Government “holding back investment” in apprenticeships amid £3.5bn black hole

The British Retail Consortium (BRC) is among four leading trade bodies calling for the Government to urgently reform the “broken” Apprenticeship Levy system which has seen £3.5 billion of funds expire under the use-it-or-lose it scheme because of restrictive requirements.

In a joint letter sent to the Government, the 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 current system requires businesses to contribute hundreds of millions of pounds into a pot, but it only allows the funds to be spent “in an overly restricted way”.

Businesses cannot use the money to fund any courses that are shorter than one year in duration. As a result, the four trade bodies say that £3.5 billion of potential investment into the UK labour market has gone to waste at a time when training is urgently needed.

The letter comes as UK job vacancies soar to 40% on pre-pandemic levels, and the economy’s growth prospects shrink.

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.

Helen Dickinson, Chief Executive Officer, of the BRC, 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.”