The UKhospitality association has joined the British Retail Consortium (BRC) and technology and recruitment associations in demanding the government fix “the broken Apprenticeship Levy system” which they brand a “£3.5 billion mistake”.
The four trade bodies, representing sectors employing more than 10 million workers in the UK, are demanding urgent reform of the Apprenticeship Levy scheme.
They argue £3.5 billion in levy funds has gone unused and been lost under the use-it-or-lose-it scheme because businesses were unable to meet the “restrictive” requirements to draw on funds they paid into the scheme in the first place.
UK technology trade association techUK and the Recruitment & Employment Confederation (REC) joined the BRC and UKhospitality in writing to the government to warn it’s “holding back investment” in training.
They point out UK job vacancies are up 40% on pre-pandemic levels while the economy is forecast to shrink this year “yet businesses are being blocked from investing in their workforce and creating job opportunities because of a broken Apprenticeship Levy system”.
The scheme requires businesses to contribute hundreds of millions of pounds to the levy but “only allows funds to be spent in an overly restricted way”.
The associations note: “Businesses can’t use the money to fund any courses shorter than one year in duration.”
They call on the government to widen the scheme into a broader ‘skills levy’ and allow businesses to spend on a wider range of accredited courses, including shorter, more-targeted courses and tailored skills programmes.
Their letter points out these changes would cost the Treasury nothing but allow businesses to “invest millions more [in] essential skills and training”.
BRC research last year suggested retailers could create thousands of new apprenticeships if the Apprenticeship Levy was reformed.
Helen Dickinson, BRC chief executive, 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. They want to create more opportunities for people. They want to contribute more to growth. But the apprenticeship system is a ball and chain around their efforts.”
UKHospitality chief executive Kate Nicholls argued: “Hospitality businesses are eager to invest in developing the skills, training and development of their workforce, particularly when vacancies are so high.
“Reform of the Apprenticeship Levy is needed to offer greater flexibility to businesses, particularly in how funding is used.
“An overhaul would enable businesses to go further in their skills investment and deliver benefits for the wider labour market, particularly in helping over-50s and the economically inactive back into work.”
Neil Carberry, chief executive of the Recruitment and Employment Confederation, added: “The levy has suffered by being imposed on businesses rather than being designed with them.
“It has not had the incentive effects 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 firms who are not doing enough.”
The government is due to launch a publicity push for apprenticeships this week.