Retailers including John Lewis, Tesco, and M&S are calling for a significant overhaul the Apprenticeship Levy, calling it as a “complete waste of money”.
Despite contributing millions of pounds, the retailers argue that the regulations surrounding the levy restrict their access to the funding pool.
Firms with a wage bill over £3m must pay a levy of 0.5% of their annual payroll to the government fund. The money is meant to aid companies, particularly smaller firms, hire and train more young people.
But critics claim the system is broken as it is too restrictive, This is Money reports.
The British Retail Consortium claims that around £130m of potential investment in jobs goes to waste due to these limits, stressing that the levy is an extra cost at a time when firms are already grappling with increases to property bills and wages.
“Businesses like ours are in a position to really influence the training and development and career of young people in this country [but] we need the money to do so.” Every year the Government takes more than £20m from Tesco but returns just under £3m for it to use on training schemes, he said.
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AO founder and chief executive John Roberts said the “broken” apprenticeship levy system could be fixed and he wants to get a group of business leaders together to create a new framework as the current scheme “doesn’t work”.
He highlighted that since the levy launched in 2016, there are 35% fewer apprentices and over £2bn of potential apprentice funding has been returned to the Government unspent.
Meanwhile, Asda said it can use only 27% of its levy funding. A spokesman for the supermarket told This Is Money: “It is time for the Government to review and reform the restrictive apprenticeship funding rules, to remove any unnecessary obstacles to levy spending.”
Back in March, retailers were left disappointed by a lack of action at the Budget.
M&S boss Stuart Machin called on Jeremy Hunt to reform the levy and said in a LinkedIn post that the government must do more to understand the importance of the retail sector as current policy “makes being an employer of people and running stores really hard”.
He urged Hunt to revise the current business rates model saying the tax “balance is wrong and stymying growth”.
In response to the backlash, a department for education spokesman told This is Money: “The levy has enabled us to increase investment in apprenticeships to over £2.7bn a year by 2024-25.”
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