According to the recent Learning the Ropes report from FSB on skills and training in England, almost half (46 per cent) of small businesses lack full proficiency in their workforce. Of those companies that had recruited in the last year, the report found 30 per cent still face skills shortages. That percentage is even higher in trades such as IT and construction.
However, if a business has fewer than 50 staff and employs a young apprentice aged 16 to 18, training and assessment is fully funded. Faced with a dwindling number of applicants – not to mention the potential for Brexit to reduce that candidate pool further – ‘growing your own’ talent through apprenticeships could be a compelling option.
Recent changes to how the apprenticeship funding system works such as the apprenticeship levy – which requires companies with a payroll of £3 million or more to pay 0.5 per cent of that towards a training fund - have caused confusion for many small businesses, however. In England, changes to funding for small businesses has given many pause for thought, even if they’re not paying the levy or ever likely to.
“There is a knowledge gap – employers don’t know where to go to access what’s available,” says Liz Curran, who set up Funding Solutions 4 Business after working for the National Apprenticeship Service. “You need to think of the levy as a training fund, regardless of whether you recruit someone or train someone who’s already in the workplace.”
The vast majority of small businesses will not be required to pay the levy, but can still access training via the Government’s list of approved apprenticeship providers, or by approaching a learning provider directly in Wales. For non-levy payers, in England the Government pays 90 per cent of the cost of training, and the employer contributes the other 10 per cent, known as ‘co-investment’. All apprenticeships in England have to follow one of around 300 official ‘standards’, designed by employers.
UK skills policy differs across the devolved nations so in Scotland, Wales and Northern Ireland the systems are slightly different. In Scotland, employers can access public funding to deliver their own ‘modern apprenticeships’, in partnership with training providers, as long as they meet the appropriate framework; those taking on an unemployed young person can get up to £4,000. The majority of small businesses in Scotland cannot access training through the apprenticeship levy.
In Wales, the Government funds all apprenticeships, responding to demand from employers, using the same delivery mechanism as in Scotland, through training providers and frameworks. In Northern Ireland, too, the Apprenticeships NI programme is fully funded by central Government.
There are particular cost benefits to hiring younger apprentices. As the Government wants to raise levels of youth employment, English businesses that bring in apprentices between the ages of 16 and 18 receive an additional cash incentive of £1,000, while across the UK National Insurance Contributions for any apprentice under the age of 25 have been abolished. Certain apprentices who are deemed to have educational, health or social care needs receive further Government support.
A small business’s first port of call in arranging an apprenticeship will be the training provider, which should be able to help source candidates. But don’t be afraid to ask questions about just what support you will get and how this will help what you do in the workplace. “Every penny counts to small businesses, so it’s up to training providers to explain the value of what they do,” says Ben Rowland, co-founder of Arch Apprentices, which recruits and trains IT and digital apprentices.
Ben Power, Managing Partner at employment law firm Springhouse Solicitors, approached a local college in Chichester when he wanted to grow his business. “They promoted the idea of apprentices to us and said they would vet the applications and manage their learning, so we went for it,” he says.
The company has employed two apprentices – an office manager who joined just after her A-levels, and a marketing apprentice. While the college no longer offers this matching service, Mr Power felt there were tangible benefits to having apprentices around and feels small businesses would benefit from more support for taking on young people.
“It helped to have a trustworthy provider in the background to monitor apprentices’ progress and deal with any problems as they arise,” he says.
Alex Grace, Managing Director of Banana Moon Clothing, agrees that employers need to be prepared to put in the effort in if they want results. “It can be tough to find good sources for candidates so be prepared to go through many emails, phone calls and meetings, but we find there are some great people working within apprenticeships who are keen to get their candidates placed,” he says. “The colleges and bodies are great at advertising the roles and vetting the applicants to interview stage, so you do get there eventually.”
Spinning all these plates can be the greatest challenge for a small employer – keeping an eye on where an apprentice will fit into a business, whether you’ll get a return on investment in their skills they’re learning, and on ensuring the time they spend on the job reflects the ‘theory’ side of their qualification.
Carl Reader, who runs d&t chartered accountants, favours hiring apprentices for his business based in Swindon and works with a local college in Cirencester. He says his company aims to recruit only “where we can offer a job afterwards”. Mr Reader caluculates return on investment in the same way as for any staff member. “We look at the apprenticeship salary as a cost and the return on that cost is what they bring to the business,” he says. “They start on the minimum apprentice wage, but once they’ve settled into their course they move up to something higher.”
But while many businesses admire the work ethic of young apprentices coming into the business, there is a risk. “It doesn’t work out for everyone,” adds Mr Reader. “Sometimes they have five years of maturing to go through compared to a graduate, or they’re still developing and not quite the right fit.”
As more apprenticeship standards in England come on board, however, it could be an opportunity to ‘future-proof’ your business by bringing in the skills you’ll need in years to come. Renewable energy company Franck Energy runs its own training programme to develop renewable energy skills, and has its own assessors in its Scottish offices and is hoping to replicate this in its English offices.
“There is a lack of engineers in this country generally, so getting people in early means we can build a pipeline of people coming through the ranks,” says company founder Marcus Franck.
In England, Government support for vocational training is unlikely to abate, with plans to introduce new technical qualifications called T-levels from 2020 for 16- to 19-year-olds, and an ambitious target to have created 3 million apprenticeships by 2020.
Ultimately small businesses need to choose the skills route that suits them, but the benefits of bringing in apprentices can make the time and effort involved in sourcing the right provider and funding route worthwhile.
Mr Grace at Banana Moon Clothing believes the greatest benefit so far has been “a regular injection of young, fresh ideas into the business”. “They challenge the senior team to keep them stimulated and ensure that they have side projects as well as learning the day-to-day work.”
Having a pool of candidates ready to learn new skills could be just the growth injection your business needs.
FSB’s legal helpline can advise members on employment contracts and taking on staff. For more information, visit fsb.org.uk/benefits
FSB member The Apprentice Store in Inverness offers technical support to businesses in the Highlands and Islands. Under the supervision of mentors, apprentices go onto client sites to discuss how to make their technology systems more efficient, and can help businesses in key areas such as cyber resilience or upgrading their Microsoft Office systems.
“We employ apprentices and have them doing anything from social media management to security patch management, which are typical tasks you might give to a junior employee,” explains owner David Massey, who set up
The Apprentice Store as a social enterprise, so all profits go back into investing in the apprentices.
“It’s not just IT, we can do their books, man their reception, and they can even share an employee with another business,” he adds. “Our apprentices get to know the client and where they fit into the business, and get an experienced mentor, which helps them learn more.” All training is delivered on the job, and assessors come into the business to see evidence of the apprentices’ progress against their qualification frameworks.
While the apprenticeship courses last two years, this does not mean their contract ends once they’ve qualified. “At the end we drop ‘apprentice’ from their job title – some clients want to take them on, but that’s up to them and we talk it through to make sure it’s the right move,” adds Mr Massey.
He believes the key to success is putting the time in to nurture apprentices and make sure they have the support they need: “If you don’t, how can you expect them to stick around and progress?”