Small businesses are the engine of the British economy. With nearly 17 million jobs and half of private sector turnover dependent on small and medium-sized enterprises (SMEs), it’s an area of the economy that needs to be prioritised in debates about growth.
Goldman Sachs’s 10,000 Small Businesses helps entrepreneurs to create jobs and economic opportunity by providing access to education and business support. But one of the greatest challenges small and medium-sized companies face is getting the right people, with the right skills, into the right jobs. This is the number one barrier to growth, and the most pressing challenge within this is a chronic shortage of digital skills.
From machine learning to quantitative analysis to coding, understanding and embedding these skills into small businesses can be overwhelming. The latest research from the tech start-up Multiverse finds UK business leaders believe that on-the-job learning is the key way to tackle this.
For businesses and the government, the foremost question is how to train hundreds of thousands of people to ensure Britain’s SMEs retain their competitive advantage. One possible answer is apprenticeships and using the Apprenticeship Levy as effectively as possible.
The levy sets aside funds for the training and reskilling of hundreds of thousands of people each year. Since the system was introduced in 2017, more than 1.8 million people have signed up to be an apprentice. The benefits of apprenticeships are far-reaching for businesses. They support young people to enter the labour market. They mean many older workers, employed in jobs that are shifting significantly due to technological advancements, have a pathway to be retrained in new roles. All of this creates huge value for businesses in closing the data and digital skills gaps.
But more than this, one of the unsung heroes of the system is the way in which the Apprenticeship Levy funding can be transferred to SMEs throughout the country. This is the golden ticket for resolving the skills challenges that the UK’s 5.5 million smallest companies face.
Over the last year, at Goldman Sachs we have donated £1.5m of our levy funding to SMEs who have been through our 10,000 Small Businesses UK programme, a high-growth business education programme for businesses across the UK, delivered in partnership with the Saïd Business School, Oxford University and Aston University.
One of these businesses is a sports company that placed several of its staff on data apprenticeships. The company transformed how it analysed its data, became more sophisticated in how it understood customers’ behaviour, and developed new models to predict which sales tactics work best. The impact has been clear – £200,000 growth in their bottom line, directly coming from upskilling their existing workforce in high-level data analysis.
This is just one example of how the apprenticeship system is delivering for SMEs and delivering for the economy. At Goldman Sachs we’re doubling down on this approach. If small businesses are to continue being the engine of UK growth in a future dominated by AI and technological developments, maintaining an apprenticeship system that lets the biggest businesses support the smallest companies to develop skills is critical.