Small firms could deliver a million more apprenticeships

The small business sector in England has the potential to double the number of apprentices they take on to well over two million, if the Government can get the incentives and package of support right.
 
Our report found apprenticeship reform 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.
 
Our ‘Make or Break: Getting apprenticeship reform right for small businesses,’ report 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.
 
Our evidence found that small businesses are most likely to recruit apprentices from outside the business, with 79 per cent of FSB members’ recruiting externally. We have 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.
 
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.

Want to get involved with our work on apprenticeships? Got an issue with apprenticeships that you’d like to share? Get in touch with me at simon.hanson@fsb.org.uk