The Charity Finance Group has called on the government to redistribute within the voluntary sector those funds raised from charities through the apprenticeships levy.
In a letter to Nick Boles, the skills minister, the CFG said the levy, rates for which were announced in last week’s autumn statement, should be made available to charities to develop high-quality apprenticeships and attract young people to the sector.
The levy was announced by the government in the summer Budget and will be introduced in April 2017.
It is designed to increase investment in training and apprenticeships by giving employers who pay the levy direct spending power over the proceeds under direction from a new employer-led body called the Institute of Apprenticeships.
Organisations with annual salary bills of more than £3m will pay the levy, which is set at 0.5 per cent of a company’s overall paybill minus a £15,000 allowance, Chancellor George Osborne announced last week.
The CFG’s letter says that because many charities work with vulnerable people and in challenging environments, apprenticeships and training are essential, and proceeds from the levy collected from charities should therefore be made available only to charities.
It says the charity sector "lacks the resources to invest in skills and apprenticeships" because it is "still effectively in recession" and faces a £4.6bn funding deficit by 2018. This has led to most organisations cutting back on personnel development and skills, the CFG says.
The letter says it is important that funds raised from charities for the levy should be redistributed within the charity sector to help ensure that much-needed investment in skills takes place and to prevent charities, in effect, subsidising training in other parts of the economy.
"Redistribution outside of the charity sector of apprenticeships levy funding could call into question whether money given for public benefit should be allowed to leave the sector in order to subsidise private sector employers and support private benefit," the letter says.
"There is also the question of whether resources given to one charity by a funder or donor should be allowed to leave that charity in order to subsidise another charity’s operations. We hope that the government will engage with the charity sector on these questions."
The CFG also called on the government to invite voluntary sector representatives to sit on the board of the Institute of Apprenticeships.
The CFG said examples of new opportunities for skills development, such as the partnership between a number of international development charities and City and Islington College in London to establish international development sector apprenticeships, showed charities were committed to the principles of skills development.
A spokesman for the Department for Business, Innovation and Skills confirmed the letter had been received and would be answered in due course.