Small businesses considering introducing apprenticeship initiatives 

Nearly one in four small businesses are looking to develop apprentice schemes to compensate for skills shortages, research finds. 

Nearly one in four small businesses are looking to develop apprentice schemes to compensate for skills shortages, research finds. 

A third (32 per cent) of companies feel that they lack expertise in key areas, according to the 2014 Albion Ventures Growth Report. 

The number of respondents that lack core skills inversely correlates with company size as firms develop the personnel they need as they grow. While smaller businesses appear content with their skills base, ‘threshold’ businesses – with turnovers of between £500,000 and £1 million – recognise the need to bring in more skills in order to take that next step, with more than half (53 per cent) recognising that they lack the required skills in key areas.

The report, which examines the challenges and opportunities faced by 450 small and medium-sized enterprises (SMEs) also highlights that staff retention is cited as one of the biggest challenges for organisations, with those businesses looking to grow eager to develop ways by which they are able to identify and retain the strongest team.

In order to combat this skills shortage, the study reveals that UK SMEs are increasingly looking to apprenticeships. While the report revealed that only a minority (12 per cent) of SMEs currently have an apprentice scheme in place, a further 23 per cent are considering launching one in the future, and only 1 per cent of firms are currently running a scheme that they will terminate.

The attraction of apprenticeships appears to be primarily financially motivated in the shape of reducing staffing costs, but also many SMEs see it as a chance to highlight their Corporate Social Responsibility credentials (44 per cent) by investing in the local community.

The tax incentives offered by the government also appear to be boosting take-up for schemes, with this cited as a key reason by 38 per cent of firms who employ apprentices.

Patrick Reeve, managing partner at Albion Ventures says, ‘While there has certainly been progress made in the past year, it is clear that businesses still feel that their potential for growth is being hampered. Our research reveals that those ‘threshold’ businesses, who are on the cusp of taking a significant step forward, continue to be undermined by a lack of skilled staff.

‘If we want UK SMEs to continue to drive the UK economy forward, we need to ensure that they have all the tools that they require to succeed.’

Emran Mian, director of public policy think tank the Social Market Foundation adds, ‘While it is a welcome boost that apprenticeships are becoming increasingly popular, it is imperative that we actively look to help those businesses, whose growth is being held back by a dearth of key skills, take the next step.’

Taking a look at ways by which the government could boost the pick-up of apprenticeships, 14 per cent of SMEs say that they would be more likely to consider taking on an apprentice as a result of the government’s relief on national insurance contributions for employees under 21, but this rises to 34 per cent for SMEs with more than 50 employees.

Further reading on apprenticeships

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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