Apprenticeships: a cornerstone, not a casualty

Martin McTague, National Chair of the Federation of Small Businesses (FSB) shares why bridging the skills gap is important for securing a prosperous future for small firms and workforce alike

two men sat at table looking at laptop The dynamic nature of our economy has propelled apprenticeships to the forefront as a key instrument for nurturing young talent. This is not just a passing fad, but a concrete method to prepare the next generation with hands-on skills and valuable knowledge.

However, the latest Government fi gures give us reason to stop and refl ect. Apprenticeship starts saw a 4.1 percent dip, shrinking to 195,600 from August 2022 to January 2023, compared with the last period's 203,990. This decline is not just a statistical hiccup: it underscores untapped potential and the knock-on effect on our economy. It also reveals the missed opportunity to leverage the full potential of our small businesses as engines of skills development. The current setup is woefully unprepared to accommodate the specifi c training requirements of small businesses.

At a time where an overwhelming 82 percent of small businesses identify skills shortages as their primary hurdle to recruitment, tackling this is not an option, it's a necessity. We must strive to bridge the skills gap with apprentices and secure a prosperous future for our small fi rms and the workforce alike.

The Federation of Small Businesses (FSB) advocates for a pivotal shift – a £3,000 apprenticeship incentive for under 25s in England. This is a tactical move designed to fortify the workforce of tomorrow. Our research shows that this would incentivise 21% of small employers in England to hire additional apprentices.
During the Covid-19 crisis, this incentive escalated from £2,000 for young apprentices and £1,500 for older workers, to £3,000 for everyone. This sparked a 21% surge in apprenticeship starts. However, when the incentive dwindled to £1,000 for under 19s and care leavers, apprenticeship starts fell off by 12%. It's been disheartening to see such a beneficial commitment to our economy be reduced. It feels like a step back when we should be leaping forward.
But that's only half the picture. The current funding model's reliance on the unpredictability of the levy pot leaves small businesses in a precarious position. The lack of certainty creates an air of apprehension, stifl ing small businesses' ability to plan and invest in the next generation.
Stable, Government funding for apprenticeship training costs – unaffected by changes in the levy – is vital to ensure SMEs can consistently plan for the long-term. SME apprenticeship funding should not be at the mercy of funds available in the levy pot. Small businesses need a durable guarantee that, at the very least, present levels of Government funding for apprenticeship training costs will persist.

FSB's approach will empower young people to gain essential, hands-on experience and access to leadership prospects that small businesses can provide. Our economy relies on their dynamism, innovation, and perspectives, so we cannot afford to let them down.

As the UK's business support group, FSB is the voice of the UK's small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profi t making and non-party political organisation that's led by its members, for its members. As the UK's leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to fi nance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK's Celebrating Small Business Awards. More information is available at You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.

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