M&S calls for changes to government’s Apprenticeship Levy to tackle labour shortages

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Apprenticeships

M&S operations director Sacha Berendji called for more flexibility to the Apprenticeship Levy structure

Marks & Spencer has called on the government to make changes to the Apprenticeship Levy to help retailers attract and retain talent amid widespread labour shortages across the food industry.

Operations director Sacha Berendji criticised the programme’s ‘one size fits all’ approach, which he said left M&S and other retailers “hamstrung by our inability to access the funds”.

Under the Apprenticeship Levy, employers with a payroll of more than £3m must pay a 0.5% levy on their total payroll, with the government offsetting the payment with a yearly £15,000 allowance.

The scheme was introduced as a way to fund apprenticeships while helping smaller businesses that might not be able to afford the training costs.

However, Berendji said the current structure of the levy was “holding employers like us back from fulfilling our potential in addressing” labour shortages.

He said M&S contributed over £5m to the scheme each year but “restrictive rules and benchmarks” for accessing the funds meant it could only retrieve and make use of around 25% of that total to help cover training costs.

“We know this is a recurring pattern amongst our larger supplier partners too,” he added.

Berendji called on the government to make two “fundamental changes” to the levy structure to increasing flexibility in the ways businesses access and use funds, thereby allowing retail to play a better role in “levelling up”.

M&S said being able to use the funds to raise awareness of opportunities available within the retail sector via “taster sessions” with potential employees would help build more resilient and enticing skills development programmes. It said letting employers use the levy to fund additional hours while apprentices were in training would also help.

Berendji also said the government should allow retailers to design courses and apprenticeships that were more adequate to the specific skills deficits across the sector. For instance, the current levy requires 20% classroom training, which he said was “not practical in retail”.

“Looking to the future, allowing funds to be used for ‘bootcamp’ style learning, offering shorter skills programmes on digital or data skills, could transform training in retail. This could protect the industry from falling behind, preparing the workforce for the skill of tomorrow, not just today.”

The government has pledged to review the levy imminently to make it more suitable to different employers’ needs across different industries struggling with labour shortages.

In May 2022, the ONS registered more job vacancies than unemployed people in the UK for the first time since records began.

Areas like haulage and seasonal farming have been particularly affected in recent years.

Berendji said: “M&S alone employs over 70,000 people, and its longstanding ability to create nationwide job opportunities that nurture critical skills, such as service and teamwork, makes me proud to be a shopkeeper.

“The need to build a future pipeline is more pressing than ever.”