Dr. Peter Wilson
Senior Researcher, Policy Connect
Hayley Pells
Policy and Public Affairs Lead, the Motor Industry (IMI)
Businesses across the UK report that they cannot find workers with the skills they seek. People can fill these skills gaps with further training, and public policy can help.
Policymakers have tried to put employers ‘at the heart’ of vocational education and training. It is critical that the voice of SMEs is heard as they make up 99% of private businesses and hire around three-fifths of the UK workforce. Yet, skills gaps for SMEs remain a significant and under-appreciated problem.
Skills shortage as SME growth barrier
Around 22% of small firms report a lack of skilled staff as a stumbling block for growth. One reason is that SMEs struggle to offer apprenticeships. SME apprenticeship uptake dropped from 241,000 to 123,800 between 2016 and 2021. SMEs have a good history of hiring young apprentices, so this has been a negative for young people.
In the SME-heavy automotive sector, currently, vacancies are around 22,000. The challenge for automotive employers is further exacerbated by the rapid acceleration of technology, which puts the sector in direct competition with many other industries, adding pressure to already tight SME budgets.
The Government should fully fund and incentivise more apprenticeships for SMEs of all sizes.
Better supporting vocational training
The Skills Commission and Policy Connect recently launched the Skills 2030 report. We found that SMEs need further support with vocational training. The Commission welcomed the Government’s recent plan to cover the training costs of SME apprentices aged 21 and under. However, we need to go further.
Firstly, a new independent public body with SME representation at the top should oversee skills issues. SMEs must be fully represented in policy decision-making for vocational training.
Fully funding SME apprenticeships
Secondly, the Government should fully fund and incentivise more apprenticeships for SMEs of all sizes. It should fully fund intermediate and advanced apprenticeships (levels 2 and 3) at SMEs, regardless of the apprentice’s age. SMEs should also be given more funds to invest in each apprenticeship, driving improvements in the quality of the apprenticeship. These measures should increase the number of apprentices SMEs can take on while promoting quality.
Reforming the skills system for SMEs
SMEs have a vital role to play in vocational training and tackling skills gaps. If we want a highly skilled workforce for the country, we must give SMEs the support they need to take on more apprentices and deliver more training. We hope policymakers heed the call to arms in Skills 2030 to reform the skills system to do just that.
