The levy will force charities to create new apprenticeships or lose the money to private business, which raises ethical issues, says Steve Woolcock
This year’s national apprenticeship week will be the last before the apprenticeship levy kicks in on 1 April. As the day draws nearer, many large organisations have been preparing to deal with the challenges it presents.
Barnardo’s will be affected in several ways. As the largest children’s charity in the UK, which last year helped 248,000 children and young people through almost 1000 services, we fall into the minority group in this sector as an employer with an annual salary payroll value of more than £3 million.
This means we will have to contribute 0.5% of the value of our annual salary payroll as our levy payment. To obtain full benefit from the levy, an organisation the size of Barnardo’s would need to create many more apprenticeship roles than we already provide (our current estimate is around 200), or face the prospect of losing this money – money which has been generously donated to support vulnerable young people and families.
Whilst we do not object to the levy in principle and indeed believe apprenticeships are an excellent way for young people to gain new skills, the mechanics of it will leave some charities out of pocket and detract from funds intended for the very people these charities exist to help.
The National Council for Voluntary Organisations estimates it will affect 1200 charities at a cost in excess of £70 million.
Only 10% of any unused funds can be reallocated to other charities, potentially resulting in hundreds of thousands of pounds not being used to help people who, for the most part, have already had a difficult start in life.
Donations are specifically to support our work with vulnerable children
Unused sums from large employer levy accounts may be used to fund the cost of apprenticeship training for the remaining 98% of employers who because of payroll size will not pay the levy.
One major reason why this raises concern within the charity sector is because we are funded by donations given specifically to support the work that we do with vulnerable children and families – not to fund apprenticeships in commercial organisations.
The other ethical dilemma is whether it is right to be taking surplus levy money from charities that they could be using to support vulnerable young people and ensuring they have a better future. Given the Government’s commitment to ensure all children and young people have the opportunity to ‘reach their full potential’, taking money from charities that help them seems a little short-sighted.
Despite these concerns, Barnardo’s has been working towards maximising the opportunities that the levy does create for our staff and those we support. Barnardo’s Employment Training and Skills (ETS) received a grade 2 ‘Good’ rating as a provider at its last Ofsted inspection, and our overall Apprenticeship success rate in 2015-16 was 77% with some programmes achieving 93%.
We are launching an internal Barnardo’s Apprenticeship Academy as part of our Employment Training and Skills department which will support the development of existing staff and young people joining the organisation.
Barnardo’s does not believe that ‘one size fits all’, which is why we have a wide range of services to help every child and young person reach their full potential.
As we review our HR needs for the coming years, we are looking at creating new apprenticeship roles which would be made available to the most vulnerable young people in our society.
We will be focussing on upskilling existing staff in areas such as leadership and management which will further enhance our ability to support the young people that use our services.
Barnardo’s is also sharing its knowledge with other Third Sector levy paying organisations by managing their levy pot and delivering apprenticeships for them.
Our ETS services can and do support employers by finding the right young people for their vacancies and preparing them for the recruitment process and the apprenticeship. We continue to support them and the employer throughout the apprenticeship.
Barnardo’s is committed to becoming a learning organisation so it can continue to improve the outcomes for the most vulnerable young people in society. The apprenticeship levy will contribute towards this goal by increasing the number of young people we can bring into the organisation and whose life chances we can improve.
So, whilst there are considerable financial and ethical challenges to the levy, Barnardo’s has found a way forwards to maximise the benefits, as we continue to “Believe in Children”.
Steve Woolcock is Head of Employment Training and Skills at Barnardo’s
The Charity Tax Group supports the Government’s drive to improve productivity by increasing the number of apprentices in the workplace but we have serious concerns about the extent to which the Apprenticeship Levy, in its current form, can be utilised for training the charity workforce. Many charities do not currently employ apprentices and, in some cases, doing so on a sufficient scale to utilise the levy fully would be neither realistic nor appropriate.
On the other hand, volunteers are the lifeblood of the charity sector and, in many charities, they outnumber paid staff by a considerable margin. Volunteers provide a very effective and productive workforce and, without them, many charities would find it difficult to operate as effectively as they do. However, they are not by definition ‘employees’; and, given their importance to the sector, we would argue that it makes sense to extend the levy contributions made by charities to supporting accredited volunteer training and associated expenses. This would be an effective way of using this funding and would meet the intention that the levy should increase the skills of our workforce. In
particular, resources could be focused towards encouraging younger people to get involved in volunteering, thereby playing a role in the up-skilling of the country’s younger workforce, which will allow them to bring additional relevant skills to any paid employment. We would be happy to give examples of how activities carried out by volunteers can be applied in an employed role.
The Government can help by:
– permitting charities to assign to other charities any unused Levy credits at a higher level than the 10% currently under consideration. This move would ensure that more funding is retained for charitable use.
– allowing Levy funds to be used to pay for accredited volunteer training and associated expenses.