Tesco Group CEO Ken Murphy has made an impassioned plea for the government to reform the controversial Apprenticeship Levy.
Speaking today at Retail Week Live, the Tesco boss lamented a dramatic fall in the number of apprentices taken on by Tesco since the inception of the levy in 2017, the cost of the scheme and the huge amount of funds going unspent.
Since 2017, the number of apprenticeships being provided by Tesco had fallen by 70%, Murphy admitted.
He also pointed out that Tesco had invested £100m into the scheme since it started, but had only been able to use 14% of that. In total, more than £600m of unused levy funds were returned to the Treasury this year alone, which Murphy said was enough to fund up to 60,000 apprenticeship opportunities across the UK.
“We’re not able to offer as many opportunities as we’d like to, opportunities that are desperately needed, because of outdated rules around the Apprenticeship Levy,” Murphy said.
“Intended to fund more apprenticeships, the levy has actually had the opposite effect by unfairly prioritising senior level apprenticeships over those at entry level. This means the levy is reducing apprenticeship opportunities for those who would benefit most, taking away an accessible stepping stone to more fulfilling careers despite the cost of living crisis.”
He called on government to make the levy more practical for retail employers to reverse the decline in entry-level apprenticeships and stop thousands of people from missing out. He said companies should use some levy funding to support high-quality pre-employment programmes, suggesting they should focus on improving literacy, numeracy and essential work-related skills. The scheme should be also be flexible to allow funds to be invested in shorter, high-quality courses to enable employers like Tesco to offer more tailored and sector-specific training, he added.
His third proposal was that the government needed to recognise the full cost of apprenticeships and investing in people, beyond just training. For example, funding the additional store working hours while an apprentice was at college. This would enable smaller stores and employers to significantly expand the number of apprenticeships they offered, he argued.
“Systematic change of the levy means an approach from government which is much more sustainable, scalable and simple,” Murphy said. “And the prize for our economy and our people is enormous.
“We know there is a generation of job seekers who had key educational milestones disrupted by the pandemic. Let’s give these young people a fighting chance with key skills.
“We’re confident that with the right support from government, Tesco and other retailers could increase the number of apprentices by up to 50%, resulting in an additional 8,000 opportunities across the retail sector. That’s what sustainable, scalable, simple, systematic change, with a real purpose looks like.”
In addition, Murphy used the platform to call for further business rates reform.
“The current system places a huge burden on shops of all sizes, putting thousands of high street jobs at risk and stifling investment into new stores, particularly in the most deprived areas of the country,” he said. “Let’s make the bill sustainable for a start. It starts with freezing the tax rate. This would reduce the upwards pressure on the cost of living for retailers of all sizes who pay this tax.
“We also need to speed up the appeal system. Three years is crazy. It’s holding up hundreds of millions in cash flow amongst the retailers who need it most and could invest that money in local community investments.”
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