We’ve said it before, apprentices can be a great thing for small firms. And you’ll hear much more about the merits of apprenticeships in the coming days as part of National Apprenticeship Week, which started on Monday. But many SMEs still need persuading that training up new recruits is worth the effort, and others are worried that changes to the way apprenticeships are funded could give them a red tape hangover.
Apprenticeships are certainly growing in popularity. Just 65,000 apprentices began their training in the academic year 1996/97. The latest figures from the Department for Business, Innovation and Skills show that there were 510,000 apprenticeship starts in 2012/13. Courses train youngsters for more types of jobs than ever before – apprenticeships cover 170 industries and 1,500 roles. And training is now at three levels: intermediate, advanced and higher, the latter of which is equivalent to degree level. Many young people faced with the prospect of soaring student debts and youth unemployment are considering these vocational qualifications as a preferable path to work than university.
And they’re not just good news for the apprentices themselves. Evidence suggests that apprenticeships can be a shot in the arm for a small business, bringing significant material and financial benefits. A huge 96 per cent of the firms employing apprentices say they experience a business benefit, and more than seven out of ten report an increase in productivity. The average person completing an apprenticeship increases productivity by £214 a week, according to work by the Centre for Economics and Business Research. Employee morale often improves, many companies experience better staff retention, and these bright, young trainees brim with new ideas and innovation.
Yet, too few smaller companies hire apprentices – just five per cent of SMEs with between two and four workers currently employ apprentices, according to Government figures. Cost is one reason often given. But there’s a lot of financial help for firms that are prepared to train up young people.
- The Government fully funds apprenticeship training for 16 to 18-year olds, pays half of training costs for apprentices aged between 19 and 24, and up to 40 per cent of course fees for those over 25, depending on the industry sector.
- The minimum apprentice wage is £2.65 an hour, and employers can get funding to help with the costs. Firms with up to 1,000 members of staff that haven’t hired an apprentice in the last 12 months, and that are willing to take on a trainee aged between 16 and 24, could get a £1,500 grant from the National Apprenticeship Service per apprentice for up to ten new recruits. This approach has proved so successful at getting SMEs involved in apprenticeships that business group the British Chambers of Commerce (BCC) recently called on the Chancellor to extend the scheme for several more years in his forthcoming Budget in March.
- Other grants are also available to finance apprenticeships in skills shortage areas, such as the £400,000 fund recently launched by the Royal Society of Chemistry and sector skills council for science-based industries, Cogent, aimed specifically at helping small companies in the chemicals industry to take on apprentices.
But still, it seems, smaller companies need further encouragement. The Federation of Small Businesses did some research in 2012 that suggested a few possible ways to change business owners’ attitudes:
- Schools should work more closely with local small firms to get them to provide work experience and apprenticeship opportunities for school leavers, as well as inviting business owners in to the classroom to talk to pupils about what being an apprentice involves.
- The National Apprenticeship Service, which coordinates apprenticeships in England, could engage more closely with small employers, offering them greater support.
- Businesses should be consulted more closely about the skills that they really need, and these findings should strongly influence apprenticeship training.
These approaches chime strongly with the Government-backed Holt report, which also analysed the barriers to SMEs hiring apprentices. It said that having apprentices should become a badge of honour for small companies, with them even being encouraged to display a sticker trumpeting ‘We employ an apprentice’. A review into the future of apprenticeships by former Dragons’ Den star Doug Richard concluded that apprentice training should more accurately reflect the genuine needs of SMEs. He suggested that business owners be given apprenticeship funding directly to be able to decide which type of training they want to invest in.
This last suggestion has become a reality, with the announcement last December in the Autumn Statement that companies will receive apprenticeship funding directly through HMRC, rather than Government money going straight to training providers, as before. It’s hoped that this will give bosses more control over what skills their young recruits learn, but critics say the changes could make employing apprentices less attractive since the administrative burden on employers looks likely to become greater. A key excuse often given by small firms for not hiring apprentices is not just the perceived cost, but also the paperwork and hassle.
So, the powers that be have their work cut out this week to persuade a large swathe of the small business community that apprenticeships could help them. But even the most hardened cynics must admit that something must be done to address the skills gaps that are hampering the progress of many smaller firms. Two out of three SMEs admit that they’ve got a shortage of skills among their workers, according to recent research by Lloyds Commercial Banking. More than a third of bosses worry that this will make their enterprise less profitable, while 44 per cent think a paucity of skills and experience among their staff could damage their future growth potential. Perversely, even though they’re suffering due to skills gaps, more than one in ten business owners say that they don’t want to train up staff for fear of losing them to a rival firm.
Business owners need to wake up to the lack of skills in their business and be proactive about training talent to fill these gaps. Apprenticeships are a tried, tested and well-established way to do this, and financial help is available to train staff. And for those who are prepared to create opportunities for young people, there could be even greater rewards than better staff retention and a boost to productivity. This week, employers that pledge any apprentice job vacancies online could also benefit from some positive publicity. Those who offer positions to young talent via the National Apprenticeship Week pledgeometer will have their names published on the apprenticeship service’s website. Now could be the time to overcome your prejudices and sign up for some apprentice talent.
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