Last week the Federation of Small Businesses released a report called “Fit for the future: making the apprenticeship system work for small businesses”, with the aim of influencing the forthcoming government spending review. The report outlines serious concerns that the Federation has with the apprenticeship budget, claiming that over a quarter of businesses (which employ apprentices) have found that recent reforms have made things worse. The Federation found that a third of those surveyed were unaware of the £1000 incentive for hiring 16-18 year-olds, with only forty percent of those eligible having actually received it.
The FSB surveyed 1,665 small businesses, and found that 42 percent of respondents felt the biggest challenge to engage with apprenticeship was recruitment, with 29 percent citing the amount of management time required and 24 percent off-the-job training. 41 percent of those surveyed said costs involved in recruiting and training apprentices had risen since the reforms.
FSB chairman Mike Cherry said that the 2017 reforms had had a deleterious effect on apprenticeships, with many small businesses turning away from the idea. He said the requirement for 20 percent off-the-job training was one of the reforms that was causing “real headaches” for small businesses. He acknowledged that the halving of the co-investment requirement to five percent was a welcome move, but warned of a “funding black hole” that is in the pipeline as 2021 is expected to see a significant overspend on the apprenticeship programme.
He expressed concern that apprenticeship could become unaffordable for many small firms, which will have the knock-on effect that persistent skill shortages and gaps which are harming growth and productivity will get worse.
This comes on the heels of a report from the National Audit Office which warned that with the average cost of training an apprentice reaching £9000 (almost double what was predicted in 2015), the apprenticeship programme is no longer financially sustainable.
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