Government has built a world-leading apprenticeship system from the ground-up - with apprenticeships now available in around 70 per cent of all occupations.
Apprenticeships are a fantastic way for businesses to develop the skills they need, and these new measures will help more businesses and young people benefit from them.
Our plan to deliver a high-growth, high-skilled economy is working, with more opportunities available to young people than ever before.
This is the third Business Connect conference to take place since it was launched by the Prime Minister last year and is expected to convene over 150 SMEs, as well as government ministers to discuss how we can further support businesses to grow and thrive in the UK.
The Prime Minister is also expected to announce further deregulatory measures to simplify both non-financial and financial reporting for SMEs which is expected to save thousands of businesses across the UK around £150 million per year.
This includes increasing the number of companies which qualify as a smaller or medium sized business through a 50% uplift to the thresholds that determine a company's size. This is expected to benefit up to 132,000 businesses who will be spared from burdensome form-filling and non-financial reporting requirements.
The existing onerous and outdated thresholds were previously set by the EU, but our Brexit freedoms mean we can now raise the thresholds to ensure they're more proportionate and better reflect the needs of British businesses. This has also allowed us to go further than the EU, who recently raised its thresholds by 25%.
We are also removing several duplicative and bureaucratic EU reporting requirements, including for what companies must set out in their annual reports, whilst also making it easier for companies to share digitalised annual reports rather than paper copies - ensuring businesses practices are fit for the modern age.
Taken together, these changes are expected to deliver around £150 million of savings for SMEs per year and save small businesses at least 1 million hours per year in total.
The Government will also consult on further changes later this year including exempting medium-sized companies from producing strategic reports, which could save them a further £148 million a year and raising the employee size threshold from 250 to 500 employees, which will mean around 1,000 more large companies could become SMEs.
Secretary of State for Business and Trade Kemi Badenoch said:
Almost every job in the UK is owed to what is, or what previously was, an SME. They are the engines of economic growth for this country.
Whether it's through cutting red tape, unlocking investment or lowering business costs, today's announcements show that this government is committed to doing all it can to turbo-charge SMEs so that they can go further and faster than ever before.
Speaking directly to businesses and delegates at the event, the Prime Minister will underline the government's plan to create the economic conditions to encourage entrepreneurship and drive growth. As part of this, the Prime Minister is expected to announce a new industry led Invest in Women Taskforce to unlock private investment in female business leaders and make the UK the best place in the world to be a female founder.
For too long, innovative, women-led start-ups have been held back due to a lack of finance and the proportion of equity capital investment going to all-female founder teams has been stuck at around 2% in the UK for the past decade.
The core aim of the Taskforce is to raise a bespoke funding pot for female-founded businesses through private capital and address the wider challenges that female entrepreneurs specifically face to help unlock their potential to establish and grow their enterprises.
The new taskforce will be industry led and co-chaired by entrepreneur Debbie Wosskow and Barclay's Hannah Bernard, with Small Business Minister, Kevin Hollinrake, representing the government. The membership of the taskforce will be set out in due course.
Hannah Bernard OBE, Co-Chair of the Invest in Women taskforce and Head of Business Banking, Barclays UK said:
This is an area I am incredibly passionate about, so it is a privilege to be offered this position.
I believe that the key to the UK's growth will be enabling every single entrepreneur in this country to thrive; female entrepreneurs face significantly higher barriers to get their businesses the support and investment they need, from seed funding for start-ups, through to the challenges of gaining scale-up investment.
I'm really excited to be working with Debbie who is an ideal partner given her entrepreneurial credentials and I believe together, we can make a real difference.
Debbie Wosskow OBE, Co-Chair of the Invest in Women taskforce and multi exit entrepreneur said:
Women leading businesses shouldn't have to face funding challenges to build and grow their business, because of their gender.
As an experienced entrepreneur, who founded her first business 25 years ago, I know first-hand the importance of breaking down barriers and making meaningful change for female led businesses.
