The head of one of Britain’s biggest retail chains hit out yesterday at a proposed £2 billion apprenticeship levy, accusing the government of feeding an army of consultants by creating red tape in subsidies for on-the-job training.
Sebastian James, chief executive of Dixons Carphone and a close friend of the prime minister, delivered a scathing critique of one of the government’s core business policies, highlighting inconsistency, bureaucracy and the cost in public subsidies.
At The Times CEO summit, Mr James confronted Sajid Javid, the business secretary, about proposals in last week’s budget to impose a levy on companies that would then be ring-fenced to pay for on-the-job training.
“The apprenticeships scheme seems very bureaucratic,” said Mr James, whose company has employed 550 apprentices in the last five years.
“I’m concerned that you charge people on the one hand, then give the money back using some kind of voucher scheme that will no doubt spawn an industry of consultants and add a lot of friction and cost.
“I’m worried that this isn’t the most efficient way to drive either productivity or apprenticeships.”
Mr James’s remarks echo frustration in business circles over the way that ministers are handling apprenticeships.
George Osborne has set a goal of creating three million apprenticeships in England this parliament. Experts have predicted that the new levy may need to raise £2 billion annually, on top of the £1.5 billion already spent out of general taxation.
The Federation of Small Businesses said that ministers have become obsessed with creating vast numbers of apprentices, rather than concentrating on the quality of schemes.
“The increasing focus on vocational on-the-job training is the right approach but we must not let the drive for greater numbers come at the expense of quality,” John Allan, the federation’s chairman, said.
“While we welcome the exclusion of small firms from the proposed apprenticeship levy, we urge government to talk further with businesses about the wider implications and implementation of the levy.”
The method of support for apprentices has been through several iterations since a review in 2012 by Doug Richard, the former Dragon’s Den panellist, found that there had been a “drift towards calling many things apprenticeships which, in fact, are not”. Matthew Hancock, the former business minister, offered two proposals in a consultation last year — a scheme whereby apprenticeships would be funded through employers’ tax refunds or through credit accounts with joint contributions from the public and private sector.
The proposals were rejected and replaced by a plan championed by Nick Boles, the minister for skills and equalities, whereby businesses would be given a voucher to spend on training at higher education colleges.
Adam Marshall, director of policy at the British Chambers of Commerce, said that employers were split over the way they wanted apprenticeships run. Some, particularly large companies, wanted full control over training while others preferred to let government organise and pay for such support.
“Businesses are not monolithic. Some are incredibly frustrated with the way the apprenticeship and vocational education system works. Others depend on it,” Mr Marshall said.
Dixons Carphone trains apprentices in repairs of household electrical items, delivery roles and customer services and at any one time has about 160 apprentices on its payroll.
Mr James was at Eton and Oxford with David Cameron and the two men’s families have spent holidays together.
In an interview with The Sunday Times last month, Mr James said that Mr Cameron was doing a brilliant job and that they never talked about business. “I think we have to be incredibly careful not to stray over the line. It just wouldn’t occur to me,” he said.
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