How SMEs can benefit from apprenticeships

As National Apprenticeship Week gets underway, Lady Cobham urges SMEs to consider what apprenticeships can do for them

This week marks the 12th annual National Apprenticeship Week (NAW), a fantastic initiative that highlights the importance of apprenticeships for employers and young people in the UK. This year’s ‘Blaze a Trail’ theme focuses on the exciting potential of apprenticeships, both as an excellent path for people at the start of their career and as a chance for employers to celebrate apprentices bringing renewed energy and passion into organisations big and small.

Indeed, I feel that it is important to address the myth that ‘earn and learn’ training opportunities are solely for larger organisations. Many smaller employers remain unaware of the apprenticeship levy’s true value, or view it as an initiative that is solely aimed at larger businesses, and therefore risk being left behind as a result. However, employers who have a wage bill of under £3 million, and therefore do not pay the levy, share the cost of training and assessing their apprentices with government – this is called ‘co-investment’. 

In fact, when Philip Hammond presented his budget to parliament in October of last year, he announced that small businesses’ apprenticeship training costs would be reduced from 10 per cent to just 5 per cent, a much-needed boost for SMEs hoping to take on new apprentices.

It was also announced that larger employers would be able to share 25 per cent of their levy funds with their supply chain, up from the original figure of 10 per cent, which according to Hammond will undoubtedly incentivise larger businesses to help smaller ones in their supply chain. We at The 5% Club have long maintained that the apprenticeship levy has the potential to boost social mobility and help to close the skills gap in the UK. 

It can be easy to forget that the benefits of apprenticeships are manifold. A recent survey of our employer-members found that nearly nine out of 10 businesses believe that ‘earn and learn’ training opportunities drive staff loyalty and retention. This is unsurprising, as employees tend to feel a sense of duty to the company that gave them their start, and the job security that can be provided by a stable position is not to be underestimated. 

The survey also found that seven out of 10 members suggest that ‘earn and learn’ training opportunities increase productivity
, a sentiment echoed in analysis from the Department for Education that found three in four SMEs that employ apprentices reported an increase in productivity thanks to product or service improvement. The investment in unique and specialised skills that comes with training an apprentice is key to this increased productivity, and this investment in skills will only become more important in a post-Brexit economy.

One of the core pillars of this year’s NAW is to reach out to those who have a ‘not-for-me’ mindset. At its core however, the issue is a societal one. The stigma associated with not going to university is very damaging, and parents often assume that vocational education will negatively affect their child’s future prospects. It is for this reason that smaller employers need to be targeting young millennials, a group that is notoriously hard to engage. SME owners must strive to create a culture that is open to innovation and give ambitious millennials a chance to kick-start their career.

We must all continue to drive towards balancing the parity of esteem between vocational and traditional education. Business leaders, government and employers of all sizes need to come together if there is to be a meaningful adjustment to the societal mindset in regard to the apprenticeship system.

Lady Cobham CBE is director general of The 5% Club, a skills training group which encourages businesses to offer ‘earn and learn’ training opportunities