Tesco chairman John Allan has called for urgent reform of the Apprenticeship Levy, after warning it has backfired against the government’s original aims.
Ahead of the launch today of a report by the business lobby London First, of which he is outgoing chairman, Allan told the Daily Telegraph ministers needed to simplify the administration of the levy and make apprenticeships more flexible.
“Unlike Brexit, which is difficult and complicated and not entirely in the hands of our government, the Apprentice Levy is simple to fix,” he said.
“The chancellor promised a review in the Budget last November. That as far as we can see has not yet happened.
“It is not working at all well. If you don’t want business to give up on this and treat it as just a tax you have got to make these simple changes. I think most businesses would agree with it.
“The sad thing is some businesses are giving up on apprentices altogether and just seeing it as another tax.”
The Apprenticeship Levy requires all but the smallest employers to pay 0.5pc of payroll into a fund to invest in jobs and training for young people.
Allan said the impact on companies was particularly bad in London, which has around half the rate of apprenticeships as the rest of the country.