The Charity Finance Group has written to the skills minister to highlight the need for sector representation on the board for the apprenticeship levy, and has raised concerns over the implications of redistributing charitable funds.
The government announced the plans to introduce an apprenticeship levy from April 2017 in the spending review and autumn statement. It estimated that this will raise £3bn by 2019/20.
Employers with a wage bill of more than £3m will have to pay the levy of 0.5 per cent through Pay As You Earn. And the government will use the money raised to fund apprenticeships. The levy applies across England, Wales, Scotland and Northern Ireland. It is estimated that around 1,200 charities in the UK will be affected at a cost of £70m.
The Treasury committed to set up an independent body to monitor the levy – the Institute of Apprenticeships.
The letter, to Nick Boles from Caron Bradshaw, chief executive of the CFG, said: “Given that the charity sector is a major employer in the UK and the unique challenges that charities face in developing new apprenticeships and recruit, a proportion of the Institute of Apprenticeship’s board should come from the charity sector.”
She said that charities have “lacked the resources to invest in skills and apprenticeships due to a tough financial environment”, and that unlike the rest of the economy, the UK charity sector is still effectively in recession.
Bradshaw went on to state that, unlike private businesses, the “vast majority of charity funds are typically allocated to their cause, making it difficult for charities to find room in their budget to invest in development and recruitment”.
She said that the levy should therefore “be made available to develop new apprenticeships and recruitment as well as paying for direct costs”, and that this “will help to ensure that they can provide meaningful, high quality apprenticeships, thereby attracting young people to the sector”.
In a separate statement, Anjelica Finnegan, senior policy and public affairs officer at the CFG, said: “The levy comes at a difficult financial time for charities and if charities are to spend limited resources on apprenticeships we need to make sure that the new system works effectively for charities. This means that charity representatives must be on the board of the new Institute of Apprenticeships, in the same way that other major employers will be represented across the economy.”
‘Charitable resources shouldn’t be redistributed outside the sector’
Existing plans state that employers will be given a ‘reasonable amount of time’ to spend the funds available in their digital accounts, the letter states. Where employers do not spend these funds, they will be made available to other employers.
Bradshaw said that it is important that where this happens the funds should be redistributed within the charity sector “as far as possible”. She said that this will “help ensure that the sector can make the most of much needed investment in skills and will prevent resources leaving an under resourced sector to subsidise training in other parts of the economy”.
The letter questioned how the levy “interacts with the principles which underpin the use of charitable resources”.
Bradshaw said: “For example, 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.
“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 said it will be actively engaging with government on these issues.
