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SMEs in line for apprenticeship grants boost

The government has pledged to improve support for small- and medium-sized enterprises taking on apprentices by increasing grants by up to £10,500, following a report that said the process was “misunderstood and inaccessible”.

The Holt review, which was commissioned by the government and carried out by apprenticeship college founder and social entrepreneur Jason Holt, blamed a “lack of awareness”, “poor process” and “insufficient SME empowerment” for failings in the apprenticeship system.

Apprenticeships need to be better targeted to address skills shortages, and SMEs should be given more purchasing power and information so they can develop their own training provision, said the report, which considered views from industry training body ConstructionSkills and several firms and consultants.

Mr Holt also found that apprenticeship schemes under the control of training providers often failed to provide the appropriate skills.

He recommended that small firms were given roles in designing the content of the schemes, as well as control over funding through financial ‘carrots’.

These incentives include vouchers and discounts on National Insurance Contributions owed by the employer, as well as considering weighting funding to reflect the higher costs incurred by training providers when supplying apprentices to smaller firms.

A looming skills crisis in construction is leading to increasing concern among employers and commentators. The government reacted to the report by pledging to make the system “simpler and more accessible”, and by reforming the Apprenticeship Grant for Employers.

“My apprentices, along with my trained technicians, are an investment in the development and future of my business.”

Paul Killingsworth, business owner.

Skills minister John Hayes also pledged to improve information and communication to small businesses, and to hold training providers to new performance standards.

In response to the Holt Review, the government will now deliver payments for apprentices aged 16-24 in a single instalment.

These will be available 13 weeks after the apprentice starts, as opposed to two payments made at weeks eight and 52 under the present regime.

Employers will also be able to claim individual grants worth £1,500 for up to 10 apprentices instead of three: a potential boost of £10,500 on current payments.

The scheme will be opened to employers that haven’t hired apprentices in the past year – where previously only those that had not hired one for the past three years were eligible – and to businesses with up to 1,000 employees.

Mr Holt’s recommendations include an online community of apprentices, as a first step to becoming a Royal Society, and a Provider Charter to promote best practice and SME information.

The report also called for an online tool to allow SMEs to identify and access the apprenticeship training best suited to their needs, with the possibility of private sector funding.

Other recommendations include promoting apprenticeships as a parallel career path to university, increasing competition among providers and designing apprenticeships that address skills shortages quickly.

The report said potential apprentices were “not given a high profile in schools and SMEs are often put off apprenticeships by a lack of coherent and consistent information”.

It added: “This is compounded by the fact that SMEs, more than large businesses, depend on responsive training providers and do not always receive good service.”

The recommendations are aimed at “replacing unfounded prejudice with the message that an apprenticeship is both positive for SMEs and the economy at large, and a valid career path alongside the option of going into higher education”, the report said.

Just one in 10 SMEs were found to employ apprenticeships, a rate of around half that of the bigger players.

Mr Holt said that while apprentices offered “undoubted growth opportunities for businesses, not enough SMEs are taking advantage”.

“This is because they have an outdated view of apprenticeships, are often in the dark, and frequently do not receive the specific training provision their apprentices need.”

SME construction employer and board member of ConstructionSkills Martyn Price said: “What is needed is a clear set of simple messages for each audience. These then need to be consistently deployed by all those promoting the benefits of apprenticeships.”

“What is needed is a clear set of simple messages for each audience. These then need to be consistently deployed by all those promoting the benefits of apprenticeships.”

Martyn Price, SME construction employer, board member of ConstructionSkills

CBI head of labour market policy Jim Bligh said: “SMEs are a major untapped source of apprenticeships, so it’s good that this review shows how complex the current process has become for smaller firms to deal with.

“SMEs need better local advice and systems in place which help them get started providing on-the-job training for new apprentices.

“Making sure SMEs realise the value of taking on apprentices is critical, and incentives like the newly expanded Apprenticeships Grant for Employers can make all the difference.”

Reaction:

  • Cross-Industry Construction Apprenticeship Task Force chairman Geoff Lister said it was still “unbelievably difficult” for many construction firms to find enough work for apprentices. He added: “For those that do have a steady flow of orders this payment could be a real help. Incentive payments help to reduce the amount of time before a business sees a return on their investment [in apprentices].”
  • British Fluid Power Association director Ian Morris welcomed the move: “Improving the UK’s apprenticeship regime – and indeed the education and training infrastructure in general – has to become a greater government priority in order to secure the high level of workforce competence needed to secure the best possible future for SMEs in the UK. Jason Holt is right in saying that while apprenticeships offer undoubted growth opportunities for businesses, not enough SMEs are taking advantage”.
  • The Electrical Contractors’ Association cautiously welcomed the move, but said more needed to be done to promote transparency in the further education sector. Head of education and training Iain MacDonald said: “SMEs are the lifeblood of UK plc. They must be supported to take on apprentices with the skills to help them grow, which would also help reverse youth unemployment.”

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