CTG shared “serious concerns” of proposed new Apprenticeship Levy, asked UK Government to postpone

The chair of the Charity Tax Group has called for the government to postpone the introduction of a new apprenticeship levy amid concerns over its impracticality for charities in its current form and potential misuse of donor funds.

In a letter to Robert Halfon MP, the minister of state for the Department for Education, the group’s chair, John Hemming, said he has “serious concerns” over the government’s proposed levy, which is due to come into effect from April next year.

“We have serious concerns about the extent to which the apprenticeship levy in its current form can be utilized by the charity sector,” he said. “Similarly, donors will be concerned that their generosity is funding unused levy contributions, which will then fund the apprenticeship schemes of others, rather than being used for the purpose they intended.”

Instead, the 500-strong membership group is calling for the government to support “accredited training and association expenses”, Hemming said.

“Many charities do not currently employ apprentices and, in some cases, doing so on a sufficient scale to fully utilize the levy would be neither realistic or appropriate,” he said. “Extending the legislation to include charity volunteer training would be an effective way of using this funding and would meet the intentions that the levy should increase the skills of our workforce.”

Among the concerns raised by group is the question of whether charities would have the opportunity to use their full levy quota. In response to concerns, the group proposes that charities be allowed to assign their unused levy credits to other charities “to enable donated monies to be applied for charitable purpose”.

The letter urges the government to delay the levy’s start date – currently set for April 2017 – on the grounds that current proposals lack clarity on both technical and practical points.

“The continued delays to the publication of guidance have led many of our members to express concerns about their readiness for the introduction of the apprenticeship levy from April 2017,” says Hemming.

“Without guidance and lacking clarity on a number of technical and practical points relating to the implementation of the apprenticeship levy, they will not have sufficient time to put in place the necessary structures for providing apprenticeships and will therefore forfeit the funds in their digital accounts.”

This morning a spokesman for the Department for Education confirmed receipt of the letter and said it would “respond in due course”.

“The government is committed to creating three million high-quality apprenticeships by 2020,” the spokesman told Civil Society News. “We are introducing the apprenticeship levy so that businesses have the talent they need to grow and thrive. We will continue to work closely with businesses of all sizes to design the levy around their needs and the need of their employees.”

Last week a letter coordinated by the Charity Finance Group added further pressure for the government to delay the levy.

The letter to Justine Greening, Secretary of State for Education, said the levy in its current form could not fulfil the government’s ambitions to create more high-quality apprenticeships and improve skills across the economy.

“While the levy is likely to boost the overall number of apprenticeships, it risks undermining overall apprenticeship quality and wider investment in the skills of the workforce,” the letter said.

“The levy represents a significant cost to many of the organizations that we represent. It is set to cost charities at least £200m by the end of this Parliament – a cost that will exacerbate the existing squeeze in funding for the sector and corresponding rise in demand on their front-line services.

“This uncertainty is compounded by the delayed publication of the guidance which was due in June. Our members urgently need clarity on the direction of the levy and adequate time to prepare. With only nine months until employers start paying the levy we are still in the dark as to how the organizations we represent will be able to use their levy funds to pay for apprenticeship training.

“We therefore urge the government to take a considered pause and work with charities to ensure that the levy is fit for purpose.”

Charity Finance Group has called for a meeting with Greening “at her earliest convenience” to “discuss the best way forward”.

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