Chancellor George Osborne’s proposed 0.5% apprenticeship levy is to become a reality for UK businesses from April 2017, and the retail industry must secure a central role in its management.
Retailers will make a significant contribution to the estimated £3bn the government predicts the levy will raise by 2019/20.
Among the businesses that will be obliged to pay the levy – those whose payrolls exceed £3m – are some of the high street’s most recognisable fashion retailers, including Next and Marks & Spencer. The levy, which employers are expected to reinvest in apprenticeships – otherwise it is redistributed to other businesses – is going to pose challenges. There is a risk that those firms that offer high-quality training will have to divert this investment to apprenticeships, even if this is not necessarily the right solution for them.
Having said that, for many businesses, apprenticeships provide tangible benefits – for example, 80% of companies that invest in apprentices report an increase in staff retention, while an apprentice typically contributes £1,800 to a firm’s bottom line throughout their training, increasing to an impressive £2,900 per retail apprentice.
If the sector can influence how the levy is implemented and managed, there could be huge advantages, such as improved productivity, sector recruitment, career progression and, of course, staff retention.
People 1st is bringing together a taskforce of employers and trade associations, including Sainsbury’s, Next and the British Retail Consortium. The aim will be to drive forward the implementation of the new apprenticeship standards and influence government on how the levy is to be rolled out.
As a sector, fashion retail will be making a significant financial contribution to this levy. We also have the capacity to deliver high volumes of apprenticeships to help meet the government’s £3bn target, and sustainable plans for how we can self-regulate the system to achieve outstanding and good-quality results.
The apprenticeship levy is going to be challenging for many businesses, but it is not going to go away. We must now make our voices heard loud and clear to government on how it is managed.
Simon Tarr is chief executive of People 1st, the skills and workforce development organisation for retail employers.