Trade bodies urge Govt to reform ‘broken’ apprenticeship levy
£3.5bn of potential investment into the UK labour market has “gone to waste” at a time when training is urgently needed
Four trade bodies within UK retail and hospitality, including the BRC, have called on the government to reform the “broken” apprenticeship levy system, as so far, £3.5bn has reportedly expired before businesses could make use of it.
This call on the government comes as businesses were also unable to meet the restrictive requirements of this “use-it-or-lose-it” scheme, which they had to meet in order to make use of funds.
In a letter sent to the government, the British Retail Consortium (BRC), UKHospitality, techUK, and the Recruitment and Employment Confederation (REC) said that the government was “holding back investment” in critical training that is vital to train the future workforce, provide better wages, increase productivity, and boost economic growth.
Furthermore, UK job vacancies have soared to 40% on pre-pandemic levels, as the economy’s growth prospects shrink once more.
In spite of this, trade bodies believe that businesses are “being blocked” from investing in their workforce and creating job opportunities due to a “broken” Apprenticeship Levy system.
According to the BRC, the current system requires businesses to contribute hundreds of millions of pounds, yet it only allows these funds to be spent in an overly restricted way. For example, businesses cannot use the money to fund any courses that are shorter than one year in duration.
As a result, £3.5bn of potential investment into the UK labour market has “gone to waste” at a time when training is urgently needed.
The trade bodies have suggested a solution, which would widen the apprenticeship levy into a broader ‘Skills Levy’ to allow businesses to spend their funds on a wider range of high quality, accredited courses including shorter, more targeted courses, or more tailored upskilling programmes, including functional and digital skills.
Crucially, these changes would reportedly not cost the Exchequer a penny, but by unlocking that funding, businesses could invest millions more into equipping their workforces with the essential skills and training that the economy needs to grow.
Helen Dickinson OBE, chief executive of the BRC, said: “The government must urgently fix this £3.5bn mistake, or it risks letting the UK’s anaemic productivity trail further behind its international counterparts.
“Retailers want to invest more in training a higher skilled, more productive and better paid workforce. They want to create more opportunities for people up and down the country. They want to contribute more to growth.”
She added: “The broken Apprenticeship system is a ball and chain around their efforts. Without reforms to the Levy, retail will not be able to turbo boost equipping its workforce for the future.”
