Memorandum 2
Submission from the Federation of Small
Businesses (FSB)
FSB RESPONSE TO
THE DRAFT
APPRENTICESHIPS BILL
INQUIRY
The Federation of Small Businesses (FSB) welcomes
the opportunity to respond to the above named inquiry.
The FSB is the UK's leading non-party political
lobbying group of UK small businesses, existing to promote and
protect the interests of all who own and manage their own businesses.
With over 215,000 members, the FSB is also the largest organisation
representing small and medium sized businesses in the UK.
According to Labour Force Surveys, 69% of all
apprenticeships take place in small businesses. An inherent problem
for businesses with fewer than 10 employees remains the cost to
the business of training an apprentice.
Does the bill meet the Government's policy objectives
to set up a system of "world class" apprenticeships
in the most effective way within a reasonable time frame? Will
the bill lead to a renaissance in apprenticeships?
The FSB feels that the Minimum Wage increase
for Apprentices from £80 to £95 at the Trades Union
Congress Conference was a good first step; however, a true renaissance
will only occur if an Apprentice can achieve parity with their
other working counterparts. The development rate minimum wage
for 16-18 year olds is still higher at £110 for a 35 hour
working week. The FSB believes that this Apprenticeship Bill should
provide the platform for equality so that there is value in taking
and completing an apprenticeship. The FSB advocates a section
in the Bill for an Apprenticeship rate to be set which is on a
par with the Minimum Wage Development rate.
The wage contribution on offer for taking on
an Apprentice is welcome; now the Bill must go one step further
and ensure that Apprenticeships are deemed as an equal learning
route to working life.
What is the cost?
The FSB is concerned of the potential administrative
burden for the smallest employers wishing to claim the wage subsidy
for apprentices. The LSC have confirmed that they have had a significant
under spend on the take-up of wage contribution payments to small
businesses and this is largely due to a lack of awareness of the
policy. There is also the problem of the policy:
"You can choose to claim either £5
per hour or the actual net hourly rate for employees that are
released for direct training with their training provider".[11]
The FSB believes that the words "or actual
wage costs" leads to a bureaucratic process of recouping
the true cost of training that many small business simply do not
have the time to investigate. Clause 21 of the Draft Apprenticeships
Bill should provide duties on the LSC for businesses with fewer
than 50 employees to be able to easily access wage contributions.
A recent FSB Apprenticeships Survey of 1,200
small businesses[12]
found that only 5% of businesses were aware of the ability to
claim wage contribution payments for providing time for apprentices
to train.
Awareness is not the only problem, small businesses
are complaining that the direct payment of wage contribution is
not reaching their business bank accounts until three months after
Government funded training—this leads to significant concern
surrounding the cash flows.
The FSB calls on the Government to ensure the
wage contribution policy is better advertised and the payment
procedure is more efficient.
What impact the bill will have on current institutional
structures?
Learning and Skills Council
The FSB would like reference made to the fact
that the Learning and Skills Council will be abolished by 2010.
Small businesses need to be made aware of the central funding
body for skills, particularly as this is the institution where
they will be accessing information on wage contribution.
Group Training Associations
The FSB supports Group Training Associations
if they make it simpler for small businesses to employ Apprentices
and removes the burdens of bureaucracy involved in taking on an
apprentice. Removal of the employment risk is welcome, however,
will it mean that the Group Training Association becomes the employer
and if so how will this impact on the rights of the SME and the
apprentice.
Is there anything missing from the draft bill?
The FSB is concerned that the Bill does not
provide detailed information on which age groups are included
within the prospective system. The FSB wholeheartedly supports
lifelong learning and apprenticeships being taken at any age,
however, the Bill needs to provide clarity as to whether it is
simply focussed at 16-18 year olds or whether 19+ are included.
September 2008
11 LSC-Train to Gain Website- http://readingroom.lsc.gov.uk/lsc/YorkshireandtheHumber/yhr-ttg-wagecont-employerbriefingnote-march2007.pdf Back
12
FSB Apprenticeships Survey-July 2008. 1,200 respondents http://www.fsb.org.uk/policy/images/apprenticeships%20survey.pdf Back
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