A government-commissioned report released this week was supposed to help the smallest employers hire more apprentices. But the National Apprenticeship Service chose to mark its publication by scrapping rules preventing large companies from claiming cash incentives meant for smaller firms.

Jason Holt, who was asked to review how small employers could be encouraged to offer apprenticeships, emphasised support for companies with fewer than 50 employees in his report published on Wednesday.

But with the pound;1,500 incentive system - paid to companies for every apprentice they take on - attracting few applicants, it has now been opened to businesses with between 250 and 1,000 staff. Among those now able to claim some of the 40,000 payments are high street names such as recruitment agency Pertemps, which has nearly 500 staff and a turnover of pound;286 million. Employers that had been rejected because they were too big will now be able to claim the payments retrospectively.

The decision was criticised by shadow skills minister Gordon Marsden. “You need to target the people who need it,” he said. “Otherwise, you’re just helping employers with big human resources departments to take it up.”

But FE minister John Hayes defended the change, saying that even larger companies need an incentive to hire apprentices. “A company of 300, 400, 800 people isn’t Rolls-Royce or BT or British Gas,” he said. “This is a challenge not just for SMEs (small and medium-sized enterprises) but for these medium-sized companies.”

While Mr Holt said that he thought the move was an attempt “to raise the profile of apprenticeships”, his report suggested that only the smallest companies need a great deal of support with training. “In my experience, once a company goes beyond 50 employees, it is likely to have developed at least a rudimentary human resources function and will aspire to having some kind of proactive skills development policy,” he said.

Other aspects of Mr Holt’s report were also undermined by the government’s response, published simultaneously. His proposals to spread best practice in apprenticeship promotion among schools, where surveys say 77 per cent of pupils report being discouraged from vocational education, were rejected in favour of allowing schools to choose their own careers guidance.

“I think from the age of 11 every child should be given regular career guidance, exposure to the real world of work, so that at 16 they can make an educated, informed decision about whether they take the (higher education) or FE route,” Mr Holt said.

He also suggested that chambers of commerce could promote apprenticeships to both businesses and students in school. “Bank managers, lawyers, accountants, chambers of commerce - get them to champion apprenticeships. The people that small businesses talk to.”

But Mr Hayes said that the requirement for every school to provide independent advice and guidance, which comes into force next month, will be sufficient to put greater emphasis on vocational options.

Mr Holt overturned conventional wisdom that “red tape” is preventing small businesses from taking on apprentices, although he said that some firms do have an outdated notion of how the system works that needs to be overcome by better marketing and communication.

He concluded that there is little regulation specific to apprentices that prevents employers from hiring them. Instead, he found that some providers lack a culture of customer service: the providers need to focus on the individual needs of each business and if necessary help them make bespoke training programmes.

“My own experience was that I had to develop my own provision. Where the provision doesn’t exist, there has to be a system where employers can get together with the local college to develop that provision,” Mr Holt said.

He also said that it is too hard for employers to assess the quality of provision, saying it was unlikely they would use the obscure FE Choices website. He proposed a TripAdvisor-style reviews site where employers could share feedback on what matters to them.

The issue of small business recruitment is pressing for government, as the number of 16- to 18-year-olds in apprenticeships has started to fall in some regions. And when FE loans are introduced next year, over-25 apprenticeships, which are the cause of record growth, may come to a halt.

Small businesses so dominate UK employment that just 10 per cent of them hire apprentices, yet these apprentices make up 80 per cent of the total. If there is potential for growth, it is in small businesses.

Recommendations

The review identified further areas for consideration:

- It said that impending changes to careers advice in schools may make it harder to counter the existing prejudice against apprenticeships.

- Employer contributions do not work: “If we sought an employer contribution, the apprenticeships would simply not happen.”

- If the government wants to prioritise 16-19 apprenticeships, it needs to find some other way than charging employer contributions at 19-plus.

- Lead providers are “top-slicing” 30 to 50 per cent from subcontractors, instead of the recommended 15 per cent, leaving less funding to support a small employer.

Original headline: Big fish can gobble up apprentice bait aimed at business minnows

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