The apprenticeship levy is failing those who need it most

We need to fundamentally reboot the system and unleash the potential of our young people, says Tesco boss Ken Murphy

Despite the noblest of intentions, the apprenticeship levy is letting down our young people (PA)

After a turbulent few years for the economy, it’s vital that the UK takes action to bolster its workforce.

The chancellor recently identified the key pillars that will drive economic prosperity and remove barriers to work, including enterprise, education and employment. But one key ingredient was missing – access to apprenticeships.

It is through apprenticeships that young people in some of the UK’s most deprived communities can learn the invaluable skills they need to kick-start rewarding careers.

Yet, despite the noblest of intentions, the apprenticeship levy is letting down our young people when they most need support.

Since its introduction in 2017, hundreds of millions of pounds worth of unused levy funds have been handed back to the government. In one year alone, £600m was sent back to Whitehall – enough to fund 60,000 apprenticeships.

That’s 60,000 lives that could be fundamentally improved in communities across the UK. Talking in these vast numbers can obscure the huge impact an apprenticeship can have on an individual’s life. It can equip them with the skills, confidence and hands-on experience they need to kick-start a rewarding career.

The retail sector is among the most meritocratic of industries. Every week, I work with business leaders who cut their teeth on the shop floor, starting at the commercial coalface.

But, remarkably, until 2021 the levy could directly contribute towards an MBA and can still be used to part-fund the qualification today. Between 2014 and 2022, the number of people starting an apprenticeship at a level equivalent to five GCSEs declined from nearly 300,000 to around 90,000.

Over that same period, higher apprenticeships – equivalent to a bachelor’s degrees and above – increased from less than 20,000 to more than 100,000. Any scheme that supports MBAs for managers over opportunities to kick-start careers for all seems to have lost its way. This was not the purpose of the levy, and it is neither fair nor effective.

That’s why we need to fundamentally reboot the system and unleash the potential of our young people.

First, the levy needs to offer greater flexibility, allowing companies to use some levy funding to support high-quality, pre-employment programmes focused on improving literacy, numeracy and essential work-related skills. This is particularly important for a generation of job seekers held back by the pandemic.

Secondly, it needs to let funds be spent on shorter, high-quality courses to enable employers like Tesco to offer more tailored and sector-specific training, from driving to food technology to finance. These sorts of courses both allow employers to meet rapidly changing skills needs and support those who need greater flexibility, such as people with young families or other caring responsibilities.

And, finally, it should allow some levy funds to be contributed towards the wider costs of providing an apprenticeship beyond training; for example, the additional store working hours while an apprentice is at college. This would enable smaller stores and employers to significantly expand the number of apprenticeships they offer. These changes would deliver real benefits for job seekers, employees, businesses and the wider economy.

We’re confident that with the right reforms we could return the number of apprentices to pre-levy levels, resulting in thousands of opportunities across the retail sector.

Most importantly, this would support access to good quality jobs and boost lifetime earnings in areas of the country that are struggling most with the cost of living.