Trade bodies call for apprenticeship levy reform

Business leaders across the UK have been vocal in their criticisms of the government's apprenticeship levy, referring to it as a "£3.5bn mistake". In particular, retailers, hospitality firms, the tech industry and recruiters all agree that the policy is in fact having an adverse effect by preventing companies from investing in substantial training initiatives that could benefit growth.

The apprenticeship levy has been labelled as a "£3.5bn mistake" by retailers, hospitality businesses, tech industry leaders and recruiters alike, who have called for urgent reform of the system. The groups argue that without reform, the government is failing to invest in critical training which can raise productivity and wages and fuel economic growth while supporting businesses.

Helen Dickinson, chief executive of the British Retail Consortium, captured the mood of many employers when she urged the government to address their £3.5bn mistake and repair Britain's broken apprenticeship system. According to Ms Dickinson, retailers are anxious to invest in skilled and better-paid workforces to create opportunities for people from all over the UK. Nonetheless, this is not happening, as current restrictions stifle investment and prevent retailers from contributing to economic growth at the desired level.

The apprenticeship levy, introduced in 2017, was intended to provide accessible apprenticeships for a wide range of people. But the reality is that these funds are difficult to use - businesses cannot use the funding for courses less than twelve months in duration. Plus, if employers cannot utilise their allotted funds within two years, they will be taken back by the Treasury. This situation has resulted in hundreds of millions of pounds essentially going unused - a frightening prospect given that long-term youth unemployment is already so startlingly high. The Resolution Foundation has also voiced concern that this system could increase expensive, upper-level apprenticeships that could eventually replace entry-level positions traditionally held by younger generations.

The trade bodies are calling on the government to make a significant shift in current spending policies, looking to broaden the apprenticeship levy into a more far-reaching skills levy which can be allocated to a range of accredited courses. These may include briefer, more focused educational opportunities.

UKHospitality's chief executive Kate Nicholls has championed such reform to create an environment where those who have been economically inactive – including those over 50 - can enter into employment and address any contemporary skills shortages. Hospitality businesses generally are keen to invest in their employees through training, particularly with vacancies in the sector being at a record level. Thus, Nicholls says that reform of the levy is essential for businesses to receive the flexibility needed to fund these measures.

Robert Halfon, the education minister, has declared that the government has made notable efforts to improve the country's skills offering since 2010. With over 5 million apprenticeship starts across hundreds of quality standards, their goal is to make sure that no matter what someone aspires to do, they can get there through an apprenticeship. Moreover, they are further increasing its associated funding up to £2.7bn by 2024-25. Haflon added, "This Conservative government is on the side of business – that's why all our skills programmes have been designed with employers to meet the needs of business and industry."

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