It found the current system has left geographical ‘cold spots’ where employers are given no support with apprenticeships.
More on apprenticeships:
Entry level apprenticeships fell by 69% between 2014/15 and 2021/22, while higher level apprenticeships increased by over 400%, making schemes less accessible to young people, ethnic minority groups and those in-work on low pay or in precarious contracts.
Anna Ambrose, co-author of the report, said this was due to a lack of support for SMEs.
Speaking to HR magazine, she said: “The fall in entry level apprenticeships, particularly amongst young people, is a national scandal.
“The role of small and medium sized employers who historically played an outsized role in creating these opportunities have been side-lined since the introduction of apprenticeship standards and the levy system.
“If we want the apprenticeships system to provide opportunities for young people and those who face additional challenges in the labour market, we need to ensure that employers of all sizes can access independent support to create high-quality apprenticeships.”
The IPPR recommended a network of business engagement support to increase demand for apprenticeships including practical one-to-ones to help navigate the apprenticeship creation process and help for accessing funding and promoting the benefits of apprenticeships.
It also recommended the government redirected the current 10% top-up it provides to employers’ monthly levy contributions.
Instead, it argued the top-up money should support the development of employer support networks, especially in underserved communities.
Ambrose said the lack of support available to businesses is failing thousands of apprentices every year.
She said: “With the right support for small businesses across England, thousands of young people at the beginning of their careers could benefit from apprenticeships every year.
“Doing so would lift more people out of poverty and precarious work, and turn the dial on nationwide skills shortages that are holding back economic growth.”
It also recommended the government formally evaluated employer support networks to ensure that employers receive the support they need.
Retention of apprentices is currently at 50%, 15% lower than the government’s retention target of 65% by 2025.
Michael Steel, the founder of training provider Kiwi Education said employers must build stronger working relationships with their apprentices.
Speaking to HR magazine, he said: "At Kiwi we spend lots of time with apprentices to ensure they're supported and value the learning they receive. Relationships with employers are essential.
“We also prepare apprentices for their end point assessment which in many cases causes apprehension and anxiety and is a factor in some learners not completing their apprenticeship.”
Steel said the apprenticeships funding system needs major reform.
He said: "While inflation and the overall cost of living is increasing, apprenticeship funding bands don't reflect this.
“Apprenticeships such as those in health and social care are no longer financially viable to deliver and have been retired by many providers."