USE IT OR LOSE IT? Helping SMEs Access Their Share of £52m Apprenticeship Levy Funding
Why are companies still missing out on the opportunity to tap into Apprenticeship Levy transfers?
By 2020, most businesses will be familiar with the Apprenticeship Levy in the UK which launched in 2017. In a nutshell, the levy is a UK tax on employers which can be used to fund apprenticeship training. It is payable by all employers with an annual pay bill of more than £3 million at a rate of 0.5% of their total payroll, and the levy monies are held in a ‘digital fund’ that employers can use to pay for apprenticeship training.
A 10% government contribution is added to each monthly payment, so employers get more out than they put in. Smaller employers – those with a total annual pay bill of less than £3million – pay just 5% of the cost of their apprenticeship training and the Government pays the rest.
25% Transfer of Apprenticeship Levy Funds
However, since April 2019, levy paying employers can also transfer up to 25% of their apprentice levy funds to other employers. The transfer option was added to make the apprenticeship system more flexible, meeting the needs of employers (those with supply chains involving logistics, warehousing or retail for example) whilst also helping smaller businesses to invest in more training opportunities. As part of the transfer scheme, local charities, community groups or small businesses in a large company’s supply chain could see their apprenticeships funded in this way.
The introduction of the Apprenticeship Levy was created in response to the need to develop future leaders and managers, against a backdrop of chronic underfunding in the Further Education (FE) sector. And it’s predicted that unless more money is pushed through, the FE sector will run out of funds for training a skilled British workforce.
Businesses Missing Out on Millions of Pounds of Available Funding
Yet from our experience at Qube Learning we can see that businesses are missing out on thousands of pounds available to fund training because they are not utilising the Levy transfer option.
By 2019-20 the funding available for investment in apprenticeships in England will have risen to over £2.5 billion, double what was spent in 2010-11 in cash terms.Since it was introduced, the levy has directly supported almost 313,000 people to start their apprenticeship journey.Figures from last year show that the amount of funds expiring in company digital apprenticeship service accounts in July 2019 was £44 million, and in August 2019 it was £52 million. Why? |
|
|
A Huge Gap in Communication and Connection
We think there is a gap in the connection and communication between large companies with excess levy, and the smaller businesses or charities that could really benefit from additional apprenticeship funding.
It also seems that some businesses find the system is confusing; in particular, transferring unused levy funds is complicated and time consuming, as they cannot be block transferred but must be transferred on a month-by-month basis.
This is where we have been able to take action in the last nine months – as an accredited learning provider, we are ideally placed to help businesses access an Apprentice Levy transfer. For example, we have recently been working with a major UK retail chain to find a transfer partner who could benefit from surplus funds from their ‘training pot’.
Past successes for us also include a recent partnership where we connected a well-known global company with a small local charity who could utilise the transfer.
As an Apprenticeship Levy payer, this international company was able to transfer a percentage of their unspent levy to support a small charity, enabling them to fund multiple apprenticeships:The company’s spokesperson said: “The Apprenticeship Levy has had a profoundly positive impact on the workforce and business here – we simply couldn’t see our unspent funds go to waste, and that’s where our hunt for a business or charity to which we could share our unspent levy began. “Following research into a range of projects and services around the UK, we knew that supporting this charity was a fantastic choice from the outset. After talks with the charity CEO, we agreed that an initial pilot of 11‘Team Leader/Supervisor’ apprenticeships would make a fantastic starting point. With our company having a solid two-year relationship with training provider Qube Learning, we ensured they were top of the pecking order as the selected training provider in 2019. “Having seen first-hand the multiple benefits to introducing apprenticeships into a business we cannot wait to see the impact the Apprenticeship Levy transfer and apprenticeships themselves have on the charity’s workforce and the charity as a whole.” |
One of the many advantages of working with Qube Learning is that we can put smaller businesses and individuals ‘in touch’ with brands who have excess levy to transfer.
Despite all the complications of the system, we are confident that the ‘Qube connection’ can benefit both levy payers and smaller businesses, allowing both sides to get maximum benefit from this useful government scheme.
Joe Crossley, CEO, Qube Learning
Responses