Small firms stand to gain a lot from taking on apprentices and creating an easier and more attractive route to employ them should be at the forefront of the Government skills agenda. As the Apprenticeships Work campaign highlights, apprenticeships are a great way to provide young people with the skills they need for a future career. And employers reap the benefits too, bringing in new talent to develop their business and fill skills gaps. But sadly, apprenticeships starts in small firms are falling and have been since the Apprenticeship Levy was introduced back in 2017. Not only are young people missing out on the valuable skills and knowledge they can gain from working at a smaller business, but the businesses are being deprived of a pool of talent.
So, what can be done about it? A good place to start is setting targets to increase the number of apprenticeship starts in small businesses, year on year, to create some accountability and measure the success of any policies that are brought in. Last year’s government change brought about a new ‘Growth and Skills Levy’, which presents an opportunity to increase the co-ordination within the skills system, making it better for small firms. Shortening the minimum length of an apprenticeship and the introduction of foundation apprenticeships in England has been a positive start- and we hope that the introduction of these new qualifications will go some way to help turn around the apprenticeship starts numbers amongst SMEs.
We’re also pleased to see the Government make the apprenticeship system more flexible to engage with, including the removal of requirements for apprentices over 18 to obtain a level 2 in English and maths. We’ve been calling for an uplift in the financial incentives given to small firms when they take on an apprentice, so the employer payment of up to £2,000 for foundation apprenticeships is a welcome move, but Government should go further and implement a £3,000 incentive for small employers hiring an apprentice under 25. Almost three quarters (73%) of small employers who currently employ an apprentice say they would take on more in the future, if the £3,000 incentive was reintroduced, according to our research.
Small employers need Government to maintain the co-investment levels (95%/100%) to apprenticeship training costs for non-levy paying businesses and the current levy paying threshold must remain at £3 million. In a practical sense, small firms say the system is confusing and fragmented, and involves a lot of admin. Most small firms don’t have their own HR team to deal with recruiting apprenticeships, which can be a strain when time and resources are in short supply. Our previous research found that a third of small business employers who currently have an apprentice on their books say reduced admin or paperwork would encourage them to take on more. This is where Edge Foundation’s new research ‘Agents of Change’ could really help to make the system more accessible for small firms and help to demystify the process of taking on an apprentice.
We’re proud to join Edge Foundation’s campaign to highlight the declining starts figures, and call attention to the huge potential of apprenticeships for young people, employers and the wider economy.
Written by
Tina McKenzie, Policy Chair, Federation of Small Businesses