- New major Federation of Small Businesses (FSB) report shines fresh light on acute skills and labour shortages in England
- UK’s largest business group calls for a revamp of apprentice and T Level incentives, and for targeted interventions to help those furthest from the employment market gain skills and relevant work experience
- Tax relief for sole trader training should be expanded to help them expand their business.
Small firms in England are being held back by poor vocational skill provision in schools, challenges in accessing apprenticeships, and inadequate incentives to retrain and upskill, according to the latest FSB research, published today.
The Scaling up Skills report finds that the vast majority (78%) of small firms are currently struggling to recruit the right people, with eight in ten (82%) of those firms flagging a lack of relevant qualifications, skills and experience among candidates – the majority (60%) also say a lack of applicants is an issue.
More positively, five in six small employers (83%) provided training for themselves and/or their staff in the previous twelve months, with seven days of training and development per staff member on average.
Though critical to future sustainable growth, only a quarter (26%) of small employers say they have undertaken leadership and management training over the same period.
Self-employed people, meanwhile, are being held back from realising their business’s full potential by a lack of encouragement to get them to learn skills which are outside their core operations but which are nonetheless vital for growth. Four in five sole traders (80%) have no training plan, budget or relationship with a training provider, while two in five (40%) have not completed any training or professional development over the past year.
With apprenticeship starts tumbling since the introduction of the Apprenticeship Levy, one in five small employers say that bringing back the £3,000 incentive to hire an apprentice which existed over lockdowns would encourage them to hire additional apprentices.
A similar proportion (22%) say financial support around hosting T Level placements would encourage them to bring more young people into their business.
In light of the findings, FSB is urging the Education Secretary and other Cabinet ministers to:
- Establish a target in legislation that by 2035 no young person in England should complete compulsory education without at least Level 2 qualifications, and that three-quarters of the working age population in England should have at least Level 3 qualifications, with at least two-thirds of working-age people in every English region qualified to this level.
- Launch a nationwide young enterprise competition for both school leavers and university/college leavers, with the winner receiving start-up funding; provide grant funding so all schools can offer programmes to encourage enterprise, such as Young Enterprise’s Company Programme; and ensure young people have encounters with employers that reflect their local labour market by amending statutory careers guidance.
- Maintain the Apprenticeship Levy and government funding for apprenticeship training within small firms; revamp financial incentives to take on apprentices and host T Level placements; and provide apprentices with free bus passes.
- Increase the Corporation Tax relief for employers training low or medium-skilled employees, and build on the success of Skills Bootcamps by introducing 50+ Skills Bootcamps, which would provide the skills older people require to remain in or re-enter the labour market.
- Extend tax relief for sole traders who up-/reskill to include training aimed at securing business growth, and widen rollout of the EnterprisingYou programme.
FSB Policy Chair Tina McKenzie said: “Our members tell us their growth potential is being held back by a lack of appropriately-skilled staff, with vital roles going unfilled, ultimately harming the economy.
“This skills and training deficit is a perennial issue, but far from an insoluble one. Our report sets out a roadmap for change on every level, from schools to apprenticeships to workplaces.
“We also want more to be done to upskill groups further away from the workplace, such as ex-offenders, older workers, and disabled people, who could help fill skills shortages and find meaningful employment if given a helping hand.
“We need to take a holistic approach to skills and training, from nurturing young people’s entrepreneurial instincts and vocational skills in schools right through to retraining later in life to take advantage of new opportunities.
“As things stand, too many young people, through no fault of their own, are leaving school without the knowledge, awareness and advice they need to excel in commercial settings and start businesses. That has to change.
“Equally, we have to provide opportunities to up- and reskill throughout careers. The economy is changing apace; there is huge potential for growth, if we can get people with the right skills in place.
“With our net zero deadlines approaching, and with technology opening up whole new fields such as AI and robotics for entrepreneurs, the need to react to global shifts with responsive education, hands-on experience, and relevant training has never been greater.
“The challenges involved are huge, but the potential rewards are even greater. If the Government is serious about levelling up every region of England, and rebuilding the economy, our recommendations definitely need to be on the new Education Secretary’s slate.
“Education policy cannot exist in a silo – the new minister will need to work with Cabinet colleagues to ensure a joined-up approach to improving skills and education levels to where we as a country need them to be.”
Notes to Editors
1) FSB surveyed 881 small businesses between February and March 2022.
2) The Scaling up Skills: Developing education and training to help small businesses and the economy report can be found here: fsb.org.uk/resource-report/scaling-up-skills
As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.