As we continue to celebrate #CollegesWeek2025, this thought piece by Head of FSB Wales, Ben Cottam, explores how deeper collaboration between SMEs and colleges can address skills shortages, support apprenticeships, and create new opportunities for both learners and employers.
Here, he highlights that investment in further education is not just a benefit to students but a crucial driver of business growth and economic resilience.
It’s an overused truism that ‘small businesses are the backbone of our economy’. After all, smaller and medium sized businesses (SMEs) account for 99% of all businesses in Wales and over 60% of private sector employment.
As important as they are, though, smaller businesses obviously don’t exist in isolation. Successful small businesses require a healthy and well-functioning ecosystem of different organisations and actors within the local economy which can respond to their needs and provide partnerships and opportunities which allow them to grow. Our colleges across Wales are among the most important aspects of that ecosystem.
It’s easy to see the relationship between businesses and colleges as transactional. We know that colleges are an important part of responding to the skills needs of our economy - more on this shortly - but colleges also act as central convening points for our local economies - institutions which bring together private, public and third sectors, pool resources and expertise and help develop outcomes which benefit learners and employers alike. It shouldn’t be forgotten too that with significant operations and substantial footprints in our towns and cities, colleges also help foster opportunities and relationships with smaller businesses through their supply chains.
It is in delivering and developing skills for industry which helps form many of the day-to-day relationships between those businesses and colleges.
Responding to the skills needs of businesses is a fundamental part of not only returning our economy to more consistent growth but also helping to adapt that economy and its businesses to the demands of the future.
Skills gaps are a persistent top three issue for SMEs, and act as a brake on investment, development and growth. OECD research finds that the UK could benefit from a 5% productivity gain if the level of skills mismatch was reduced to OECD best practice levels.
Further education colleges have a key role to play in bridging these skills gaps and in developing the workforce required to deliver economic growth. Effective collaboration between businesses and colleges can boost employability, aid the development of emerging sectors and support the growth of small businesses in Wales.
Further education colleges across Wales are already doing this in several ways. Colleges are key providers of apprenticeship programmes, allowing individuals to earn and learn, while businesses gain skilled workers. They provide practical experience, bridging the gap between education and employment, including programmes that help with the transition from education to employment. In addition, colleges offer flexible training solutions to upskill or reskill existing employees, helping small businesses adapt to changing technologies and market demands.
Businesses and their owners or managers often maintain relationships with colleges as skills providers over many years. However, as our 2023 report, A Skills Led Economy for Wales, found, at times relationships between businesses and education providers have often developed in ad hoc and informal ways, via personal connections, and are therefore at risk of being unsustainable in the longer-term, for instance if staff move on to another other organisation. The benefit, therefore, of providing a broader bridge between businesses and colleges on a more regularised basis is important.
We have seen colleges in Wales develop these important links via initiatives such as Cardiff and Vale College thought leadership seminars or FSB Business Breakfasts hosted by both Grŵp Llandrillo Menai and Coleg Cambria in North Wales. Activity such as this helps to position colleges as ‘partners for business growth’ - not just by responding to the skills needs of businesses but by convening business networks and crucially, helping inform the provision of courses and qualifications in the future.
There is much more that can be done though, to grow the relationship between colleges and SMEs and help inform the needs of those smaller businesses.
FSB has made the case that there is an important role here for the new tertiary education body Medr to play. We would like to see Medr deliver an SME-focused strategy with a mission to skills-based growth that ensures small businesses have access to an equitable, financially viable and straight-forward way to recruit and train. Medr could also provide a central hub for research and analysis, helping SMEs and educational institutions understand the skills gaps within the Welsh economy in the short-term, while also commissioning research to the same ends over the long term.
Cuts to apprenticeship funding in recent years have been painful for organisations and individuals and FSB has joined with the tireless efforts of organisations such has ColegauCymru and the National Training Federation for Wales (NTFW) to make the case for reinforcing apprenticeship funding and investment to make sure that opportunities remain in the future both for businesses and crucially, those they employ.
Given that these financial pressures are likely to remain for the foreseeable future, it’s important that we maintain this conversation with Welsh Government. Government should be in no doubt that ensuring colleges have the funding to respond to the needs of our smaller businesses, is a pre-requisite for any conversation about future growth or realising the opportunity to grow the green skills we know we will need to be competitive and showcase Wales as one of the best places to invest - whether large or small businesses.
And so, this week, in #CollegesWeek2025, it’s an opportunity to remind ourselves of the dynamic and positive relationships between colleges and SMEs across Wales but also that at the very heart of this is that those relationships are about individuals and their aspirations - whether this is the SME owner or all those they employ.
We wish our college staff across Wales and all those whose learning they support all the very best this #CollegesWeek2025.
Further Information
Ben Cottam, Head of Wales, Federation of Small Businesses
Ben Cottam is Head of Wales at FSB (Federation of Small Businesses) - Wales largest business representative organisation representing the interest of thousands of business owners across industrial sectors. FSB is a leading voice on a number of issues relating to the economy including entrepreneurship, self-employment, skills, business support and growth, infrastructure and wider issues around economic development.
Ben joined FSB from accountancy professional body ACCA (Association of Chartered Certified Accountants) where he led ACCA Wales for over 8 years helping support the development of the profession across the private, public and third sectors. Earlier in his career, Ben also worked within the National Assembly for Wales, now Senedd Cymru.
Ben is a member of a number of boards and groups throughout Wales in his role engaging Welsh and UK governments and other decision makers. He previously served for some years as Chair of, and then member of the Local Advisory Board of Cardiff & Vale College’s Career Ready programme which delivered career-focussed employability opportunities for young people across South Wales.
