Retailers could have offered 12,000 more apprenticeships over the past year if it was not for the Government’s failure to reform the Apprenticeship Levy, according to a survey by the British Retail Consortium (BRC). The industry took on approximately 17,000 apprenticeships in that period, meaning Levy reform could boost this by 70%.
A more flexible system would not cost the taxpayer a penny yet would both boost apprenticeship numbers and open up additional training opportunities for people in retail, equipping them with the skills that the economy needs to grow. If the Levy were more flexible, retailers would have been able to train over 20,000 more people including 7,000 in digital skills, helping the industry prepare for the huge technological transformation currently underway.
The survey also revealed how vital reforms would be for ‘Levelling Up’. The Northwest, Northeast, and Yorkshire and the Humber are among the regions that would see the most significant rise in training if the Levy funding system was more flexible.
As a result of the inflexible Levy scheme, over £200m of potential retail investment into the UK labour market has gone to waste over the past 12 months, equivalent to nearly £500,000 every single day. This is because the Apprenticeship Levy is a “use it or lose it” system requiring businesses to contribute hundreds of millions of pounds into a pot, but only allows funds to be spent in an overly restricted way. For example, retailers cannot use the money to fund any courses that are shorter than one year.
Government must widen the Apprenticeship Levy into a broader Skills Levy and make it more flexible to:
- Fund high quality pre-employment courses to help potential apprentices reach the required level to begin a full apprenticeship
- Allow apprenticeship funding to cover some costs associated with hiring an apprentice, for example covering the cost of back-filling roles while apprentices are on off-the-job training
- Provide high-quality short courses, including functional and digital skills, to allow existing employees to upskill or transition to new roles, where a full apprenticeship is not necessary
- Allow Levy-payers in Devolved nations to directly access the funds they are being compelled to pay as the Levy in these Nations is effectively another employment tax, penalising businesses for employing workers
Apprenticeships are crucial for employees and businesses, providing vital opportunities for people to get into the workplace and develop essential skills that will support them through their careers, but the system that is meant to enable these opportunities does the exact opposite.
Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said:
“It could not be clearer that reform is needed. Tens of thousands of people up and down the country are missing out on apprenticeships, training and career progression. Retailers are blocked from investing in their workforce; harming productivity, wages and the Government’s levelling up agenda. Government must use the upcoming Budget as an opportunity to introduce the necessary reforms – it really is a no-brainer.”