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The case for a serious reappraisal of the apprenticeship system

Smaller companies are finding it hard to engage with the apprenticeship programme, citing a lack of buying power. Anthony Impey, the National Federation of Self Employed & Small Businesses' (FSB) apprenticeships and skills policy chair, writes about solutions to change the status quo.

Skills are vital to unlocking productivity and driving growth in small businesses which are the backbone of the UK economy and make up 99.9% of all firms in the country. So it’s more important than ever that smaller employers are able to recruit and retain a skilled set of employees.

At the heart of skills policy in England sit apprenticeships, which remain a highly important route for addressing skills shortages and skills gaps that many small firms up and down the country face every single day. Along with the new T Levels, apprenticeships are the key pathway that the Government has introduced to help achieve the long overdue parity of esteem between technical and higher education.

Anthony Impey, the National Federation of Self Employed & Small Businesses' (FSB) apprenticeships and skills policy chair

Small firms are at the heart of communities whether that be on high streets, in rural areas or our coastal resorts, and this means there are vast opportunities for improving and promoting social mobility through apprenticeships in small businesses. But this will only work if the right and supportive system is in place to facilitate this.

For a long time now, small firms have been at the forefront of apprenticeships - but if this is to continue, change is needed. FSB’s research found that the 2017 apprenticeship reforms in England have had unintended, negative consequences for smaller businesses. Over a quarter (27%) of smaller firms say that the reforms have had a negative impact on their business.

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Our own evidence suggests that the changes to the apprenticeship system, which were intended to significantly increase the number of apprenticeships by March 2020 and achieve the government target of three million apprentices in England, have not to date worked for smaller businesses. One of the primary concerns that small businesses have is the sharp decline in Level 2 (intermediate) and Level 3 (advanced) apprenticeships.

One small business owner who runs a care service for the vulnerable told us she has employed 31 apprentices who completed Level 2 or Level 3 Health and Social Care or Business Administration qualifications. But ever since the reforms were introduced in 2017, it has just become too difficult for the company to engage with the apprenticeship programme.

We have welcomed government interventions to decrease co-investment and encourage transfers of unspent levy funding to non-levy paying firms. However, more must be done in the short-term to support firms and improve the quality and availability of training and assessment provision, especially for those working at Levels 2 and 3.

There is also a need to ensure the existing incentives are delivered to the eligible small firms. Levy-paying public sector employers can play a role by using their unspent levy funds developing skills in their local area, or in their supply chain by transferring funds to small employers.

In the medium to longer-term, as levy funds are exhausted, the Government needs to find fair and equitable solutions to address this situation, while at the same time ensuring this doesn’t lead to apprenticeships becoming unaffordable for smaller businesses.

The National Apprenticeship Service is running a test of its new apprenticeship service, which it is looking to launch in early 2020. The test is seeking small and medium businesses looking to start apprenticeships between August and October 2019.

FSB isn’t looking for a radical reform of the apprenticeship system, but there remain several serious questions that must be answered in relation to the future sustainability of funding for apprenticeships. The Spending Review will be a crucial moment to address this.

Currently, smaller businesses simply don’t have the same buying power as other larger private sector employers to influence training provision, which is why change is so desperately needed. Smaller businesses need immediate support to meet the explicit requirement for a minimum of 20% off-the-job training, and to ensure they are not disadvantaged by the transition from frameworks to standards.

The onus is, therefore, on officials to use the review of the apprenticeship levy and the forthcoming Spending Review to make a true success of the apprenticeship policy in England.