The government is using the charity sector as a "piggy bank" through its refusal to lift a 10 per cent cap on apprenticeship levy transfers, the Charity Finance Group and 23 national charities have claimed.
The apprenticeship levy, which comes into effect next month, will force employers with wage bills of at least £3m to pay 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 apprenticeship schemes.
In a letter sent to Justine Greening, Secretary of State for Education, on 30 March, Caron Bradshaw, chief executive of the CFG, and charities including Cancer Research UK, the National Trust and the British Heart Foundation stress the importance of allowing charities to transfer unused levy funds to other voluntary organisations.
The letter says this would prevent charitable donations in effect being used to subsidise apprenticeship training in the private sector.
The government has allowed employers to transfer some of their levy revenue to other organisations, but has capped the amount at 10 per cent.
The letter says: "The government is effectively exploiting the charity sector by using it as a ‘piggy bank’ to advance its other policy objectives.
"The principle that money given for public benefit should not be taxed has been the foundation of many of the reliefs and exemptions, such as Gift Aid and non-domestic business rate relief for charities.
"It is our view that allowing charities – who will account for just 6 per cent of the £3bn that government expects to raise from the levy – to transfer 100 per cent of their unused funds is a small adjustment that will mitigate the serious consequences of the levy for our sector."
The letter mentions polling commissioned by the CFG and carried out by ComRes: 46 per cent of those polled said they believed unused levy funds should be transferred to other charities or not transferred at all.
In a statement, Bradshaw said: "Charities want to ensure that they are supporting their employees to develop, and with Brexit on the horizon it is more important than ever that they are able to increase skills in their workforce. However, as it currently stands, the apprenticeship levy will prohibit charities from doing this.
"We now are less than a month away before the levy is introduced and it is vital that the government acts now and reforms the levy before it is too late. To not do so will risk undermining our sector’s ability to support the people and communities that rely on charities, at a time when they are being asked to do more."