Apprentice fund under fire from Tesco boss Ken Murphy

National Apprenticeship Week, which ends today, celebrates the achievements of apprentices. But the Apprenticeship Levy needs work. This tax that was designed to help fund more apprenticeships has had the reverse effect.

At Tesco, restrictions in how we are allowed to use the funds means that we now offer fewer apprenticeships than we did before the levy was introduced. Not only is it not working for businesses, but thousands of people are missing out.

And it’s not just Tesco. This year alone, more than £600million of un-used levy funds have been returned to the Treasury. That’s enough to fund up to 60,000 apprenticeships, or 60,000 missed opportunities for people all over the UK.

It is inflexible and designed in a way that puts entry level apprenticeships at a disadvantage over those who are already in management positions.

Between 2014 and 2022, the number of people starting an entry level apprenticeship declined by 72 per cent. On the flip side, higher-level apprenticeships grew by 400 per cent following the introduction of the levy and management apprenticeships have grown more than 1,100 per cent.

This is because higher level apprenticeships can be more easily taught in a classroom. I argue that it unfairly penalises those looking to gain more practical skills and experience in the workplace – including across retail and hospitality.

Tesco has now contributed more than £100million to the apprenticeship levy since it was launched in 2017, and we have only been able to use 14 per cent of that. The intention of the levy was to enhance the quality and availability of training. But, the reality is, we could have created thousands of opportunities and invested more in training without this training tax.

As Government looks to rebuild the economy, it needs to fix this levy and prioritise entry level apprenticeships. These apprenticeships improve skills and typically raise pay by 20 per cent within four years, in all types of communities across the country.

What we’re asking for is more flexibility in how levy funds are used. For example, to better support pre-employment training, such as digital literacy, which is crucial for social mobility, by helping people of all ages – and particularly those held back by the pandemic – to develop important and transferable skills from an accessible starting point.

The proposals we’re making are practical ones. And the outcomes would have widespread benefit for employees, businesses, and the wider economy. With proper reform, we could bring in an additional 500 apprentices every year at Tesco alone. That equates to around 8,000 more across the retail sector.

With so many households struggling right now, Government needs a levy that works for those who need it most.