The postcode lottery of small business support is undermining the government’s ability to address England’s national skills shortages, according to a new report by IPPR. Under the current model, which has emerged organically in response to the needs of employers, ‘coldspots’ with little or no available support are preventing employers from recruiting and retaining apprentices.

It comes as apprenticeship numbers have "fallen off a cliff edge" following government reform in 2017, with starts declining from a peak of half a million in 2015 to fewer than 350,000 in 2021/22 (the latest data available), representing a fall of over 30%.

Half of apprentices are now dropping out of their apprenticeships and without action the government will fail to meet its target to increase retention to 65% by 2025.

Alongside the fall in numbers and poor retention, apprenticeships are also increasingly inaccessible to young people, ethnic minority groups and those in-work on low pay or in precarious contracts. Entry level apprenticeships fell by 69% between 2014/15 and 2021/22, while higher level apprenticeships increased by over 400%.

Addressing the shortcomings of the uneven geography of business support could create more opportunities for England’s workforce, address poor productivity, promote social mobility and help lift people out of poverty.

IPPR recommends that a network of ‘one-stop-shops’ is necessary to ensure that employers in poorly served communities are able to upskill. In order to embed business support, the government should also establish an independent umbrella body, ‘Apprenticeship Support England’.

IPPR says that the one-stop-shops would provide business engagement support to increase demand for apprenticeships, practical 1-2-1 help to navigate the apprenticeship creation process, support employers to access funding and promote the benefits of apprenticeships.

On top of this, IPPR recommends that:

• The government redirect the 10% top-up it provides to employers to fund Apprenticeships Support England and seed funding to support the development of employer support networks, especially in places that can benefit the most; and
• The government builds an evidence base of ‘what works’ by formally evaluating employer support networks to ensure that employers receive the support they need.

Anna Ambrose, Director at the London Progression Collaboration and co-author of the report, said:

“Despite significant demand, the lack of support available to businesses is failing thousands of apprentices every year. That means fewer skilled carpenters, plumbers and bricklayers to build the homes our communities need, fewer social workers to support the most vulnerable and fewer skilled engineers and environmentalists to protect our environment from climate change. With the right support for small businesses across England, thousands of young people at the beginning of their careers could benefit from apprenticeships every year. Doing so would lift more people out of poverty and precarious work and turn the dial on nationwide skills shortages that are holding back economic growth.”