Four leading trade bodies, who together represent industries
employing over ten million workers in the UK, are calling for
urgent reform to the broken Apprenticeship Levy system. So far,
£3.5 billion of Levy funds have 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.
In a letter sent to the
Government, the British Retail Consortium (BRC), UKHospitality,
techUK, and the Recruitment & Employment Confederation (REC)
say the Government is “holding back investment” in critical
training that is vital to train the future workforce, provide
better wages, increase productivity, and boost economic growth.
The letter comes as UK job vacancies soar to 40%
on pre-pandemic levels, and the economy’s growth prospects
shrink. Yet businesses are being blocked from investing in their
workforce and creating job opportunities because of a broken
Apprenticeship Levy system.
The current system requires businesses to contribute hundreds of
millions of pounds into a pot, but it only allows these funds to
be spent in an overly restricted way. For example, businesses
cannot use the money to fund any courses that are shorter than
one year in duration. As a result, £3.5 billion of potential
investment into the UK labour market has gone to waste at a time
when training is urgently needed.
The trade bodies call on the Government to widen the
Apprenticeship Levy into a broader Skills Levy to allow
businesses to spend their funds on a wider range of high quality,
accredited courses including shorter, more targeted courses, or
more tailored upskilling programmes, including functional and
digital skills.
Crucially, these changes would not cost the Exchequer a penny,
but by unlocking that funding, businesses could invest millions
more into equipping their workforces with the essential skills
and training that the economy needs to grow. Research last year conducted
by the BRC revealed that retailers could create thousands of new
apprenticeships if the Apprenticeship Levy system was reformed.
Helen Dickinson OBE, Chief Executive of the British
Retail Consortium, said:
“The Government must urgently fix this £3.5 billion mistake, or
it risks letting the UK’s anaemic productivity
trail further behind its international counterparts. Retailers
want to invest more in training a higher skilled, more
productive and better paid workforce. 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.”
Kate Nicholls, Chief Executive of UKHospitality
said:
“Hospitality businesses are eager to invest
more in developing the skills, training and development of their
workforce, particularly when vacancies are so high. Reform of the
Apprenticeship Levy is urgently needed to offer greater
flexibility to businesses, particularly in how funding is used. 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.”
David, Chief Executive of of
techUK, said:
“National Apprenticeship Week serves as a reminder of the work
and support apprenticeships and the levy provide for businesses
of all sizes. Apprenticeships should be at the heart of the
strategy to level up skills across the UK, but there is more we
can do to enable businesses to reach, attract and retain diverse
talent, and prepare them with the skills they need. There is a
real need to continue to support young people and new entrants
into the workforce using apprenticeships, but also to support
those in the existing workforce to progress and acquire the
skills they need for the future of work. The key to this will be
to reform the apprenticeship levy to make it flexible and
fit-for-purpose.”
Neil Carberry, Chief Executive of Recruitment and
Employment Confederation, said:
“The levy has always suffered by being imposed on businesses,
rather than being designed with them and with learners. That
means it has not had the incentive effects originally hoped for.
It also pushes many workers out –like the million temps placed
into work every day. Their wages are levied, but the system locks
them out of training. A levy that allowed firms to access a range
of high-quality training would see far greater uptake, and put
more pressure on those firms who are not doing enough. A redesign
with business at the table could transform skills performance,
growth and prosperity.”
-ENDS-
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