The CBI is calling for greater flexibility in the apprenticeship levy and a reversal of the planned business rates hike to help retailers invest in jobs and skills.
The retail and wholesale sector supports one in five UK jobs, with 5.7 million people employed in the sector or by its suppliers, according to CBI Economics.
However, on top of the fallout from the war in Ukraine and the Covid-19 pandemic, it has warned that the planned inflation-linked business rates increase in spring 2023 threatens the survival of many retail businesses, some of which are already overpaying due to a “slow” revaluations system.
It also called on the government to reform the apprenticeship levy to give employers more flexibility in how they use their funds. This would help it create high-value growth opportunities, as well as develop the digital skills that employees will be able to use throughout their careers.
The report says: “Greater flexibility in the use of the sector’s apprenticeship levy funds could unlock additional investment in training, enabling a shift in the occupational profile of the sector’s workforce towards higher value roles and preventing job losses at lower skill levels.
“One major retail business, for example, has stated that they could create 8,000 new apprenticeship opportunities if the apprenticeship levy was reformed, providing a 36% boost to the sector’s apprenticeship opportunities and boosting lifetime earnings for trained employees by over £500 million.”
Another retail company told researchers that extending the scope of the apprenticeship levy would supporting it to retrain and upskill employees on shop floors to enable a career change in line with business requirements and prevent job losses at lower skill levels.
The report finds that retail and wholesale organisations would be able to accelerate their investment in digitalisation and decarbonisation if cost-pressures, including the business rates rise, were alleviated.
CBI chief policy director Matthew Fell said: “Amid unprecedented levels of inflation and a cost-of-living crisis, it has never been more important to have retail and wholesale firing on all cylinders.
“That is why we are asking government to smooth the looming business rates cliff edge; without intervention, the eye-watering rises scheduled for April will present an existential threat for many businesses which communities depend on.
“Longer-term reforms which encourage investment and fresh thinking on the apprenticeship levy can help future-proof the sector and spur further growth.”
Helen Dickinson, chief executive of the British Retail Consortium, said: “ As the largest private sector employer in the UK, supporting jobs in every corner of the country, the success of the industry matters.
“High global commodity costs, a weak pound, and tight labour market are driving up prices for consumers at a time when they are already facing higher bills and mortgage payments. Unless action is taken, retailers face an additional £800m in business rates every year from 2023. This is money that better spent keeping prices low and supporting local communities.”
Dickinson agreed that the apprenticeship levy should be reformed: “Currently, hundreds of thousands of pounds are wasted every month, meaning missed employment opportunities, missed training, and missed career progression. The industry needs a higher skilled, more productive, and better paid workforce but this broken system is holding this back. Government must make the Levy more flexible so retailers can use the funds for high quality pre-employment courses, short in-work developmental courses and to cover other costs related to training their people.”
The Making a positive impact report finds that:
- retailers spend £4bn a year on training employees, which equates to 10% of all UK training expenditure and is equivalent to all UK receipts from the apprenticeship levy (£2.7bn) nearly twice over
- retail and wholesale is responsible for more than 21% gross value added (the measure of the value of goods and services produced in an area, industry or sector) in one in five UK constituencies
- one in five constituencies rely on the retail sector and its suppliers for more than a third of their employment
- a quarter of all apprenticeships created by the sector are found in the UK’s most deprived 20% of areas
- nearly 40% of businesses in the sector are investing in management skills training and nearly 60% are investing in new technology and digital skills training.