A cross-party think tank – the Social Market Foundation (SMF) – has called on government to fix the issues preventing small businesses from fully embracing apprenticeships, particularly in skilled trades such as automotive crash repair, as it warned that the skills crisis is to worsen for SMEs.
The SMF report, sponsored by Reed in Partnership with support from TrustMark, examined the challenges holding small and medium enterprise businesses back from offering more apprenticeships to younger people. The latest government data shows that for every apprentice vacancy, nearly two young people are interested, potentially leaving many without placements.
Skills crisis is to worsen for SMEs
Speaking with small trades firms (see below for research methods), the SMF learned that a lack of engagement is one of the biggest issues preventing them from taking on an apprentice. They often lack necessary relationships with education and training providers. The majority of businesses surveyed said that they have little to no interaction with local colleges (52%), schools (69%), independent providers (60%), or universities (90%). This makes it hard, often impossible, to navigate the complex process of recruiting and training apprentices.
It is crucial to improve the apprenticeship-employer ecosystem, the SMF said. In particular, small business skilled trades need a go-to intermediary service, whose role would be to strengthen local connections, bringing SMEs and training providers to work together more effectively. The SMF noted that its proposed system would “complement, not complicate” employment reforms that will revamp Jobcentres to improve access to work for young people – including apprenticeships.
There are further challenges when it comes to green skills. Green skilled trade firms have the specific issue of shortage of relevant courses in the emerging sectors. For example, a senior human resource manager bemoaned the failure of colleges and training providers to catch up with increasing demand for these roles. SMF observed that green skilled tradespeople see the “green education pipeline” in the UK lagging behind the likes of Denmark and Germany.
To this end, the SMF recommended that Skills England – the new body positioned to lead the UK’s skills landscape – oversees the proposed intermediary system. Skills England should identify priority sectors and, from this, guide the strategic focus and targeting for intermediary organisations. The body is perfectly placed to do so, having already flagged the green workforce and housebuilding as skills priorities in its first report, according to the SMF.
Enthusiasm for apprenticeships remains high
Despite the challenges and signs that the skills crisis is to worsen, it is worth noting that enthusiasm for apprenticeships remains high among small businesses, who recognise the vital role young people can play in addressing skills shortages. With a growing focus on green skills and the challenges posed by an ageing skilled workforce, apprenticeships are seen as key to creating a sustainable talent pipeline for the future.
The full list of SMF recommendations include:
- Increase the apprenticeship incentive payment for under 19s to £3,000. This should be funded using apprenticeship levy underspend, rather than having it returned to the Treasury.
- Department for Education and Skills England should launch a national campaign to promote awareness and positive perceptions of young apprentices. This campaign should be led by the DfE and Skills England.
- Establish an intermediary system that strengthens the relationships between SME trades firms and training providers, forming a cohesive apprenticeship network that offers guidance and support for employers, including administrative and pastoral services. To action this we recommend the following steps:
- The DfE increase the coverage of brokerage pathfinders to provide wider support.
- Skills England takes responsibility and oversight of the new intermediary system and set the strategic direction.
- Local authorities (initially) manage the delivery of the intermediary system, before transitioning this responsibility to Careers Hubs.
Fixing apprenticeship pipeline
Niamh O Regan, researcher at Social Market Foundation, said as the warning emerged that the skills crisis is to worsen for SMEs:
“By and large, small businesses are keen to do their part to train the next generation. Unfortunately, for many, taking on an apprentice is good in theory and painful in practice. The process can be complex and the administrative burden high – ultimately blocking the pipeline of talent needed to overcome the UK’s skills crisis.
“Fostering better connections between SMEs and training providers can pave the way for a more skilled workforce, ready to tackle the challenges of tomorrow.”
Senior SMF researcher Jake Shepherd added: “To boost the number of apprenticeships and strengthen the workforce in key skilled trades … small businesses must be helped to overcome the barriers they face. The government can act by creating an intermediary system that brings together Skills England, Careers Hubs, and training providers to guide businesses and make the apprenticeship process easier to navigate. At the same time, a national campaign can highlight the benefits of hiring young apprentices, while increased financial incentives would help small businesses manage the costs of taking them on.”
To find out more as the skills crisis is to worsen and to read the SMF report, Laying the foundations, visit the SMF website.
Note about the research methodology: In August 2024, SMF partnered with the field agency Indiefield to conduct 10 interviews with individuals from a range of small and medium-sized enterprises, including sole traders and family-owned businesses. In addition, SMF recruited one participant independently. Of the 11 businesses interviewed, five had employed an apprentice within the past three years, while the remaining six had not. SMF also conducted an interview with green policy experts from the FSB, bringing the total number of interviews to 12.
