Why Apprenticeship Levy reform is crucial for industry growth
Apprenticeships hold the key to addressing the UK’s skills shortage and transforming the retail workforce for the future.
But with half of retailers’ £250 million Apprenticeship Levy contributions going unspent, urgent reform is needed. Luiza Paludo Gomes, Employment and Skills Adviser at the BRC, outlines why the Government must unlock these funds, allow flexibility in training options, and ensure retailers have access to the right resources. By doing so, retail can create better jobs, improve productivity, and drive long-term economic growth.
By Luiza Paludo Gomes, Employment and Skills Adviser at the BRC:
A strong economy relies on a strong retail industry. And for the retail industry to be strong, it needs high skilled workers.
With retail rapidly undergoing large-scale transformation, apprenticeships are a brilliant way to deliver the skills the industry needs, now and in the future. They can also drive up social mobility, upskill older workers returning to the workforce, and help young people starting out in retail build their careers.
Never Miss a Retail Update!In 2017, the Government introduced the Apprenticeship Levy to help address the UK’s shortage of skilled workers. While the scheme has been important in training up many apprentices in key industries – it has become little more than yet another added cost for the many retailers who pay into the pot but have been left unable to make use of it. Approximately 40-50% of the current retail workforce needs upskilling, as retail focus on new, better paid, more productive roles. It could have been the perfect match: a need for upskilling joined with available Levy funds. But alarmingly, half of the retail industry’s £250 million apprenticeship levy contribution goes unspent.
For years, the BRC has called for the Apprenticeship Levy to be reformed to unlock investment in retail jobs. The Labour Government has committed to widening the current system into a Growth and Skills Levy. By introducing greater flexibility in how these funds can be spent, retailers could unlock tens of thousands of new training opportunities within the industry.
While we wait to see full details on what the new system will entail, retailers number one priority remains to allow businesses to spend funds on a wider range of high quality, accredited courses. These need to include: pre-employment courses, and shorter courses such as functional and digital skills to enable existing employees to upskill or transition to new roles. The new system must also cover some of the currently ineligible costs associated with hiring an apprentice such as covering the cost of back-filling roles while apprentices are on off-the-job training. There also needs to be collaboration with the Devolved administrations so businesses can better access relevant funds, where the Levy is effectively just a tax.
Some early details of the new Levy system are concerning. The Government announced plans to reduce Level 7 Apprenticeships in the hope that it will stimulate more spending on Level 3 – 5 Apprenticeships. But, with eight in ten Apprenticeships already in Level 2 and 3, it is clear that retailers are already sufficiently prioritising investment in these apprenticeships. Removing Level 7 Apprenticeships is unlikely to increase uptake of lower level apprenticeships, it will instead serve as a barrier to upskilling mid and more senior level colleagues to become the senior leaders of tomorrow.
If Government wants to direct more investment at lower level apprenticeships, it should work in partnership with businesses to unlock barriers, including priorities I mentioned earlier. It needs to ensure it truly understands business needs before cutting apprenticeship types that can be funded by the Levy.
Retailers employ more people than any other private economic sector and provides employment and career progression for people from all places and walks of life. The new Levy must be reformed with consultation from business in order to improve the number of apprenticeships and training opportunities retailers can offer, creating better jobs, boosting productivity, and helping the economy to grow.
