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As political parties prepare their manifestos, they must commit to reforming the broken Apprenticeship Levy to allow retailers to better upskill and retrain their workforce, increase productivity, and ensure the industry is equipped to meet the needs of the economy, now and in the future.

Simple fixes would allow retailers to offer 12,000 more apprenticeships, particularly in more deprived areas, according to the British Retail Consortium (BRC).

This call comes as National Apprenticeship Week begins, and the industry celebrates all its brilliant apprentices. Apprenticeships provide an excellent opportunity for people to get into the workplace and develop crucial skills.

Unfortunately, the Apprenticeship Levy – a tax on businesses aimed at funding apprenticeships - does little to support the apprenticeships and wider training that retailers, and our economy, really need. Approximately 40-50% of the current retail workforce needs upskilling for new, better paid, more productive roles, and retailers cannot draw on much of their Levy funds for this vital training.

Not only are opportunities going to waste, but so is over £130m of potential retail investment into the UK labour market, equivalent to nearly £400,000 every single day. That is millions of pounds a year that could have been invested into our workforce in towns and cities all over the country.

This is because the Levy’s “use it or lose it” system requires businesses to contribute hundreds of millions of pounds into a Levy pot, but funds can only be spent in a very restricted way. For example, retailers cannot use the money to fund any courses that are shorter than one year.

Election manifestos must promise to widen the Apprenticeship Levy into a wider Skills Levy, introducing the flexibility 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 suitable.

  • Fund high quality pre-employment courses to help new hires reach the required level to begin a full apprenticeship.

  • Allow Levy-payers in Devolved nations to directly access the funds they are being compelled to pay as part of the Levy. In these nations, the Levy is effectively another employment tax, penalising businesses for employing workers.

  • Provide high-level courses to better reflect employer needs. Unless employers invest additional funds into ‘bolt-on’ modules for apprenticeships, the apprenticeship curricula rapidly becomes irrelevant.

  • Allow apprenticeship funding to cover some costs associated with hiring an apprentice, for example covering the cost of back-filling roles while apprentices are on off-the-job training.

Retail is the everywhere economy, driving growth and investment in every village, town and city. Retailers employ more people than any other private economic sector and provides employment and career progression for people from all walks of life. Political parties must commit to reforming the Levy in their manifestos so retailers can increase and improve the number of apprenticeships and training opportunities they offer, creating better jobs, boosting productivity, and helping the economy to grow.

Helen Dickinson, Chief Executive of the British Retail Consortium, said:
“A clear plan for economic growth is the key priority of every political party ahead of the General Election, and reforming the Apprenticeship Levy is a crucial piece of this puzzle. The Levy is an inflexible, outdated system, that hinders retailers from effectively investing in their workforce. It has deprived tens of thousands of people across the country of potential apprenticeships and training opportunities and stands in the way of career progression for many people working in the industry.”

Paula Coughlan, Chief People, Comms and Sustainability Officer at Currys, said:
“Due to the inflexibility of the apprenticeship levy system, we are only able to use less than half of the available funds. One of the key barriers is the current insistence on 12-month courses which is ill-suited for today’s workforce. We would like to see the levy developed into a broader lifetime learning model that offers flexibility in accessing funds for diverse and relevant skills courses. Reform to the system is long overdue, and is essential in order to help companies like ours deliver more training and in turn support growth and better wages.”

Sue Fox, President, The Estée Lauder Companies (ELC) UK & Ireland, said:
“We are very proud to offer high quality apprenticeship programmes that provide exciting opportunities for people to develop their skills and grow their careers in prestige beauty in roles ranging from data analytics to content production, digital marketing and retail.

“We would very much welcome reform of the Apprenticeship Levy to provide greater flexibility enabling us to support more training opportunities and broaden our investment in a wider range of skills needed to contribute to the UK economy.”

Sarah Findlater, HR Director at M&S, said:
“It’s the people that make a business special and as an employer of more than 60,000 people, we have a responsibility to attract, develop and retain talent. And one of the ways we do this is through apprenticeships – we currently have more than 200 apprentices, giving our colleagues the opportunity to learn new skills, often in a new discipline too. And we want to support even more colleagues to access this excellent form of lifelong learning but, as it stands, the Government fund which is meant to support investment in skills is too difficult to access so millions of pounds are going unspent. This National Apprenticeship Week, we’re calling on Jeremy Hunt to reform the Levy and make it more flexible and simpler for employers to access this fund so we can create even more apprenticeships and valuable career development opportunities.”

Claire Costello, Chief People and Inclusion Officer at Co-op, said:
“Apprenticeships designed and delivered well can help develop skilled colleagues which employers like the Co-op need but, more importantly, they provide opportunities for people to progress and succeed in their chosen careers – whatever their starting point is. The Apprenticeship Levy has failed to deliver the opportunities I believe are essential to promote social mobility across the UK.

"That’s why the Co-op’s ask of Government is for more flexibility in the way in which levy funds can be used so more employers are incentivised to invest in apprenticeships. We’d like to be able to use levy funds to invest in pre-apprenticeship programmes for under-represented groups and to cover the costs of backfill for face-to-face roles. In addition, we’d like levy payers to be able to share a greater percentage of unspent levy funds with other employers than is currently allowed.”