Apprenticeship system 'not fit for purpose' and should be overhauled, say retailers

The majority of retailers said the apprenticeship system needs to change. Photo: Daniel Harvey Gonzalez/In Pictures via Getty Images
The majority of retailers said the apprenticeship system needs to change. Photo: Daniel Harvey Gonzalez/In Pictures via Getty

British retailers have urged the government to reform the apprenticeship levy system in order to created thousands of new apprenticeship roles in the industry.

According to a study from the British Retail Consortium (BRC) some retailers estimate they could create up to 1,000 new apprenticeships each if the system was overhauled.

The apprenticeship levy, introduced by the UK government in 2017, is a form of taxation designed to help firms offer more apprenticeships.

Respondents said that the current system is inadequate, inflexible, and does not support essential courses that are needed for a thriving retail industry, with 95% admitting the system needs to change.

Two-thirds of respondents say more than 40% of their levy funds go unspent and individual retailers have lost up to £12m ($14.7m) per company in unspent funds since the levy was introduced.

"People are losing out on essential training, opportunities are being wasted, and money is being lost", the BRC said.

"Apprenticeships are crucial for employees and businesses — they provide vital opportunities for people to get into the workplace and develop essential skills that will support them through their careers."

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The group, which represents UK retailers added they are also "vital for upskilling the workforce" to ensure it is equipped to meet the huge technological transformation that retail is undergoing.

"It is crystal clear that the apprenticeship levy system is not fit for purpose, and in desperate need of reform," said Helen Dickinson OBE, CEO of the BRC. "Hundreds of thousands of pounds are being wasted every month."

"But this is not just a financial issue, it represents missed employment opportunities, missed training, and missed career progression."

On Tuesday, the BRC and its members called on the government to make the levy more flexible in order to allow apprenticeship funding to cover some costs associated with hiring an apprentice, including covering the cost of back-filling roles while apprentices are on off-the-job training.

Additionally, to fund high quality pre-employment courses to help potential apprentices reach the required level to begin a full apprenticeship.

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Other key points in the report called for changes in the levy system in order to:

  • Provide high-quality short courses, including functional and digital skills, to allow existing employees to upskill or transition to new roles, where a full apprenticeship is not necessary.

  • Allow levy-payers in devolved nations to directly access the funds they are being compelled to pay as the levy in these nations is effectively another employment tax, penalising firms for employing staff.

"If government is serious about its ‘levelling up’ agenda, the levy must be made more flexible so retailers can use the funds for high quality pre-employment courses, short in-work developmental courses and to cover other costs related to training their people," Dickinson added.

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