Amongst a flurry of government announcements at the end of last year, one stood out. The headline read: “50,000 more young people to benefit from apprenticeships as government unveils new skills reforms to get Britain working.”
It is an admirable goal, and something that very much aligns with the Edge Foundation’s mission to encourage more young people to take on apprenticeships. But is it achievable?
In short, no. Or at least, it’s not achievable without small- and medium-sized enterprises (SMEs). Putting aside the problematic nature of apprenticeship targets (apprenticeships are jobs, not just training places), we won’t get that kind of supply without engaging with SMEs, which account for 60 per cent of all employment in the UK.
SMEs’ engagement in apprenticeships has been flagging in recent years, however, and they now make up just 37 per cent of apprentice employers. Often it reflects a lack of time and resources.
The government has been seeking to address this, in two key ways. Firstly, we saw the Chancellor put SME apprenticeships in the national spotlight by announcing in the Autumn Budget that training for apprentices aged up to 25 in SMEs will now be fully funded. The usual 5 per cent co-investment cost is being removed for SMEs.
This is a welcome step, but it’s difficult to assess how much of an impact it will have. SMEs already have access to fully funded apprenticeships for under-22s. But this seems to have only had a modest impact since it was introduced in April 2024. In fact, since the 2023-24 academic year, we have actually seen a 5 per cent fall in under-19s starting apprenticeships.
The 19-24 cohort has risen, but only by 1 per cent. There is also no evidence that the additional under-22 funding is what increased starts among SMEs in particular.
Trends have been broadly similar between employers large enough to pay the apprenticeship levy, and those which aren’t. So while the expansion of funding is welcome, it is unclear what thinking lay behind this policy decision.
The government’s other approach has far more promise. It plans to work on a £140 million pilot scheme to help link young people up with local apprenticeship opportunities, in areas which have regional mayors. In other words, a brokerage service. Details were scarce when it was announced in December, but it marks a hugely exciting development for Edge, and particularly for our Apprenticeships Work campaign – which aims to encourage more SMEs to hire apprentices.
Brokerage services can have a significant impact on engagement, as we laid out in our Agents of Change report last year. They can help SMEs understand both their skills needs, and how these can be addressed through the local training offer.
More than two-thirds of companies we surveyed with the help of the Recruitment and Employment Confederation said that personalised advice would be a decisive or encouraging factor in whether they chose to hire an apprentice. There is already an evidence base for this in the National Apprenticeship Hub Network, a group of around 25 organisations providing free and impartial guidance to businesses. But this is not a national or a lasting solution – many of these services rely on the UK Shared Prosperity Fund (UKSPF), which is due to expire at the end of March.
In our letter to the Work and Pensions Secretary last year, our Apprenticeships Work campaign called on the government to establish a centrally funded and coordinated, high-quality framework of local brokerage support so that all SMEs, regardless of postcode, can understand and reap the benefits of apprenticeships.
Despite the challenges, there are many excellent SMEs who go above and beyond to offer apprenticeship opportunities to young people in their communities, however. Because of their more manageable size, SMEs can offer progression opportunities at speeds unmatched by larger companies.
One SME who shared their story with our campaign has two directors under 30 who are both former apprentices. Close contact with other teams can also provide exposure to a broader range of disciplines that just isn’t available in the more siloed environment of large corporations. These opportunities, which only SMEs can offer, could make all the difference to a young apprentice.
So, let’s use this National Apprenticeship Week as an opportunity to celebrate SMEs – and call on government to do more to support them.
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