New government guidance on the apprenticeship levy has been criticised by the Charity Finance Group for failing to address key concerns about how the proposals will affect the charity sector and for the lack of time charities have been given to prepare for the levy’s implementation.
Starting on 1 April 2017, the apprenticeship levy will force all employers with payrolls of £3m and over 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.
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.
At a meeting with the CFG last month, Nick Boles, the skills minister, said that charities would not be exempted from the levy.
New guidance released by the Department for Business, Innovation and Skills has given some clarity to employers affected by the levy.
The guidance, published yesterday, confirms that the levy allowance will operate on a monthly basis and will accumulate throughout the year, with any unused allowance carried over from one month to the next.
A 10 per cent top-up will be applied to funds for apprenticeship training, which means that for every £1 paid into the scheme employers will receive another 10p, the guidance says.
Funds will expire after 18 months unless they are used. Charities that will pay the levy can register with the digital apprenticeship service from January 2017 and use it to pay for the training and assessment of apprentices from April 2017, the guidance says. It explains that employers paying the levy will see funds in their digital accounts from May 2017 onwards.
But Anjelica Finnegan, senior policy and public affairs officer at the CFG, told Third Sector that the overall lack of clarity in the proposals was disappointing, particularly given that the levy would become operational in April 2017.
She said among the immediate concerns was that charities would be unable to redirect funds to other organisations for the first year.
Finnegan said there were no details about how employers, including charities, could become recognised training providers and thus spend the levy on in-house training. The guidance says that employers paying the levy can use it only on approved training provider and assessment organisations.
"I am disappointed at the lack of clarity that employers are being afforded at this late stage," she said.
"With less than a year to go before the levy is introduced, charities need to be able to plan for it. "Without sufficient time to plan, charities are being put at further risk of not being able to spend their levy and of charitable funds being redistributed out of the sector to subsidise private business.
"This is exacerbated by the fact that there will be no provision for employers to transfer their unspent levy funds to another organisation. This is despite the minister stating that charities will be able to do this in the event that they cannot spend their levy.
"It is also concerning that details about how to become a registered training provider have still not been announced. Those charities with in-house training schemes might be forced to use other, less relevant, training providers until they can be assessed."
Finnegan said the government’s devolution of apprenticeships policy to Scotland, Wales and Northern Ireland would make it difficult for UK-wide charities to plan accordingly.
The new guidance says further details on the apprenticeship levy will be released in June, October and December this year.