School's out, GCSE results are in, now's the time to hire an apprentice

With GCSE results released last Thursday, school-leavers are gearing up for their next stage of training or education. In the past two years, a growing number have pursued apprenticeships – in the academic year 2014-2015, the number of under 19s starting an apprenticeship increased by 5.1% on the previous year. And in 2013-2014 the number increased by 4.6%.

But just less than a quarter of small and medium-sized firms have an apprentice, so what’s putting them off? Potential costs and not enough clarity, says a recent report from the Federation of Small Businesses (FSB). There are around a million apprentices in the UK’s small businesses and there is potential to double that,but only if the government puts the right system and incentives in place, says the report.

New developments are encouraging, says Annie Peate, policy adviser in education and skills at the FSB and author of the report. A day after it was published, the Department for Business, Energy and Industrial Strategy announced new initiatives. Two of the FSB’s recommendations – making apprenticeships more cost-effective for small businesses, and making information about apprenticeships more accessible – have been addressed.

Small businesses with under 50 employees who take on a 16- to 18-year-old as an apprentice will now pay nothing towards the costs of their training, and will be given a cash incentive of £1,000 per apprentice. The government will also create an apprenticeship investment calculator for its apprenticeship website, allowing small businesses to understand what the potential costs, and benefits, might be.

But there is still plenty to be done to get the message out. Take the apprenticeship levy, a significant strand of the government’s new approach to apprenticeships funding. From spring 2017, business in England, Scotland, Wales and Northern Ireland with earnings of more than £3m will pay 0.5% of their payroll total minus a £15,000 allowance towards apprenticeship funding. So a business with earnings of £5m would initially owe £25,000 (0.5% of £5m), but with the £15,000 levy applied, its contribution would be £10,000. Very few small businesses are likely to be affected by it, says Peate, but many, incorrectly, think they will.

The FSB wants to see far more practical advice on apprenticeships, tailored to the needs of small businesses and based around their recommendations and experience. To that end, they are proposing that the government convene a panel of small businesses – the FSB 100 – to review and consult on apprenticeship policy.

Peate says: “In particular, small businesses said the government’s apprenticeships website didn’t really speak to them. They want almost a step-by-step guide. The message that came through from the respondees in our report was that they understand the business benefits, but they need to know how it all works and, crucially, where they start – because once they’ve switched off [from the idea of getting an apprentice], it’s very difficult to get them back.”

Those who have already taken on apprentices say that looking beyond graduates can have huge benefits. “It’s been a really positive step for us,” says Hugh Wade-Jones, founding partner of mortgage broker Enness, which takes on around three to four apprentices per year. Not all are school leavers – one particularly successful former apprentice is ex-army.

“Initially we recruited from within the industry but we found that people had bad habits [such as poor interactions with clients or poor presentation skills] and weren’t trained to a satisfactory level,” Wade-Jones says. “It was very difficult to get people to adapt, particularly if they had been in a large bank or organisation. [Apprenticeships have] given us access to individuals that we wouldn’t have found within the industry. Now we have people who are Enness people, rather than the guys who have done the rounds at three or four different companies.”

There are costs involved, certainly. “The biggest cost is having the infrastructure and setting up the learning culture,” says Simon Conington, managing director of BPS World, one of the first recruitment firms to offer apprenticeships.

“If you have brought an apprentice in and haven’t built a robust programme, and you don’t thoroughly monitor it, you are setting those people up to fail. Yes, there is a wage cost, and the fact that they are probably not going to contribute [significantly] for at least six months. But we’ve broken down the programme into stages around what apprentices can do, so they do start contributing pretty quickly.”

And taking on an apprentice is not without its challenges. Simon Schnieders founded SEO company Blue Array a year ago. Of the six employees, three are apprentices – the most recent started in the last month. “It can be difficult finding the right candidate, and managing your own expectations,” he says. “Apprentices may have some basic building blocks, such as being able to do basic word processing and Excel. But that’s probably all you are going to get. An apprentice is going to need support from you throughout. But the rewards are huge.”

Tom Pool, 20, is proof of that. He was Schnieders’ first apprentice. After leaving school following his GCSEs, Pool decided A-levels were not for him, and completed a level three NVQ in engineering before joining Blue Array six months ago. “I really wanted to join my friends at university,” he says. “However, after working out the costs, it became apparent that I would be taking on at least £50,000 worth of debt.

“My experience has been incredible. I’ve met many interesting people and feel valued as a part of the team. The variation keeps the business exciting and I actually enjoy coming into work every day.”

So how can small business make apprentices work? A close partnership with the training provider, and carefully supervising the apprentice, says Petra Wilton, director of strategy and external affairs at the Chartered Management Institute. She adds that businesses need to give the training provider regular feedback on the apprentice’s performance.

Having an apprentice is not, she says, a quick win. “There can be a downside in terms of the initial investment in time to understand what’s right for your business. You need to be aware of the management time, which is needed to support an apprentice, and you do need to commit resources to support them. But that’s generally hugely outweighed by the benefit. In the medium and longer term, apprentices can add real value back to the business.”

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