Excessive road enterprise leaders have hit out on the “troubling” use of the taxpayer-funded apprenticeship levy to subsidise MBA enterprise levels for prime executives incomes over £100,000 a yr.
Lush cosmetics co-founder Mark Constantine, who has over 100 retailers in Britain, mentioned the 2017 scheme is not match for goal and must be changed.
It comes after The Unbiased revealed the £2.47bn levy continues to be getting used to part-fund MBA college levels whereas younger trainees are shedding out, with 100,000 fewer apprenticeship begins for under-25s in 2021/22 in comparison with six years in the past. On the prime finish, an estimated £100m of the apprenticeship levy has been used to subsidise prime earners getting their govt MBAs.
The levy is charged to companies with annual payrolls over £3m, who should contribute over 0.5 per cent of their wage invoice; the sum can be utilized by corporations to recruit and prepare apprentices however any levy that is still unspent after 24 months must be returned to the Treasury as a tax. It’s charged on round 2-3 per cent of employers.
Use of the levy to fund MBAs was banned in 2021 when then training secretary Gavin Williamson mentioned it was “not within the spirit of the programme” – however this newspaper’s investigation reveals a raft of universities and enterprise faculties are nonetheless gaming the system and providing their in style and costly programs “part-funded” by as a lot as 65 per cent.
Tina McKenzie, coverage chair of the Federation of Small Companies, which represents greater than 5 million excessive road corporations, mentioned: “It’s troubling to listen to that the apprenticeship levy continues to be going to part-fund costly MBA programmes for giant corporates as a result of that utterly goes in opposition to the spirit of what it was designed for.
“It additionally takes up funds that needs to be used to get younger folks furthest from work to begin their careers.”
She added: “The Institute for Apprenticeships and Technical Schooling should urgently speed up the event of intermediate apprenticeship requirements in key sectors akin to digital, enterprise, and administration.”
Mr Constantine mentioned: “The apprenticeship levy has not been one of many authorities’s higher schemes and has come to the tip of its usefulness. Maybe the federal government might change it with a scheme that’s usable.”
A spokesperson for Lush added: “The apprenticeship levy was bought as a ‘win-win’ for sectors akin to manufacturing however in its present type it stays a ‘lose-lose’.
“Manufacturing basically has seen an enormous drop off in apprenticeships being taken up by younger folks and it is inflicting an enormous shortfall.
“Apprenticeship numbers have taken a nosedive. In 2016/17, there have been 75,020 manufacturing and engineering apprenticeship begins however this fell to 39,510 in 2020/21. Because of this, there are at present 84,000 open jobs in manufacturing within the UK, which is stretching companies to have the ability to preserve going. Additionally it is resulting in misplaced productiveness, estimated by business consultants as amounting to £8bn – which is round £21m a day in misplaced output.”
Their feedback echo Tesco group chief govt Ken Murphy who mentioned the levy is “not working” and referred to as for “correct reform to make sure the levy is spent on creating alternatives the place they’re wanted most”.
