"Apprenticeships have the advantage of being popular with employers, learners and the public at large, and for good reason: the economic returns they deliver are going up. The biggest challenge is the expectation that they can solve an extremely broad range of labour market issues - from the threat of tech driven redundancy, to low pay, to the education to work transition. Let's channel that ambition into action, and use this moment, with the introduction of Skills England and appetite for reform, to drive up the number of apprenticeship opportunities across the economy."

(Tim Smith - VP, Corporate Affairs, Multiverse)

On Tuesday 25th February 2025 we convened a dynamic group of employers and policy makers, for a roundtable event supported by our event partners Multiverse.

The potential of apprenticeships to support the government’s growth and skills missions is clear – but also highly complex, as highlighted by Tim above. And whilst there is no shortage of discussion of the evolving apprenticeships landscape at the moment, it’s notable how little of it focuses on SMEs.

130,000 'missing' apprenticeships

The data is stark. Since the high point in apprenticeship starts in 2014/15, the share of level 2 apprenticeships – often the entry point for young people - has crashed from 60% to just 20%. At the same time, there has been a pronounced shift towards apprenticeships at levels 4 and above, with a growing emphasis on older learners. This shift is happening while nearly a million young people (987,000) are not in education, employment, or training (NEET), and demand for apprenticeships among school leavers continues to outstrip supply.

It's well known that the overall number of apprenticeship starts has declined. In 2016/17, there were 494,400 apprenticeship starts; by 2022/23, this had fallen to 337,000 — a drop of 157,400. But crucially, SMEs account for a staggering 84% of these ‘missing’ apprenticeships.

SMEs are often described as the powerhouse of the UK economy. They are 99% of businesses, three fifths of private-sector employment, and half of all turnover. SMEs are also everywhere, in every community in the country. They are therefore a vital part of the government’s ambitions for both its growth and opportunity missions. With SMEs the traditional creators of entry level apprenticeships too, if the government wants to rebalance the system towards younger learners in pursuit of its wider goals, it must also rebalance towards SMEs.

The reality for SMEs

Our roundtable discussions highlighted both the challenges and the potential of apprenticeships for SMEs. Barriers highlighted included:

• Complexity and cost, with one SME recounting a 6-year journey to fully understand the system and access appropriate support
• Barriers for young people including travel costs and mental health challenges - and nowhere for SMEs to turn for support
• Rapid policy churn, leading to uncertainty for SMEs and making it harder for employers to build apprenticeships into their business planning

Yet, despite these challenges, SMEs shared powerful success stories. Many spoke about the transformative impact of apprenticeships on staff retention, progression, and business growth. When apprenticeships work well, they are a win-win—empowering young people while strengthening local businesses and communities.

What needs to change?

If government wants to reinvigorate SME apprenticeship numbers, our discussions suggested three areas for change:

1. Fit for purpose standards: The design of apprenticeship standards must better reflect the reality of roles in smaller organisations. Unlike larger corporations with highly specialised job functions, SMEs often require employees to wear multiple hats. However, many apprenticeship standards are tightly mapped to narrow occupational roles, making them difficult to apply in smaller businesses. Designing programmes that account for this—such as the newly announced Foundation Apprenticeships—is essential. The recent approval of a Level 2 Assistant Administrator apprenticeship is a promising step in the right direction.

2. De-risking apprenticeships for SMEs: Secondly, government should further ‘de-risk’ apprenticeships for SMEs, particularly when they hire young people facing additional employment barriers. The capacity required to navigate the system is a significant cost for SMEs which can be eased by high-quality intermediary support; intermediaries can also aggregate demand, bringing groups of SMEs together making the economics of apprenticeship provision add up. Clear pathways to access mental health, housing, and financial support for apprentices would make SMEs more confident in hiring and supporting young talent.

3. Policy consistency and clarity: SMEs need a stable policy environment to plan effectively. Constant policy churn creates confusion and discourages engagement — some employers are still asking us about Kickstart! By scaling proven initiatives and avoiding “scheme-itis,” the government can build long-term confidence in and engagement with the apprenticeship system.

A positive future

Our roundtable concluded with notable optimism.

By designing an apprenticeship and skills system that genuinely works for SMEs, we can unlock the potential of apprenticeships to drive growth, boost opportunity, and support young people in communities across the UK. With the right reforms, SMEs can once again be at the heart of an apprenticeship system that delivers for both business and society.

This event was supported by Multiverse. To discuss partnership opportunities with Workwhile on events or other projects, contact us.