New Survey Finds That Smaller Firms Are Avoiding Apprenticeships
A new survey by the Federation of Small Businesses (FSB) interviewed 1665 small businesses, and found that they were avoiding apprenticeships. The main findings of the survey were:-
- 27% stated that the apprenticeship levy and the 2017 reforms had had a negative impact upon their business
- 41% stated that the costs of recruiting and training apprentices had increased due to the 2017 reforms
- The 3 biggest problems with the levy following the 2017 reforms according to the small businesses interviewed, were problems with recruitment (42%), time management (29%), and the requirement that apprentices spend 20% of their time on off the job training (24%)
- 21% had encountered problems in funding the 10% contribution to the training and assessment costs of apprentices
- 87% of the apprenticeships offered by the small firms were at Level 2 (intermediate) and Level 3 (Advanced). However, following the 2017 reforms, the number of apprenticeship starts at Level 2 and Level 3 has fallen by 45%. This indicates that smaller firms are now avoiding apprenticeships altogether.
Apprenticeship Reform Package
In his recent Spring Statement, the Chancellor of the Exchequer, Philip Hammond, announced that the Government was implementing an apprenticeship reform package a year early. Under the apprenticeship reform package, the following measures have been implemented:-
- Small and medium-sized enterprises (SME's) contributions in terms of the co-investment rate will drop from 10% to 5%. It is estimated that the fact that SME's will now only have to contribute 5 per cent to the training of their apprentices, will save them £695 million collectively on an annual basis.
- The amount that organisations can transfer of their apprenticeship levy entitlement to another organisation in their supply chain will increase from 10% to 25%
Reaction
Commenting on the fact that smaller businesses are avoiding apprenticeships, the Chairman of the FSB, Mike Cherry, stated that: "Small businesses are champions of apprenticeships as they are a great way to tackle skills shortages that often affect smaller businesses and to give young people their first step into employment. They are also a great way of promoting social mobility and helping those furthest from the job market into work. Worryingly though, our research shows that many small firms are turning away from apprenticeships with some of the 2017 reforms being the cause. Changes like the explicit requirement for a minimum of 20 per cent off-the-job training, are causing real headaches. The more recent halving of the co-investment requirement to 5% is a major step forward to reduce the cost of apprenticeships. Small businesses need more support like this if they are to continue to be the champions of apprenticeships. It must not be forgotten that our small firms provide 60% of private employment and it is for this reason that they must be the ones driving the system forward."
