The Association of Employment and Learning Providers (AELP), which represents organisations that offer apprenticeship training, found that 75% of providers have had to turn away a prospective new SME employer of apprenticeships because they cannot meet demand.
Seventeen per cent of the 253 providers surveyed have stopped recruiting apprentices altogether for new and existing SME customers, while 25% have had to cut back on apprentice recruitment for their employer customers due to a lack of funding.
Furthermore, a third (33%) of providers said they need up to 25% of additional funding on their government funding contract to meet current demand.
SMEs don’t pay the apprenticeship levy, but rely on funding being left over from it for their apprenticeships after large levy-paying employers have first taken back their entitlement. However, the levy funding shortage is so acute that a third (32%) of training providers have said they will focus more on delivering apprenticeship training for levy-paying firms rather than SMEs in the future, the AELP has found.
This could disadvantage both SME employers looking for talent and young people entering the workforce, with SMEs traditionally being main recruiters of school leavers, at a time when apprenticeship starts for 16 to 18 year olds have fallen by 7% in the last year and by 23% since the year before the levy was introduced, researchers warned.
The AELP has previously urged the government to make more funding available for apprenticeships, after members reported unavoidable reductions in starts or a complete stopping of them altogether. Its latest research comes almost six months after the National Audit Office also issued warnings about the apprenticeship programme’s creaking funding system.
In early July, Boris Johnson made a pledge that apprenticeships would be "properly funded" if he became prime minister.
AELP CEO Mark Dawe has called on the government to fulfil its promise.
“It’s been over four months since the DfE’s [Department for Education] permanent secretary told a Commons committee that ‘something is going to have to give’ unless more funding for apprenticeships was forthcoming and we’re saying that the damage is already being done,” he said.
Dawe added that the government must act urgently to deliver more funding: “More recently the prime minister said that apprentices are ‘indispensable to this country’ and that ‘we have a desperate shortage in this country of people with the right skills‘. The clear message from apprenticeship training providers is that the shortage will quickly become much worse unless the government delivers quickly on Boris Johnson’s funding promise.”