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BLOG: Behind the headlines - What the 2021 budget could mean for you

On 3 March the Chancellor delivered the annual budget statement, dominated of course by measures aimed at addressing the economic impact of the Covid-19 pandemic. While early education and childcare was not mentioned directly, there were a number of announcements that could help you and your childcare business grow.

In England there are a number of incentives for you to consider employing one or more apprentices.

These financial incentives build upon those first introduced by Rishi Sunak in August 2020. From April 2021 (until 30 September 2021) a £3,000 payment per apprentice hire will be available, with no restrictions on the apprentice’s age.

This is on top of the £1,000 payment provided for new apprentices aged 16 to 18 and those under 25 with an Education, Health and Care Plan, meaning that some employers could receive £4,000 in total.

The Chancellor also launched a new ‘flexi-job’ apprenticeship. Under this scheme, apprentices will be linked to an agency, instead of a single employer. So, they can take on different jobs across multiple early years settings to expand their learning. From July 2021, employers will be able to bid for money from a £7 million fund to create new agencies. The first ‘flexi-job’ apprenticeships are expected to start in January 2022.

Here you can read Kim’s experience of recruiting an apprentice during the pandemic. Pam, a childminder of over 14 years, also shares her experience of employing an apprentice.

To support you with recruiting apprentices in England, PACEY works with The Childcare Company who can offer PACEY members a free recruitment service.

For more information about employing an apprentice for your childcare business in Wales, please email or call 0845 8801299.

The Chancellor also announced substantial investment in traineeships

The government has committed an additional £126 million in England for high-quality work placements and training for 16 to 24 years olds in the 2021/22 academic year. This is hoped to attract a further 40,000 traineeships. Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee. There will be continued flexibility that will enable you to deliver tailored trainee programmes, for example longer programmes up to 12 months.

More information will follow soon.

There will also be a Help to grow scheme

The Chancellor confirmed that £520m will go towards a new Help to Grow scheme, aimed at supporting small businesses to boost their productivity. You must be registered with companies’ house to apply for this scheme.

There will be two versions, Help to Grow: Digital and Help to Grow: Management.

The digital version will provide small businesses with free online technology advice, and 50 per cent discounts on approved software which can boost productivity. The management version will provide leaders of small and medium-sized businesses with subsidised management training, which will cover areas like marketing and financial management. Charities are not eligible.

It is not for everyone as you need to employ at least 5 people and no more than 249. You can apply for a voucher covering the costs of an approved software package up to a maximum cost of £5,000. Businesses can use this voucher on software that can:

  • Build customer relationships and increase sales
  • Make the most of selling online; or  
  • Manage their accounts and finances digitally

You can register your interest here. PACEY is seeking information on what software will be approved.

See PACEY’s business smart guidance for more inspiration and ideas for growing your business.

Other measures

Recovery Loan Scheme

From April until December 2021 the UK wide Recovery Loan Scheme will give businesses of any size access to loans and other kinds of finance up to £10 million per business once the existing Covid-19 loan schemes closes. Full details will be available in due course, but it is likely that these loans will only be available for registered companies, so nurseries and larger childminder settings, and not, for example, sole traders.

We do know that:

  • Term loans and overdrafts will be available between £25,001 and £10 million per business.
  • Finance terms are up to six years for loans. For overdrafts and invoice finance facilities, terms will be up to three years.

You will be able to apply for a loan if your business is trading in the UK, has been impacted by the coronavirus pandemic but is viable, or would be viable were it not for the pandemic. Businesses that have received support under the existing Covid-19 guaranteed loan schemes will still be eligible to access finance under this scheme, if they meet all other eligibility criteria.

The Job Retention Scheme

As expected, the Chancellor extended the furlough scheme (in England and Wales) until September 2021. For employees there will be no change and they will continue to receive 80 per cent of their salary for hours not worked. Employers, however, will be asked to contribute 10 per cent towards wages from July 2021, rising to 20 per cent in August and September 2021.

The Self-Employment Income Support Scheme

This will continue for the self-employed in England and Wales until September 2021 with fourth and fifth grants. The Chancellor announced that those people that became self-employed in 2019-20 may now apply for grants under the scheme - as long as their tax return for 2019-20 was filed by midnight 2 March 2021.

For the fifth grant claims can be made from July 2021. Self-employed people whose turnover has fallen by more than 30% will continue to qualify for the 80% grant. Those with decreases in turnover of less than 30% will be restricted to a 30% claim.

However, the announcement again ignores the over a million people who have been excluded from self-employed grants because either they have a parallel source of income or they pay themselves in dividends.

Recognising the shortcomings of the SEISS for many in the early years sector, not least childminders, PACEY joined forces with the campaign group ExcludedUK prior to the budget and signed an open letter to the Chancellor.

Taxation and business rate relief

Business rates relief has been extended, so nurseries in England will qualify for 100 per cent business rates relief from 1 April 2021 to 30 June 2021.

This will be followed by 66 per cent business rates relief from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Note that local authority-run nurseries are not eligible.

The pending rise in corporation tax from 2023 has received much coverage. However, any small businesses in England and Wales with profits of less than £50,000 will be exempt.

Universal Credit

The £20 uplift to Universal Credit will be extended until September (England and Wales).

PACEY’s website will continue to provide information on all the sources of help that are available.

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