Retailers urge government to reform Apprenticeship Levy

Three leading trade bodies and seven food retailers are calling for urgent action to reform the broken Apprenticeship Levy system and address the “critical and persistent” labour shortages in the food supply chains.

In a letter sent to the government, the British Retail Consortium (BRC), the National Farmers Union (NFU) and UKHospitality (UKH), along with leading UK supermarkets, said reform to the Apprenticeship Levy would allow businesses to train up more domestic workers in order to fill the vital skills gaps.

It comes as the food supply chain, which includes farming, handling, packaging, retailing and hospitality – has been hit by acute labour shortages in recent years, particularly in areas such as food production and preparation, logistics, warehouse operations and quality control since the UK left the EU and the labour market contracted during Covid. 

A reformed Apprenticeship Levy could help plug shortages, but the current system is too “inflexible”, according to these trade bodies and food retailers. 

They argued this inflexibility has cost the UK many thousands of training opportunities and billions of pounds of potential investment into the British labour market at a time when it is urgently needed.

In light of this, they are calling 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 food safety, hazard analysis, first aid and driving farm machinery. 

Helen Dickinson, CEO of the BRC, said: “Why is it that the very system that exists to enable training opportunities, serves as the total opposite? Businesses across the food supply chain have long been calling for reform to the Apprenticeship Levy. 

“The Government should stop dragging its feet so businesses can upskill our workforce, help safeguard food security in the UK, streamline costs and respond to the needs of the economy. The Apprenticeship Levy is nothing more than a tax on business and it must be reformed.”

Tom Bradshaw, deputy president of the National Farmers Union, said: “For a long time now there has been a clear skills gap in the food supply chain. Unlocking the money that levy payers have not been able to use would be a positive step and could help to provide much-needed flexibility in delivering apprenticeship training.”

Ken Murphy, chief executive of Tesco, added: “Reform of the apprenticeship levy could not only unlock high-quality jobs in our food supply chains, but also help safeguard Britain’s food security for the future. I would urge the Government to look again at the practical barriers to skills development under the current system, because it is not delivering for food businesses or their employees.”

Hayley Tatum, senior VP – chief people and corporate affairs officer at Asda, concluded: “We believe that the current Apprenticeship Levy scheme requires reform to provide greater flexibility in the schemes where the Levy funds can be distributed. Asda would welcome reform that would make it easier for businesses to spend Levy funding as intended – offering new opportunities across the country as well as upskilling the existing workforce.”