Low take up of scheme to transfer levy funds from larger to smaller employers

Only a tiny proportion of large employers’ apprenticeship cash was passed on to smaller employers in the first three months of the transfer scheme, the skills minister has revealed.

Since May this year levy-paying employers have been able to transfer up to 10 per cent of their funds to smaller employers in their supply chains.

Take-up was understood to have been low, and this has now been confirmed by Anne Milton.

In the three months from May to July “less than 1 per cent of levy funds in employer apprenticeship service accounts were used to fund apprenticeships in this way for non-levy paying employers,” she said in response to a parliamentary question.

Despite multiple enquiries, FE Week has only been able to find a handful of employers that have passed their levy funds along in this way

Last month the chancellor Philip Hammond announced an increase in the amount of cash that employers will be able to pass on from April 2019, up to 25 per cent.

Ms Milton said at the time that she hoped this would boost take-up “because then it’s a substantial proportion”.

Speaking to FE Week at the Conservative party conference in October, she admitted that “possibly yes” the 10 per cent wasn’t being passed on because it was “too small to make it worthwhile”.

“By January, I’d like to see some real progress. My challenge to employers is to go and transfer it,” she said.

“Employers say they really want to be able to help their supply chains. There are lots of enlightened ways you could use that transfer to grow apprenticeships – that’s what we want to see.”

A spokesperson for Health Education England, which supports apprenticeships in the NHS, said it was “providing support for employers seeking to transfer out and receive levy”.

“This includes transfers between trusts and primary-care employers such as GP practices, pharmacies and dental practices.”

However, she was unable to name any of the trusts involved.

Last month HEE wrote to all NHS trusts encouraging them to use or transfer their levy funds, after finding their annual £200 million pot was not being spent fast enough.

Mike Cherry, the Federation of Small Businesses’ national chairman, said the government should be “looking at solutions to encourage larger levy-paying firms to transfer their unspent funds” such as a matching service “where levy-paying businesses can locate smaller businesses to receive funding”.

Plans to allow levy payers to transfer funds to smaller employers in their supply chain, to support them to recruit apprentices, were first announced in October 2016.

When the policy first came into effect employers were limited to passing cash on to a single employer, although this restriction was subsequently lifted.

Following Mr Hammond’s announcement in October, a number of large employers, including Specsavers and the Co-op, voiced concerns that the increase to the transfer facility would have “little impact”.

“We are continuing to work with employers to build awareness on how businesses can use their apprenticeship-levy fund,” a Department for Education spokesperson said.

This included supporting them “to make sure they make best use of the levy transfer and their own levy funds”, she said.

FE Week reported last week that employers had used just 14 per cent of their apprenticeship levy funds in the 18 months since the charge was brought in.

Just £370 million of the £2.7 billion total balance of employers’ apprenticeship service accounts had been spent as of the end of September, a freedom of information request revealed.