This is designed to reduce costs and burdens for businesses and deliver more opportunities for young people to kick start their careers with a target of 20,000 new apprentices. .

The announcement also included changes to the apprenticeship levy, effective from April.

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. 

Speaking at the third Business Connect conference, Prime Minister Rishi Sunak said: ‘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.

‘These measures will unlock a tidal wave of opportunity and make a real difference to businesses and entrepreneurs across the country.’

In addition, from 1 April, there will be an increase in 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; this transfer limit will go up to 50% of funds to support other businesses, including smaller companies, to take on apprentices.

Currently the government spends £2.7bn a year funding apprenticeships ‘with apprenticeships now available in around 70% of all occupations’, said education secretary Gillian Keegan.

On the small business funding, there are calls for the funding to be made available quickly so that  businesses do not have to eat into cashflow to pay for training.

Michelle Mullen, vice president - international advocacy at AICPA & CIMA, said: ‘We hope the funding will be made available up front, so that small businesses will be able to take advantage of it without experiencing a negative impact on their already stressed cash flows.

‘In time we hope to see support for apprentices of all ages, because upskilling our workforce is critical to generate the productivity gains we need to see in the economy.’

The reforms are too limited for the Recruitment and Employment Confederation, who would like to see more efforts to stop companies from putting the lion’s share of their budget into training older apprentices.

REC deputy chief executive Kate Shoesmith said: ‘Cutting the cost of apprenticeships is useful to SMEs in a slow economy and when the volume of young people aged under 24 years old starting an apprenticeship has hardly increased for 20 years.

‘But the announcements are not the concerted reform of apprenticeships required to better contribute to overcoming labour shortages, shortages which risk costing the economy up to £39bn every year – just short of two entire Elizabeth Lines.

‘The lack of bolder reform means the lack of flexibility to the apprenticeship levy remains a massive contributor to the skills system not working.

‘This is because the funds are only available to those who have the same employer for at least one year – which is the time it takes to complete an apprenticeship.

‘Out of the one million temporary workers on assignment in the UK every day, we believe around 960,000 are ineligible for levy funding. This underlines the need for the levy money to pay for modular and shorter courses.’

Think tank EDSK and REC are also calling for a review to prevent employers from accessing further levy funding for apprenticeships if they have trained more apprentices aged 25+ than those aged 16-24.

The small business move is backed by an additional £60m of new government funding for next year. Since 2010, 5.7 million people have started an apprenticeship.