The Federation of Small Business says smaller firms could deliver a million more apprenticeships if the Government can get the incentives and package of support right.
An FSB report says that apprenticeship reform is at a make-or-break moment, with small firms critical to achieving the Government’s target of reaching three million new apprentices by 2020. The report clearly demonstrates the potential of small firms to help meet the target, but also presents some major challenges which need to be addressed to achieve it.
The FSB report, ‘Make or Break: Getting apprenticeship reform right for small businesses,’ found that one in four FSB members (24%) already employ an apprentice, but a further quarter (24%) would consider taking one on in the future. If this reflects the situation of the rest of England’s 4.7 million small firms, there is potential to deliver well over a million new apprenticeships with smaller employers.
Among the barriers to achieving this is a change which requires small businesses to contribute towards the cost of training their apprentice. This is expected to result in a fall in the number of businesses offering apprenticeships. To limit this, FSB is calling on the Government to provide a more generous small employer incentive than is currently proposed. This will ensure extra support is appropriately targeted at the smallest firms that can least afford the extra upfront costs of taking on an apprentice.
Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said: “Smaller businesses are taking on more apprentices than ever before. What’s more, a quarter of our members say they are considering employing an apprentice in the future. This presents a huge opportunity and is great news for vocational training, which has become an increasingly attractive option for young people put off by the rising cost and uncertain returns of a university degree.
“We are at a make-or-break moment. We need the Government to hit the right balance between incentives and support. While many small firms are committed to apprenticeships, many more continue to be worried about the time and personal commitment required.
“Ministers need to focus on three main areas: more targeted and localised information for businesses with high growth potential, specific and practical guidance on how a smaller company can take on an apprentice, and a more generous package of incentives and support for those which do. Getting this right is key to the successful reform of the apprenticeship system.”
FSB’s evidence found that small businesses are most likely to recruit apprentices from outside the business, with 79 per cent of FSB members’ recruiting externally. FSB also found that apprenticeships in two thirds (67%) of small business lead to longer-term employment once training is complete. These finding show smaller businesses are providing a reliable pathway into full time employment for their apprentices.
Cost-effectiveness (37%) was cited as a key reason for taking on an apprentice, but increased financial burden risks many abandoning apprenticeships altogether. FSB’s research also found another key motivator for smaller employers was a commitment to giving young people training opportunities.
Challenges to taking on an apprentice included a perception that school leavers did not have the skills businesses’ need, with 32 per cent saying the quality of apprentices was a major challenge. A third (31%) worry about the day to day management on top of other business commitments. Over a quarter (26%) said they lacked the time needed to properly train an apprentice.
Among the detailed recommendations from the FSB report was a call for the Government to set up a group of 100 small businesses to critique and contribute to apprenticeship policy. This is supported by the other recommendations in the report which outline precisely the support, tailored information and incentives necessary to deliver the apprenticeships and skills the UK economy needs.
Tomorrow (Friday) the Government is expected to announce its initial plans for apprenticeship funding levels from April next year. FSB intends to play an active part in this consultation process, using its research to find the right balance of incentives to support smaller employers while also unlocking their potential to take on new apprentices.