Small businesses fear loss of apprenticeship incentive

19th August 2016 at 01:00
Focusing support on recruits facing the greatest barriers to employment may mean firms miss out

Concerns have been raised over the support available to encourage small businesses to take on apprentices. The fears have emerged after education secretary John Swinney wrote to Skills Development Scotland (SDS) reiterating that its Scotland’s Employer Recruitment Incentive (SERI) should have a sharper focus on those overcoming the greatest barriers to employment.

In his letter, received earlier this summer, Mr Swinney asks SDS to continue to work with local authorities on the administration and delivery of SERI, but states that small businesses should be supported in taking on a modern apprentice only if the potential recruit faces barriers to employment.

These barriers include long-term health conditions or disabilities. Young people with previous convictions or from minority ethnic backgrounds are also eligible.

The government considers small businesses key to increasing modern apprenticeship (MA) numbers in Scotland. It would like to see 30,000 starts each year by 2020, and organisations are concerned that any change in the flexibility of support schemes could have an adverse effect on growth.

Figures published by SDS earlier this month show that by the end of the first quarter of 2016-17, there were 3,634 MA starts – equating to 14 per cent of the 26,000 target for this year. At the same point last year, 17 per cent of the annual target had been achieved. More than two-thirds of MA starts were for learners aged 16-24 – a slightly higher proportion than at this time last year – while 30 per cent of people were 25 or older.

Launched in June 2015, SERI targets employers and supports them to take on a modern apprentice, offering up to £4,000 per recruit. The scheme was paused in December last year – after the chancellor’s spending review and amid uncertainty over the Scottish Budget – but was resumed in April, with the new tighter conditions for small businesses.

Barry McCulloch, a senior policy adviser for the Federation of Small Businesses in Scotland, said the organisation had been “really pleased and elated” by the launch of SERI “because it is the first time in a while that the government has acknowledged the problem of small businesses”.

But any narrowing of the scheme would be a cause for concern, he stressed. “We oppose making support more targeted because a targeted approach reduces the flexibility to the businesses owner and that is important to them. Already, our research suggests fewer than 20 per cent of businesses will take business support,” he explained. The main reason was because what was offered was “just not right” for them.

'Biggest challenge'

Mr McCulloch said that small businesses accounted for 98 per cent of all Scottish firms, and increasing their uptake of the apprenticeship scheme was the biggest challenge on the way to reaching the government’s target.

“The current economic uncertainty will make the job of increasing apprenticeship numbers harder,” he added. “All sorts of employers will be thinking twice about increasing their headcounts – never mind making a more serious commitment like taking on an apprentice.”

Employing a modern apprentice was not a traditional way of recruiting for small businesses and was often seen as not flexible enough, Mr McCulloch explained. “It is not a cost-free option,” he said. “I am most concerned about the lack of bespoke help and support – not just financial but a service that holds our hand through the whole process.” His organisation has made the case for continued funding for SERI, he added.

Hugh Aitken, director of business lobby group CBI Scotland, said: “A successful economic future for Scotland rests on our skills system, and businesses are steadfastly committed to investing in and developing current and future talent.

“Ultimately, the government and businesses of all sizes must work together to increase skills investment and create high-quality apprenticeships that can go some way to alleviating skills shortages across Scotland.”

A Scottish government spokeswoman said SERI was open to private and third-sector businesses of any size, and was closely aligned to improving economic conditions and the jobs market. “It continues to support small and micro businesses to recruit modern apprentices where the young person has the greatest barriers to employment.”

A spokesman for SDS said SERI targeted support at unemployed young people with the greatest barriers to employment to enabled them to find and stay in sustainable employment, including MAs.

“The funding is available as a contribution towards the additional costs of recruiting and sustaining a young person during their first 52 weeks of sustainable employment,” he added.


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