The government’s apprenticeship system is “failing” the logistics industry, according to trade body Logistics UK.
The group has joined a long list of food industry players who have called for an overhaul of the heavily criticised funding system.
The levy, which was rolled out in April 2017, requires businesses with an annual wage bill of more than £3m to put the equivalent to 0.5% of their payroll costs into a training fund.
The money can then be accessed to fund an array of training schemes aimed at both retaining and attracting talent to help tackle the UK’s labour shortage issues.
However, a recent Logistics UK survey showed that, over the past five years, only 4% of levy-paying employer accounts were able to fully utilise the funds available to them.
“Our latest report found that the total estimated amount of funding possible to be recovered by businesses in transport and logistics since the levy was introduced was £250m,” said Logistics UK deputy director of policy Michelle Gardner. “However, during the same period, the sector paid in £825m in levy funds.
“This is unacceptable – especially considering the current economic climate – and highlights the urgent need to overhaul the Apprenticeship Levy, especially if industry’s long-term skills shortage is to be resolved.”
Around 68% of respondents said they were interested in taking on apprentices at a time when the logistics sector has faced skills gaps in different areas, from HGV driving to mechanical engineering.
But traditionally, businesses across the sector had faced “too many barriers to entry” for both candidates and employers, the trade body said.
This included requirements around minimum skills and minimum duration of the apprenticeship, as well as “restrictive” business size specifications that prevented further uptake of the training scheme, it claimed.
“There is a requirement for apprenticeship starters to have achieved a pass mark in both English and Maths at GCSE level. However, in the view of Logistics UK this is restrictive and could prevent potentially valuable members of the workforce from entering industry,” the group’s policy advisor, Jonas Keat, explained.
”While we understand this may be necessary for some apprenticeships, we do not feel it is applicable to all logistics related apprenticeships.”
Additionally, the duration of apprenticeships, currently required to last for a minimum of 12 months, proved unfitting for businesses and applicants in the logistics sector, Keat said.
“This is restrictive to some logistics related apprenticeships that do not necessitate that full duration, such as the HGV driving apprenticeship.
“HGV driver training can be completed in a much shorter timeframe and if the apprenticeship levy were to be reformed enabling funds to be used for other forms of training, then that money could be used to train new drivers much quicker.”
Logistics UK is asking for a “radical overhaul” of the Apprenticeship Levy system if businesses “which make regular levy payments into the scheme are to be able to train new recruits using these funds”.
“Since 2021, Logistics UK has been highlighting to government the need for the current system to be replaced with a more flexible Training Levy to enable realistic training and development programmes for new recruits”, Gardner said.
“The industry itself is working hard to fill skills gaps and introduce the next generation of workers to the, however it is now vital that government responds accordingly to remove the barriers and ensure a continued skilled workforce is available to keep the UK economy supplied with everything it needs.
”It is clear the demand across industry to support growing talent is there, but the current system is fundamentally flawed,” Gardner added.
Logistics UK joins other trade representatives such as the British Retail Consortium, as well as the bosses of prominent retail businesses including M&S, the Co-op and Superdrug, in calls for a reform of the controversial levy.
Superdrug CEO Peter Macnab this week said overhauling the scheme would ensure “valuable funds are no longer wasted”.
The Co-op revealed in February that more than £600m had been returned to the Treasury last year because businesses were unable to meet the rigid rules for making use of the money.
The BRC has previously said that, so far, £3.5bn of levy funds had expired under “the use-it-or-lose-it scheme” because businesses were unable to meet the restrictive requirements they must meet to draw on the levy funds they have paid in.