Decline in apprenticeships as FSB urges government to introduce SME reform initiatives

Apprenticeships starts have dropped significantly this year, according to recent government data

Decline in apprenticeships as FSB urges government to introduce SME reform initiatives

Apprenticeships have been on a steady decline. Thousands of people are dropping out of apprenticeships every year, the latest government figures show. Nearly 203,990 people started apprenticeships in England in the 2021-22 academic year. This number has dropped significantly by 4.1%, with just 195,600 people apprenticeship starts this year compared to the previous period.  

Traineeship starts were down by 18.1% from August last year to January this year, the figures also show. This number stands at 7,300 compared to the 8,900 reported for the same period in the previous year. Thousands of people are also dropping out of apprenticeships in England every year. Firms provided ‘little or no training’, according to a report in 2022 by EDSK, an education think tank.  

The FSB has now urged the government to direct more funding to SMEs for apprenticeship schemes so as to encourage small firms to take on board young talented apprentices. FSB Policy & Advocacy Chair Tina McKenzie, said: “This downtrend in apprenticeship starts is a glaring signal that small businesses need to be prioritised in apprenticeship reform initiatives. “The apprenticeship levy should serve as an accelerator for recruiting fresh minds and stimulating growth, and any reform should enhance its core purpose of increasing the number of apprentices.

“But currently, it unintentionally nudges larger firms to invest in upskilling those who already qualified, sometimes overshadowing eager newcomers in SMEs who are ready to learn. Ms McKenzie urged the government to up the bonus for hiring under-19 apprentices by redirecting funds from other pots. She said: “A clever pivot can address this. The Immigration Skills Charge (ISC) revenue, which jumped from £98.8 million to £349 million last year, offers a promising wellspring for apprenticeships. Redirecting a portion could supercharge incentives for employers.  

“We propose transforming the £1,000 bonus for hiring under 19 apprentices to a £3,000 bonus for SMEs recruiting those under 25. Our research suggests this move could stimulate 21% of small business employers to onboard apprentices. It’s vital to ensure a reliable supply of apprenticeship funding to our thriving small business community. The Government must not burden SMEs with extra costs when hiring new apprentices.” 

Ms McKenzie also encouraged the government to uphold their commitment to cover apprenticeship costs and skills development. She added: “To avoid a bad situation getting worse, there needs to be a cast-iron guarantee to SMEs that the Government maintains a commitment to covering 95 per cent of apprenticeship training costs. Resources set aside for SMEs’ skills development must not be left to the whims of the remaining levy balance. Beyond apprenticeships, refining and making tax reliefs more transparent can ignite further training opportunities for SMEs and the self-employed. A brighter future is ahead with these changes.”

Latifa Yedroudj
Latifa Yedroudj

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