BRC CEO Helen Dickinson has urged the government to reform its “broken” Apprenticeship Levy system if it wants to unlock economic growth and help businesses recruit more widely amid a nation-wide skills shortage.
Dickinson is one of four trade body chiefs to have signed an open letter to government arguing the current system is too restrictive and is “holding back” employers from investing funds more flexibly.
Under the current scheme, all businesses with an annual payroll above £3m have to pay the monthly levy towards an annual allowance that can be reinvested in apprenticeship training.
However, businesses are not allowed to carry over any unused funds into the next tax year, resulting in around £3.5bn in expired funds going to waste since 2019, according to a January report by City & Guilds.
Dickinson has urged the government to fix this “£3.5bn mistake” or risk letting the UK’s “anaemic productivity” fall further behind its global counters.
“Retailers want to invest more in training a higher-skilled, more productive and better-paid workforce,” she said. “They want to create more opportunities for people up and down the country.
“They want to contribute more to growth. But 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.”
Almost two thirds of retailers responding to a BRC survey in January 2022 said more 40% of their annual levy fund remained unspent. The survey found that potentially thousands of new apprenticeship places could be created in the industry were the system reformed.
The letter was sent on Friday (3 February) to Robert Halfron, minister for skills, apprenticeships & higher education, and John Glen, chief secretary to the Treasury.
Along with Dickinson, it is also signed by UKHospitality CEO Kate Nicholls, TechUK CEO Julian David and Recruitment & Employment Confederation CEO Neil Carberry.
They call for the levy to be replaced by a broader ‘Skills Levy’ that enables employers to invest in training better suited to its individual needs.
“A Skills Levy should reflect the evolving needs of the education landscape” by enabling companies to invest in their employees through short, modular courses, and online learning,” says the letter.
Existing staff could also benefit from shorter, more targeted upskilling programmes, which are not eligible for funding under the current scheme, the signatories add.
The letter comes at a time when the latest data from the Office for National Statistics shows that UK job vacancies between October and December were 45% higher compared with pre-pandemic levels.
UKHospitality’s Nicholls said: “A much-needed overhaul of the system would enable businesses to go even further in their skills investment and deliver huge benefits for the wider labour market too, particularly in helping over-50s and the wider group of economically inactive back into work.”
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