Government makes changes to apprenticeship levy following pressure from employers

The Charity Finance Group will take part in a new group that will examine proposals made under the scheme

Apprentices
Apprentices

The government has announced changes to the apprenticeship levy, including increasing the amount of time affected charities have to spend their levy funds, following pressure from employers.

The apprenticeship levy, which comes into effect in April 2017, will force employers with wage bills of at least £3m to pay a levy of 0.5 per cent of their overall payroll amount to the government.

Each employer will receive £15,000 to offset the cost of implementing this, and the difference between what they pay out and receive from the government will be put into a digital account and made available for employers to provide apprenticeship schemes.

In a written ministerial statement today, Justine Greening, the education secretary, said the government would increase the amount of time employers had to spend funds in their digital account from 18 months to 24 months.

The Charity Finance Group and Charity Tax Group have both previously called for the levy to be delayed to allow charities to prepare for its introduction, including to develop apprenticeship programmes of sufficient quality to benefit.

In the latest guidance on apprenticeship funding, which has also been released today, the government says the changes proposed will allow employers to get the right programmes in place.

"We received feedback from employers and representative groups that a longer expiry period would help employers prepare for the new system and adapt and scale their training programmes," the guidance says.

"We have considered this feedback and recognise that the market is changing significantly. We want to support employers to adapt and develop their apprenticeship programmes and agree that a longer expiry period will help employers to prepare for the new system, giving them more time to identify the skills they need, select the best training and scale their apprenticeship programmes."

Anjelica Finnegan, policy and research manager at CFG, said: "We are pleased that after significant campaigning from CFG that the government has decided to extend the amount of time that employers have to spend their levy funds.

"We have consistently voiced our concerns that the sector is starting from standing when it comes to preparing for the levy, so an extra six months provides some much-needed breathing space for charities to plan how they can use the levy."

Greening’s statement also said that the CFG would take part in a new employer group examining proposals to allow employers to transfer digital funds to other employers in their supply chains, sector or to apprenticeship training agencies in 2018.

The current proposals allow levy-paying employers to transfer up to 10 per cent of the annual value of funds entering their digital accounts to other employers.

Finnegan said the CFG would continue to call for the 10 per cent cap to be removed and that "any unspent levy funds within the charity sector should be redistributed within the sector rather than risk being redirected to private business".

Other organisations in the employer group include the Confederation of British Industry, the Federation of Small Businesses, the British Chambers of Commerce and EEF – the Manufacturers’ Organisation.

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