Employers have "outdated" views on apprenticeships, a business entrepreneur has warned, prompting concerns the "complicated" system will take a toll on young people's job prospects.
Jason Holt, a jeweller and social entrepreneur commissioned by government ministers to review ways to make apprenticeships simpler and more accessible, said boosting awareness among small businesses is key to unlocking the economic benefits of apprenticeships.
He recommended the government improve communication about apprenticeships, shift the balance of influence towards employers taking on apprentices and away from providers of training schemes, and simplify the system.
Ministers, including Education Secretary Michael Gove and Business Secretary Vince Cable, welcomed the Holt Review, and committed to taking measures to improve apprenticeships.
These will include modifying the Apprenticeship Grant for Employers (AGE), agreeing new standards for training providers, and improving communication about schemes - including via groups such as lawyers, who advise small and medium employers.
Publishing his report, Holt said: "Whilst apprenticeships offer undoubted growth opportunities for businesses, not enough SMEs are taking advantage.
"This is because they have an outdated view of apprenticeships, are often in the dark, and frequently do not receive the specific training provision their apprentices need.
"My recommendations are intended to address these issues with government, employers and providers all playing a part."
Gove said: "I am very grateful to Jason Holt for the considerable time and effort he has devoted to producing his report. He is certainly right that we need to give employers, and not training providers, the power and freedom to shape their apprenticeships, and make the process as simple as possible for every employer.
"Jason has raised important issues for us to consider - we can and must go even further, to strip out bureaucracy and to ensure quality."
Cable added: "Only a small minority of SMEs currently employ apprentices. Many of the rest are missing out on an effective way of growing and up-skilling their businesses.
"We hope that the measures announced today will make a difference by raising awareness of the benefits of apprenticeships amongst SMEs and making it as easy as possible for these businesses to take on an apprentice."
In its detailed response to the review, the government said its refinements to the £1,500 AGE would involve delivering it in a single payment, rather than the current two.
Employers will be able to claim grants for up to 10 apprentices, and the scheme will be opened to employers who have not hired an apprentice in the past year.
Medium sized employers, who have between 250 and 1,000 employees, will be eligible to claim the grant.
Skills Minister John Hayes announced the government's response on a visit to Lincoln's PK Automotive, which is taking on its first apprentices.
Business owner Paul Killingsworth said: "My apprentices, along with my trained technicians, are an investment in the development and future of my business."
Shadow skills and further education minister Gordon Marsden said: "I welcome Jason Holt's valuable report, which challenges the Tory-led Government to do more to help small and medium-sized businesses take on apprenticeships.
"With over a million unemployed young people and the number of young people starting apprenticeships falling across a third of England's regions this past year, this action is urgently needed.
"Many of the report's recommendations echo Labour's plan to boost apprenticeships, such as boosting the role of Local Enterprise Partnerships, professional and businesses groups in promoting apprenticeships, expanding the role of Group Training Associations and helping small firms buddy up with larger companies to offer apprenticeships throughout the supply chain.
"To provide more opportunities and help create an economy which works better for working people, we need to make it easier for small firms to take on apprentices.
"Sadly, ministers have refused to back Labour's plan to boost apprenticeships and have instead adopted a hands-off approach."