Defined: What’s the apprenticeship levy and why is it controversial? — science weblog

Tens of millions in taxpayers’ cash is getting used to part-fund college programs for high executives incomes greater than £100,000 a 12 months, an investigation by The Impartial has revealed.

However what precisely is the levy and why is it controversial? Right here we check out the historical past.

What’s the apprenticeship levy?

It’s a cost that companies with annual payrolls over £3 million should pay, calculated at 0.5 per cent of their wage invoice. It impacts 2-3 per cent of employers.

How does it work?

Levy payers are supposed to use the levy to recruit and prepare apprentices. They’ve two years to make use of it or lose it. Any levy unspent after 24 months needs to be returned to the Treasury as a tax. The Treasury use a few of this unpent levy to assist smaller companies prepare their apprentices whereas the remainder goes to a normal pot to fund different authorities expenditure. The Treasury have by no means made this cut up specific which has led to accusations that it has “not been clear”.

Who advantages?

The levy raises round £2.46 billion a 12 months. It was launched by David Cameron in 2017 who stated he “wished extra individuals to have the prospect of studying a ability to allow them to get a well-paid job and have a satisfying profession”. It was meant to profit younger individuals beginning out get a foot on the profession ladder in addition to up-skill current staff and enhance the general productiveness of the workforce. Scores of universities, eager to profit from this large pot of presidency cash, registered as apprenticeship coaching suppliers and a few aligned their government MBA programmes to include apprenticeship requirements so they didn’t price corporations or people a penny.

Why is it controversial?

Most levy payers don’t spend all their levy on coaching, however moderately than return it to the Treasury as a tax, many started to make use of it to fund their high executives doing costly diploma and postgraduate programs, together with MBAs. The Authorities tried to stamp this out two years in the past by saying that MBAs can not be funded by the levy because it was “not within the spirit” of the scheme. Some universities have responded to this by dividing their MBA into two components, the primary half being a Senior Chief Apprenticeship which is funded by the levy. The result’s that these MBA candidates nonetheless have round two-thirds of the overall price of their MBA funded by the levy. An estimated £100M of the levy has been used to fund or part-fund government MBAs up to now. Critics say the Authorities is popping a blind eye.

Supply hyperlink