Business leaders on the high street have hit out at the “disturbing” use of the taxpayer-funded scholarship levy to subsidize MBA business degrees for top executives earning more than £100,000 a year.
Mark Constantine, founder of Lush cosmetics, which has more than 100 UK stores, said the 2017 scheme was no longer fit for purpose and needed to be replaced.
It will come later The Independent It found that the £2.47 billion levy is still being used to partially fund MBA degrees, while younger learners are losing out, with 100,000 fewer under-25s starting their studies in 2021/22 than six years ago. Finally, nearly £100m of the scholarship levy was used to subsidize high earners doing their executive MBAs.
The levy is levied on businesses with an annual payroll of more than £3m, which must contribute more than 0.5 per cent of their payroll; the amount can be used by firms to hire and train students, but after 24 months any unspent fee must be returned to the Treasury as tax. It is taken from about 2-3 percent of employers.
The use of the levy to fund MBAs was banned in 2021 when then education secretary Gavin Williamson said it was “out of step with the spirit of the programme”, but this newspaper’s investigation shows many universities and business schools are still gaming the system and offering their own opportunities. popular and expensive courses are “partially funded” up to 65 percent.
Tina McKenzie, policy chair of the Federation of Small Businesses, which represents more than five million high street firms, said: “It is worrying to hear that the Apprenticeship Levy is still part-funding expensive MBA programs for large corporations, as it is completely against the spirit of what it was designed for.
“It also takes away funds that should be used to start young people on career paths away from work.”
He added: “The Institute of Apprenticeships and Technical Education should accelerate the development of intermediate standards of practice in key sectors such as digital, business and administration.”
Mr Constantine said: “The Apprenticeship Levy has not been one of the government’s better schemes and its usefulness has come to an end. Maybe the government can replace it with a usable scheme.”
A Lush spokesman added: “The tuition fee has been marketed as a ‘win-win’ for sectors such as manufacturing, but as it stands it remains a win-win.
“In general manufacturing, the enrollment of young people has fallen significantly and this is creating a huge deficit.
“The number of students has decreased sharply. In 2016/17, 75,020 started manufacturing and engineering apprenticeships, but this fell to 39,510 in 2020/21. As a result, there are currently 84,000 open jobs in manufacturing in the UK, which will expand the business to allow it to continue. It will also result in a loss of productivity estimated at £8 billion by industry experts – that’s up to around £21 million of lost output per day.”
Their comments were echoed by Tesco group chief executive Ken Murphy, who said the levy was “not working” and called for “appropriate reform to ensure levies are used to create opportunities where they are most needed”.