A group of trade bodies and major food retailers are calling for urgent action to reform the apprenticeship levy system and address what they describe as “critical and persistent” labour shortages in UK food supply chains.

In a letter sent to the Government, the British Retail Consortium, the National Farmers Union and UKHospitality, along with a number of UK supermarkets, say reform to the apprenticeship levy would allow businesses to train up more domestic workers in order to fill the vital skills gaps, which would “foster greater resilience, support the nation’s food security, and benefit the economy”.

The food supply chain, which includes farming, handling, packaging, retailing and hospitality - has been hit by acute labour shortages in recent years, particularly in areas such as food production and preparation, logistics, warehouse operations and quality control since the UK left the EU and the labour market contracted during Covid. The shortages have meant labour costs have risen, creating an additional inflationary pressure contributing to higher prices for customers.

The trade bodies say that a reformed apprenticeship levy could help plug shortages, but argue the current system is too inflexible. They say that businesses are required to contribute hundreds of millions of pounds into a pot, while funds can only be spent in a limited way – for example, businesses cannot use the money to fund any courses that are shorter than one year in duration. The groups say that inflexibility has cost the UK many thousands of training opportunities and billions of pounds of potential investment into the British labour market at a time when it is urgently needed.

They are calling on the government to widen the apprenticeship levy into a broader skills levy to allow businesses to spend their funds on a wider range of high quality, accredited courses including shorter, more targeted courses, or more tailored upskilling programmes, including food safety, hazard analysis, first aid and driving farm machinery.

Helen Dickinson, CEO of the British Retail Consortium, said: “Businesses across the food supply chain have long been calling for reform to the apprenticeship levy. The government should stop dragging its feet so businesses can upskill our workforce, help safeguard food security in the UK, streamline costs and respond to the needs of the economy. The apprenticeship levy is nothing more than a tax on business and it must be reformed.”

Ken Murphy, CEO of Tesco, added: “Reform of the apprenticeship levy could not only unlock high-quality jobs in our food supply chains, but also help safeguard Britain’s food security for the future. I would urge the government to look again at the practical barriers to skills development under the current system, because it is not delivering for food businesses or their employees.”

---