Action needed to safeguard apprenticeships for small firms

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Date: 4 February 2020

Apprentice in training

As National Apprenticeship Week gets underway, the Federation of Small Businesses is calling on the government to secure the long-term future of apprenticeships.

Research by the Federation of Small Businesses (FSB) has found that over a quarter of small business apprentice employers in England feel that the 2017 reforms have had a negative impact. Government data shows that apprenticeship starts across England have decreased to 125,800 from 132,000 in Q1 of 2018/19 compared to the same period a year before.

As National Apprenticeship Week gets underway across England, the FSB is calling on the government to secure the long-term future of apprenticeships. It has warned that SMEs using the apprenticeship system are facing a crisis as the apprenticeship levy funding on which they depend is about to become exhausted.

"Urgent action is needed to ensure sufficient funding for small businesses in order to be able to continue offering apprenticeships," said FSB national chair Mike Cherry. "Whilst we welcome the manifesto commitment of a £3 billion national skills fund for the next five years, if this is used to top up apprenticeship funding for SMEs, there will be little remaining for the equally important priority of adult retraining."

In addition to an injection of cash for SMEs, the FSB is calling for a reduction in co-investment costs for training from 10% to 5%. It says more than a third of small business employers of apprentices say costs related to the recruitment and training of apprentices have increased since the 2017 reforms were implemented.

Mike Cherry added: "Small firms have long been champions of apprentices and the benefits they can bring, but if we are to address the persistent skills shortages and gaps that are damaging growth and productivity we must prevent apprenticeships becoming an opportunity which is only open to those who can afford it."

Other business groups have expressed similar concerns. Jane Gratton, head of people policy at the British Chambers of Commerce (BCC), said: "Businesses support the drive for more and better apprenticeships, but the system needs urgent reform if they are to help our workforce reach its potential. We need to give employers more flexibility in how they can use the Apprenticeship Levy, alongside help for smaller firms to access quality training more easily at the local level. This will help close the productivity gap and retain local talent in communities across the country."

Written by Rachel Miller.

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