Apprenticeship levy flexibility would unlock retail skills investment

The CBI calls for greater flexibility in the apprenticeship tax and a reversal of the planned trade rate increase to help retailers invest in jobs and skills.

The retail and wholesale sector supports one in five jobs in the UK, with 5.7 million people employed in the sector or by its suppliers, according to CBI Economics.

However, in addition to the consequences of the war in Ukraine and the Covid-19 pandemic, he warned that the planned increase in inflation-linked business rates in the spring of 2023 threatens the survival of many retail companies, some of which they are already overpaying due to a “slow” revaluation system.

He also urged the government to reform the apprenticeship tax to give employers more flexibility in how they use their funds. This would help you create high-value growth opportunities, as well as develop digital skills that employees will be able to use throughout their careers.

The report says: “Greater flexibility in the use of sector apprenticeship tax funds could unlock further investments in training, allowing for a shift in the occupational profile of the sector workforce towards higher value roles and avoiding losses. employment at lower skill levels.

“A major retail company, for example, has stated that it could create 8,000 new apprenticeship opportunities if the apprenticeship rate were reformed, providing a 36% boost to industry apprenticeship opportunities and increasing lifetime earnings for employees trained in more than £500 million”.

Another retail company told researchers that expanding the scope of the apprenticeship rate would help it retrain and upskill employees in shops to enable a career change in line with business requirements and avoid job losses in lower skill levels.

The report finds that retail and wholesale organizations could accelerate their investment in digitization and decarbonization if cost pressures, including rising business rates, were eased.

CBI Chief Policy Director Matthew Fell said: “In the midst of unprecedented levels of inflation and a cost of living crisis, it has never been more important to have the retail and wholesale fire on all cylinders.

“That is why we are asking the government to soften the edge of the looming commercial rate cliff; Without intervention, the dazzling increases scheduled for April will present an existential threat to many businesses that communities depend on.

“Longer-term reforms that encourage investment and new ideas around the apprenticeship tax can help future-proof the sector and spur further growth.”

Helen Dickinson, Chief Executive of the British Retail Consortium, said: “As the largest private sector employer in the UK, supporting jobs in every corner of the country, the success of the industry matters.

“High global commodity costs, a weak pound and a tight labor market are driving up prices for consumers at a time when they already face higher bills and mortgage payments. Unless action is taken, retailers will face an extra £800m in merchant fees every year from 2023. This is money that would be better spent keeping prices low and supporting local communities.”

Dickinson agreed that the apprenticeship tax should be reformed: “Currently, hundreds of thousands of pounds are wasted every month, which means lost employment opportunities, lost training and lost career progression. The industry needs a better skilled, more productive and better paid workforce, but this broken system is holding it back. The government should make the tax more flexible so that retailers can use the funds for high-quality pre-employment courses, short on-the-job development courses, and to cover other costs related to training their people.”

The Making a Positive Impact report finds that:

  • retailers spend £4bn a year on training employees, which is equivalent to 10% of all UK training spending and is equivalent to all UK revenue from apprenticeship levy (£2.7bn million) almost double
  • retail and wholesale trade is responsible for more than 21% of gross value added (the measure of the value of goods and services produced in an area, industry or sector) in one in five UK constituencies
  • one in five districts relies on the retail sector and its suppliers for more than a third of their employment
  • a quarter of all apprenticeships created by the sector are in the 20% most deprived areas of the UK
  • almost 40% of the companies in the sector are investing in training in management skills and almost 60% are investing in new technologies and training in digital skills.

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