Retailers demand changes to apprenticeship levy

Tens of thousands of apprenticeships could be created and hundreds of millions of pounds saved if the flawed apprenticeships levy were reformed, according to a survey of members by the British Retail Consortium.

Five years on from the levy’s introduction, 26 national retailers have told the business lobby group that they could each create about 1,000 new apprenticeships if changes were made.

Millions of pounds of levy support is being wasted every month as the rules surrounding the scheme are so rigid that businesses have found them unsuitable and irrelevant, critics have claimed. During the HGV driver crisis, companies complained that the levy did not support retraining staff as lorry drivers.

Two thirds of retailers polled by the consortium said that more than 40 per cent of their levy was unspent each month, while one business said that it had lost up to £12 million in unspent levy funds since it was introduced in 2017 largely because the rules were too restrictive and counterproductive for retraining its workforce.

Helen Dickinson, chief executive of the British Retail Consortium, said the system “is not fit for purpose and in desperate need of reform. Hundreds of thousands of pounds are being wasted every month. This is not just a financial issue: it represents missed employment opportunities, missed training and missed career progression.”

Retailers said the biggest barriers to hiring more apprentices were that the scheme required them to take 20 per cent of time off, additional costs, the length of the programmes and unsuitable courses.

Research by the Chartered Institute of Personnel and Development found that nearly £2 billion of employers’ levy funds had expired and been returned to the Treasury between 2019 and 2021 because they were unable to spend the pot.

The BRC said that more people could be helped back into work if the government proposed a defined list of high-quality shorter courses.

Last year Ken Murphy, Tesco’s chief executive, called on the government to overhaul the levy and said that reforms could create 8,000 new Tesco jobs alone. The supermarket said that full apprenticeship schemes were unattractive to those who wanted to learn new skills while still working.

It also has proven tricky for smaller shops, which have to fund staffing cover while an apprentice is absent for training.

The levy was introduced by George Osborne when he was chancellor and came into effect in 2017. However, research has found that since then apprenticeships have fallen and far fewer have gone to younger people.

“If government is serious about its ‘levelling up’ agenda, the levy must be made more flexible so retailers can use the funds for high-quality pre-employment courses, short in-work developmental courses and to cover other costs related to training their people,” Dickinson said.

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