High street firms demand end to apprenticeship levy over taxpayer-funded MBAs

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Big business leaders are unhappy with the “alarming” use of taxpayer-funded tuition tax to subsidize business MBAs for top executives earning more than £100,000 a year.

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Cosmetics company Lush co-founder Mark Constantine, who has over 100 stores in the UK, said the 2017 scheme no longer served its purpose and needed to be replaced.

It happens after Granthshala showed that the £2.47bn levy is still being used to partially fund university MBA degrees while young interns are losing out: 100,000 fewer apprenticeships started for those under 25 in 2021/22 compared with six years earlier. In the end, around £100 million of apprenticeship tax was used to subsidize highly paid professionals pursuing an executive MBA.

The levy is levied on businesses with an annual salary of over £3 million who must contribute more than 0.5% of their payroll; this amount can be used by firms to hire and train apprentices, but any fee that remains unspent after 24 months must be returned to the treasury as tax. It is charged by about 2-3 percent of employers.

The use of the levy to fund MBA programs was banned in 2021 when then Education Secretary Gavin Williamson said it was “not in the spirit of the program”. popular and expensive courses are “partially funded” by as much as 65 percent.

Tina McKenzie, political chair of the Federation of Small Businesses, which represents more than 5 million large firms, said: “It is disturbing to hear that the tuition fee will still partly fund costly MBA programs for large corporations because it goes completely against the spirit of what it was designed for.

“It also requires funds to be used to enable young people furthest from work to start their careers.”

She added: “The Institute for Apprenticeship and Technical Education must urgently accelerate the development of standards for intermediate apprenticeship in key sectors such as digital, business and administration.”

Mr. Constantine said: “The apprenticeship tax was not one of the government’s best schemes and has come to the end of its usefulness. Perhaps the government could replace it with a scheme that can be used.”

A spokesperson for Lush added: “The apprenticeship tax has been positioned as a ‘win-win’ for sectors such as manufacturing, but in its current form it remains a ‘win-win’.

“Manufacturing as a whole is facing a drastic reduction in apprenticeships for young people and this is causing a huge shortage.

“The number of apprenticeships has plummeted. There were 75,020 manufacturing and engineering internships in 2016/17, but this has dropped to 39,510 in 2020/21. As a result, there are now 84,000 manufacturing jobs in the UK, forcing businesses to stay open. It also results in a loss of productivity estimated by industry experts to be £8 billion, which equates to around £21 million per day in lost production.”

Their comments echoed Tesco group chief executive Ken Murphy, who said the levy was “not working” and called for “proper reform to ensure the levy is spent on creating opportunity where it’s needed most.”

Credit: www.independent.co.uk /

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