REC backs CBI’s 100-day deadline for Apprenticeship Levy reform

Commenting on the CBI manifesto launch today, Kate Shoesmith, REC Deputy Chief Executive, said:

“The next government must act quickly to smooth kinks in the labour pipeline, or risk a £39 billion cost to the economy per year because of labour and skills shortages – just short of two whole Elizabeth Lines. Success will require politicians and policymakers to up their understanding of today’s tight labour market and build the solutions to it in a more modern way.”

The CBI Manifesto calls for action within 100 days on key labour market policies: reform of the Apprenticeship Levy; a cross-departmental strategy to tackle labour shortages; and announce a new remit for the Low Pay Commission.

Kate Shoesmith said:

“We strongly support the next government aiming to reform the Apprenticeship Levy within the first 100 days. This should include reform that allows levy funding for high-quality, modular training to enable more people, including temporary workers to train and fill vacancies. Today, levy funds are only available to those who have the same employer for at least one year, which is the time it takes to complete an apprenticeship. But this means we are not making the most of British talent, because by our calculations, out of the one million temporary workers on assignment in the UK every day, around 960,000 workers are ineligible for levy funding.

“Asking the Cabinet office to lead cross-departmental strategy to tackle labour shortages – and immediately – gives us a chance of a long-term plan for how the UK will put people planning at the heart of its growth strategy. But the next government must commit to keep this approach in place over many years. After all, the most successful UK labour market changes of past few decades, such as National Living Wage and pensions autoenrollment, have been delivered this way.”

Kate Shoesmith added:

“A look at the Low Pay Commission’s remit is worthwhile to ensure decisions around minimum wages are entirely evidence-based, rather than politically driven. Wage rates must support enhanced opportunities, protections for the most vulnerable workers, as well as sustainability for all businesses.”

Notes to editors:

REC has recently published its Dynamic Labour Markets for Growth because no attempt to drive growth will succeed without a proper appreciation of workforce issues. REC’s proposals cover:

·       Understanding today’s people and labour market challenges.

·       Supporting our labour market transition by preparing for the future.

·       Boosting workforce productivity and driving down inactivity.

·       Regulating for a sustainable and dynamic labour market.

In REC’s Overcoming Shortages report, we show exactly how much damage could be done if we don’t step up. With a 10% surge in demand for staff across the economy, and the labour market restricted by shortages, we could see a 1.2% fall in expected GDP and productivity by 2027 – costing the economy anywhere between £30 billion and £39 billion every year. This figure is just short of the entire current defence budget, or two whole Elizabeth Lines.

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The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for great candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy.

Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.