Over £200m of potential retail investment into the UK labour market has gone to waste over the past 12 months due to the inflexibility of the Apprenticeship Levy, according to the British Retail Consortium (BRC), which found that retailers could have offered an additional 12,000 more apprenticeships if the scheme was more flexible.
While the retail industry took on 17,000 apprenticeships over the past year, this figure could be boosted by 70% if the Apprenticeship Levy was reformed, found a survey conducted by the BRC.
The body has claimed that a more flexible system would not cost the taxpayer, but would result in more apprentices being taken on, plus an increase in training opportunities for people in retail, equipping them with the skills that the economy needs to grow. It stated that if the Levy was 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.
Reforms could also play a central role in ‘Levelling Up’ across the Northwest, Northeast, and Yorkshire and the Humber, which are among the regions that would see the most significant rise in training if the Levy funding system was more flexible, revealed the survey.
As it stands, the inflexible Levy scheme has seen nearly £500,000 of potential retail investment into the labour market go to waste on a daily basis, stated the BRC. 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.
The BRC wants the government to 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
BRC chief executive Helen Dickinson OBE, 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.”
The Co-op has also been vocal about the need for reform. Back in February, Co-op group CEO, Shirine Khoury-Haq said: “Apprenticeships are one of the best tools available to promote social mobility, so business must play a central role in providing young people with an equal chance to gain the skills they need to fulfil their potential – particularly in the current economic climate.
“The Apprenticeship Levy goes some way to encouraging businesses to invest in their people, but the government needs to better support businesses to make apprenticeships accessible to all and ensure that funding is used as effectively as possible.
“By working together, businesses and government have the potential to bring an established career and brighter future for tens of thousands of young people.”
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