British businesses are hiring 25 per cent more apprentices as firms record a slowdown in graduate recruitment

 
Lauren Fedor
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Prime Minister David Cameron meeting apprentices at BMW (Source: Getty)

British businesses are offering 25 per cent more apprenticeships this year compared to last year, but graduate vacancies are up by just two per cent over the same period, according to a new report out today from the Association of Graduate Recruiters (AGR).

According to AGR, the figures mark a significant slowdown for graduate programmes compared to last year, when employers increased their graduate intake by 13 per cent.

"Apprentice policy is driving many employers to ramp-up their apprenticeships on a much larger scale than we’d anticipated," said AGR chief executive Stephen Isherwood.

"We don’t know what the long-term effects will be, but this isn’t a case of employers cannibalising their graduate schemes," Isherwood added. "We’re hearing that businesses view the two groups very separately and that they are complementary. Employers are engaging earlier and opening their doors to a wider group of people by presenting alternative options."

The government has pledged to support 3m apprenticeships by 2020.

Meanwhile, the Chartered Institute of Taxation (CIOT) pressed the government to rethink plans for a so-called apprenticeship levy, arguing that smaller businesses may lose out.

Chancellor George Osborne first announced the apprenticeship levy in July’s summer budget, and revealed in November's Autumn Statement that the levy would be a 0.5 per cent payroll tax for companies whose wage bills exceed £3m. Revenues from the levy are expected to be reallocated in the form of funding for businesses to hire apprentices.

According to CIOT, the proposed levy – set to go into effect next year – will hurt smaller businesses whose aggregate pay bill is bigger than £3m, even if the pay bill of any one employer falls below that figure.

"We believe that this situation is unfair and that the levy allowance should be available for offset against the combined pay bills of all employers where aggregation applies," said Colin Ben-Nathan, chair of the CIOT employment taxes subcommittee. "We would therefore urge the Government to reconsider the approach on this point."

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