Retailers have a strong track record in investing time and money in the skills of their employees. The 2015 UKCES Employer Skills Survey shows that the Retail and Wholesale industries were among the leading investors in training, spending £5.1bn in 2015 on meaningful on-the-job training and development for their employees.
The Levy, announced in the July 2015 Budget, is the most significant new development in this area. Due to come into force in April 2017, much is still unclear. Although the long-awaited proposals for funding rates and rules and details of how to become a employer training provider were published for consultation in August 2016 providing much needed information for businesses planning implementation, fundamental problems remain.
The levy is potentially an opportunity for increasing skills and supporting those most vulnerable in the workforce. It could also play a vital role in supporting structural change in retail, providing the opportunity to develop the skills needed for new and more productive roles in the future. However, we are concerned that the levy's implementation and how it will operate have yet to be properly thought through. It is hard to see how the growth rates needed in apprenticeship starts to reach the UK Government's target of three million will be achieved.
BRC estimates show that the apprenticeship levy will cost the industry between £140 and £160m per annum. As it stands, we don’t think that retailers will be in a position to recoup these costs through the levy as it is currently designed. This is due to the gap in compatibility between retailers' current approach to training and the levy's funding criteria.
In order to make the Apprenticeship Levy fit for purpose, we propose that the government:
- Ensures an employer-led, industry-specific solution – to include responsive and effective processes to develop new standards
- Measures outcomes and not processes/inputs – specifically addressing concerns about OFSTED inspections and SFA registration
- Gives businesses sufficient time to prepare – allowing more than 18 months to spend Apprenticeship Levy funds
- Ensures funds can be directed to the most valuable type of training – including Level 1 and internal training programmes
- Ensures seamless integration of approach in the devolved nations