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Member Blog - Apprenticeship levy transfer option: the opportunities for economic development

 

Read our latest member blog below, by Iain Mackinnon, a Fellow of the Institute of Economic Development, Secretary to the Maritime Skills Alliance and Managing Director of The Mackinnon Partnership

It may not be as stark as Brexiteers v Remainers, but I worry that the economic development profession is falling too readily into two camps: those who are getting stuck into the detail of how apprenticeships work and those who are standing back, sure it’s nothing to do with them. This article is for the second group: you’re missing out.

What I would particularly like to draw your attention to is the new provision which will allow levy-paying employers in England, for the first time from April, to pass on up to 10% of their levy pot. The idea came from companies like Jaguar Land Rover, already deeply committed to apprenticeships and keen to do what they can to help smaller firms in their supply chain.

This is a good idea. Getting companies to work together like that, particularly with bigger companies helping out smaller ones, has long been a goal of public policy. And the levy – love it or loathe it – oils the wheels with cash. 

But it’s not just companies in the supply chain which might benefit. Here is the key sentence in the government’s announcement: “There are currently no restrictions about who you can transfer funds to”.

No restrictions? They don’t quite mean that – but the restrictions are very few – and this means that a major employer in your area could help to support other companies locally which aren’t in its supply chain, perhaps as part of its corporate social responsibility programme. 

The levy is all about money, and squeezing it out of companies (rather than taxpayers) to do some good. This new provision opens up the opportunity for larger companies to use some of their levy pot to support others in employing apprentices.

So, if I was working in an area-based economic development team, I would do two things:

  • Identify the big employers in my patch who are paying the levy.
  • Work hard to make sure that none of those employers return a single penny to the Treasury as tax. If they don’t want to use the levy themselves (and there are lots of opportunities), they should make full use of this new provision and help another employer – in their supply chain or their locality – to employ their own apprentices. 

The points of the apprenticeship levy transfer option are:

  • Only levy-paying companies can make a transfer. 
  • Companies can transfer a maximum of 10% of their levy funds. 
  • Any employer can receive and use transferred funds, but they have to be registered with the apprenticeship service. 
  • A transfer can only be used to pay for training and assessment for statutory – that is, government-approved – apprenticeships, and only new-style apprenticeship standards (not the older framework apprenticeships they replace). 
  • The transferred funding can only pay up to the maximum of the allocated funding band for the apprenticeship supported. Companies can make other arrangements for any further costs, but cannot use levy funds beyond that point.
  • The funding must be for specific apprentices, and the two companies must agree the costs before the transfer starts (i.e. it is not a general transfer of cash: the opportunity exists to support apprenticeship training only). 
  • This opportunity is only available in England, not the rest of the UK. 
  • The announcement, with full details, is here.
  • The Maritime Skills Alliance has prepared a two-page briefing on it, available here.

 

Iain Mackinnon is a Fellow of the Institute of Economic Development, Secretary to the Maritime Skills Alliance and Managing Director of The Mackinnon Partnership

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