Retailers suggest Apprenticeship Levy system 'not fit for purpose'

Some retailers estimate they could create up to 1,000 new apprenticeships each if the Apprenticeship Levy system was reformed, according to the latest findings by the British Retail Consortium (BRC).

Ahead of today’s APPG on Apprenticeships Five Year Review of the Apprenticeship Levy, the BRC has published results from its latest survey in the hope that it will prompt Government to take much needed action.

The survey highlights the flaws in the Apprenticeship Levy system and draws attention to much-needed reforms. The survey’s findings include:

• Up to 1,000 new apprenticeships created from most businesses if the system was reformed
• 95% of respondents said the system needs change
• Two thirds of respondents say more than 40% of their Levy funds go unspent
• Individual retailers have lost up to £12 million per company in unspent Levy funds since 2017
• The current system is inadequate, inflexible, and does not support essential courses that are needed for a thriving retail industry

The BRC and its members call on the Government to make the Levy more flexible in order 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

By making the above changes, the BRC suggests that the Government will help retailers to increase the number of apprenticeships they offer, fill skills gaps, and create new opportunities for retail colleagues.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said: “It is crystal clear that the Apprenticeship Levy system is not fit for purpose, and in desperate need of reform. Hundreds of thousands of pounds are being wasted every month. But this is not just a financial issue, it represents missed employment opportunities, missed training, and missed career progression.

“Retailers want to invest in a higher skilled, more productive, and better paid workforce. They want to create more opportunities and contribute to local communities across the country. However, this broken system is holding them back. 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.”