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Lack of Incentives for SMEs and Organisations Hiring Under-19s Causes Steep Decline in Apprenticeship Starts

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The ‘Unleashing Potential: Unlocking Opportunities for Young Apprentices’ (2024) report has identified prevalent issues within the UK’s current apprenticeship and wider skills system as apprenticeship starts for 16 – 18-year-olds continue to decline.

National training provider Baltic Apprenticeships conducted the report in conjunction with GK Strategy. The report has identified four key areas affecting the potential growth of the apprenticeship landscape: the concerning change in apprenticeship demographics, the wider skills system, the opportunities available for young apprentices, and clear barriers to entry for prospective apprentices.

In 2013, 5% of 16-year-old school leavers started an apprenticeship. However, in 2023, with more than twice the number of apprenticeship standards available across diverse sectors, only 4% of 16-year-old school leavers started an apprenticeship.

A key concern is the Apprenticeship Levy scheme which has changed the trajectory of apprenticeships, a system originally designed to provide young people an accessible route into employment. Since the Apprenticeship Levy was introduced in 2017, under-19 apprenticeship starts have dropped by 41% and SME apprenticeship starts have dropped by 49%.

The report states that the Apprenticeship Levy has created an environment whereby businesses are disincentivised from hiring younger apprentices and has resulted in Levy contributions being used to upskill existing staff with prior qualifications, as opposed to hiring early entry-level talent.

Baltic Apprenticeships provides five key recommendations within the 2024 report:

  1. Protect the spirit of apprenticeships
  2. Create true parity of esteem for apprenticeships
  3. Build in-demand skills that support economic growth
  4. Coordinate apprenticeship recruitment to match year 11 and 13 decision-making
  5. Stop expecting the impossible from school career advisors

The report offers several supporting actions designed to drive positive engagement and economic change, such as introducing a ‘Young Person Bonus’ for businesses to incentivise hiring apprentices who are under 19, to confront the steep decline of 16 – 18-year-old apprenticeships starts across the country.

This bonus should be offered in conjunction with information about the long-term benefits younger apprentices provide to both businesses and the wider economy, and how crucial they are for our current and future skills gaps.

Joanna Wake, Director of Public Affairs at Baltic Apprenticeships, said:

“This report highlights the stark place we are in regarding apprenticeships for 16 – 18-year-olds and how we are losing the spirit of apprenticeships.

“Our economy can only grow if businesses can grow, and skills have hindered business growth for too long, whilst the impact of apprenticeships on skills gaps is well documented. We must now unite and act to create opportunities for our young people who want to take the apprenticeship route.

“The potential gains are endless. We can dramatically grow our skills base, improve social mobility, and transform workplace diversity. The value for money is unquestionable, for every £1 we put into apprenticeships, we get £21 back.”

A further action called for the Government to provide a maintenance loan to apprentices, similar to those offered to university students, to help ease financial pressures, making apprenticeships even more accessible and attractive.

Impact on Wider Skills System

The Federation for Small Businesses found that 78% of SMEs that have tried to recruit in the last 12 months have faced difficulties, including a lack of individuals with relevant qualifications and experience (82%) and low numbers of applications (60%).

The challenge in recruiting those with the necessary skills has fed through to high vacancy rates in the economy with businesses unable to bring in the talent they need to flourish. A clear solution to the UK’s growing recruitment pandemic is the promotion and creation of apprenticeship opportunities. The vocational nature of apprenticeships means that they are relevant to a range of sectors which continue to see major growth in the UK.

The report’s survey data shows there is a widespread view among current and former apprentices that school career services did not promote apprenticeships or give individuals a well-rounded view of options available to them following the completion of their GCSEs. Despite this, 80% of respondents agreed that they feel confident about their future career having undertaken an apprenticeship, and similarly, 87% of respondents agreed that their apprenticeship had helped develop skills that would aid their future employability.

Anna Morrison CBE, Director and Founder at Amazing Apprenticeships, said:

“This report sets out many important recommendations that will increase SME uptake in apprenticeships, re-balance the age profile across levels and sectors, and improve awareness of apprenticeship routes.

“Many of the suggested actions are ones that we could start within our communities and networks, and would potentially not require significant investment. Other recommendations challenge us to think about the future, and how technology could play an important part in scaling up services and support.

“Apprenticeships provide a crucial stepping-stone into the workplace for young people, and we must ensure that there is access to opportunity at all levels.”

Baltic Apprenticeships was recently rated Outstanding by Ofsted and has been appointed as an Expert provider by the DfE and specialises in delivering tech and digital apprenticeships nationally.

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