The government has explained how employers which pay the apprenticeship levy will be able to transfer funds to other organisations from April for the first time.
Large employers have been forced to pay the levy since it was launched last April, but they have only been able to spend the funding generated on their own apprenticeship training so far.
New guidance published on gov.uk explains how this will change: there are “no restrictions about who you can transfer funds to”, except that “they have to be registered on the apprenticeship service”.
The Education and Skills Funding Agency also advised those transferring the funds to be aware of “the funding rules around transferring apprenticeship funds, which will be published at a later date”.
Once a transfer is made, it can’t be refunded “to the sending employer”.
The intention to allow levy payers to transfer funds was announced in the Department for Education’s apprenticeship funding policy guide in October 2016, and later featured in the Conservatives’ general election manifesto.
This is the first time the government has laid out in detail how it will work, however.
Levy-paying employers which want to transfer funds will be able to find employers who want money in a number of ways.
For example employers can “work with an employer in your supply chain”, “get in touch with employers in your industry”, “get in touch with an Apprenticeship Training Agency”, or work with “regional partners”.
Employers can transfer a maximum of 10 per cent of their annual funds, which is “worked out from the total amount of levy declared”.
The levy is currently paid by large employers with an annual payroll of at least £3 million, and is set at 0.5 per cent of gross annual payroll, less at £15,000 allowance.
It’s expected to raise £2.5 billion a year by 2020, which can only currently be spent on apprenticeship training.
There have been question marks over whether many levy-paying employers will spend all of their funding on their own trainees, so moves to allow the funding to be spread further will be widely welcomed.
Transfer payments will be made monthly from apprenticeship accounts, and “if the apprenticeship stops, transferred payments will stop as well”.
Levy-payers that want to transfer to other employers are also advised that they will be “funding the total cost of their apprenticeship and not just the 10-per-cent co-investment”.
While only large employers currently pay the levy, smaller firms also now have to contribute to training costs for the first time, through a 10-per-cent co-investment model introduced through the wider apprenticeships funding system reforms.
This means the government will pay 90 per cent of costs from leftover levy revenue.
Today’s guidance also features a section on how transferring funds will work.
“The sending employer and the receiving employer need to first agree the details of the transfer of funds; for example, which apprenticeship standard, how many apprentices, the cost,” it said.
Once both employers are registered with the government apprenticeship service it explains how they need to connect with each other on the system, exchange details, and confirm the transfer.
“You need to know that 10 per of all the funds you receive as a transfer from another employer counts as state aid,” the guidance warns.
They should therefore check “how much state aid you’ve already received in any three-year period, so you don’t go over the €200,000 limit you’re allowed”.
There is no excuse now for companies to complain that the Levy is “just another tax”.
If they don’t want to use their Levy funds themselves (and there’s lots of scope), they should PASS IT ON to another company which can use it. A company in their supply chain, a business partner, or just another local company, as part of a Corporate Social responsibility programme.
This is a very helpful announcement by the Government, with the rules intelligently set as permissively as possible. Let’t use the opportunity.