By putting funding front and centre of this Taskforce, we aim to make the UK the best place in the world to be a female founder.
In 2024, the year of the SME, the government continues to back small businesses as the lifeblood of the economy. The single biggest way we are backing businesses is by the economic conditions for them to thrive, which is why the government has worked hard to deliver on our priorities to halve inflation, grow the economy and cut debt.
We have made good progress on our plan. Inflation has fallen from 11.1% to 4.0%, the economy has performed better than forecast, wages are rising, mortgage rates are starting to come down, the economy has outperformed European neighbours and debt is on track to fall as a share of the economy.
Because of the progress we have made, the economy is turning a corner and we have been able to afford tax cuts as part of our plan to reward work and grow the economy. But we know there is more to do which is why we're sticking to the plan to keep building an even stronger economy to support businesses to establish and grow their roots in the UK.
Martin McTague, National Chair at the Federation of Small Businesses, said:
We welcome these very important announcements on apprenticeships, as well as other action including helping more women start up in business. The Prime Minister is right to take decisive steps to support small employers do what they do best, providing jobs and opportunities in their local communities.
We have campaigned for more levy-paying businesses to be able to transfer their funds to small businesses in their supply chain, and for crucial support on costs, so we're pleased to see the Prime Minister make this intervention today.
Time and resources are in short supply for small businesses and so increasing the amount of funding for training costs will help to improve the number of small firms entering the apprenticeship system.
Apprenticeships are an effective way of allowing small firms to recruit and up-skill talented people and these measures are a positive way to bolster the number of businesses taking on apprentices.
Anthony Impey, Chief Executive of Be The Business and Chair of Apprenticeship Ambassador Network, said:
Small businesses are run by some of the country's most impressive and resilient people, but they are time poor and need a simple, straight-forward skills offer to access the talent they need to grow their businesses.
These changes will make a real difference in opening up apprenticeships for young people to kick start their careers at a time when small businesses are pushing forward to boost their productivity.
The government has a strong record on backing businesses and driving entrepreneurship - including by cutting taxes to ensure our business rates remain internationally competitive. As announced in the Spring Budget, the government will increase the VAT registration threshold to £90,000 from 1 April 2024 which will take around 28,000 small businesses out of paying VAT altogether.
We are also cutting tax for two million of the self-employed who make up the vast majority of small businesses owners and leaders, by cutting the main rate of Class 4 NICs from nine to six per cent in April. Taken together with the cut to self-employed National Insurance announced at the Autumn Statement, this is a tax cut of £650 for an average self-employed person on £28,000. We've also increased the Employment Allowance for National Insurance Contributions, taking 40% of businesses out of paying NICs altogether.
On top of this, SMEs will be supported to invest and grow through a £200 million extension of the Growth Guarantee Fund, helping 11,000 small businesses to access the finance they need.
At the Autumn Statement we protected over one million small businesses from a business rates increase for the fourth consecutive year. We are now supporting small businesses for the next five years with the cost of their business rates through a £4.3 billion package. This includes freezing the small business multiplier at 49.9p for a fourth consecutive year, saving an average shop £1,650, and protecting over a million rate payers from a 6.6% increase on their bills.
We have extended the Retail, Hospitality and Leisure business rates relief for a fifth year, meaning 230,000 properties will receive a 75% relief, up to a cap of £110,000 per business. This support is worth £2.4 billion and will protect small businesses including cafes and high street shops, and meaning the average independent pub saves over £13,000. The Small Business Rates relief has also taken over 700,000 businesses out of paying business rates completely.
Last month, the Department for Business and Trade held the first meeting of the newly established Small Business Council which acts as a powerful voice for small businesses within Government and has been tasked with overseeing three key areas for small firms - access to finance, skills and support as well as removing barriers.
The Help to Grow campaign website has also been relaunched and refreshed, as a one-stop shop for SMEs to find the information they need to grow and scale up. This includes helping small firms to clearly identify what funding they can access, helpful webinars as well as the basics of how to set up a business for the first time.