High Street bosses: Tax reforms are key to growth

Leading companies such as McDonald’s and Currys believe that apprenticeship reforms are key to unlocking economic growth.

Businesses are desperate for reform as money raised from the current tax ends up being wasted while the country faces a shortage of workers.

Big companies such as Tesco, B&Q owner Kingfisher, and Halfords want more flexibility. For example, bosses want rules on course length scrapped so older workers can be trained in digital skills in less than a year.

Since 2017, a total of £2bn in funding has been returned to the Treasury as businesses are constrained by strict rules governing apprenticeship tax. The number of entry-level apprentices has plummeted.

Labour pledged to reform the tax in the King’s Speech and last month Sir Keir Starmer launched his new body Skills England to reduce “over-reliance” on foreign workers.

Alistair Macrow, chief executive of McDonald’s UK and Ireland, told The Mail that the tax “needs to be made more flexible”.

“Allowing more money to be spent on a wider range of courses and ensuring that more of the costs associated with employing an apprentice are covered by the levy would be a good start,” he said.

An example of cost is when an apprentice has to take a day off work to train and a company needs to hire cover staff.

Although McDonald’s wants to use the unspent money from the tax to fund 500 training courses for young people, Macrow says this is “difficult because of the barriers created by the existing tax.”

Companies also want decentralized countries to be able to use that cash.

Chancellor of the Exchequer Rachel Reeves has insisted she will lead the most “pro-growth” Treasury in history.

But she faces an uphill battle to convince large swaths of “economically inactive” individuals to return to the workforce.

Currys believes the reforms will help recruit older people. And Kingfisher said they will help address the sector’s workforce shortage, which is estimated to cost £98bn in lost economic growth by 2030.