Levy-paying employers have 24 months to spend their levy before it gets clawed back by the Government to fund apprenticeships at non-levy paying employers.So, for employers who started paying the levy on day one (April 2017), this means that the first month’s levy payment expires in April 2019.
From April 2018, levy-paying employers can transfer up to 10% of their annual levy funds to other employers to fund apprenticeships.
Transfers can only be used to pay for training and assessment for apprenticeship standards and only for new starts.
For more information on transferring levy funds go to https://www.gov.uk/guidance/transferring-apprenticeship-service-fundsGiven that doing this brings extra work and potentially extra risk, the question has to be ‘what are the benefits of transferring your Levy funds’?
1. Develop your supply chain
Use your levy to support your suppliers to develop skills in their existing workforce or grow their business through apprenticeships. If you have apprentices on similar apprenticeships, you can bring added value by including cross-business placements in the programme, helping not only to develop skills and behaviours but also to embed an understanding of each other’s business in the learning process.
2. Grow training opportunities
Preparing to deliver a new standard can be a big investment for a training provider or college. Some require a minimum cohort number to be viable. Using your levy transfer to fund apprenticeships for other employers in the sector may enable you to increase numbers so the standard can go ahead.
3. Cement strategic partnerships
Using your surplus levy funds to support an apprenticeship programme for other key organisations can be a really effective way of cementing strategic partnerships. As well as building skills, you can explore opportunities for cross-business placements and joint learning opportunities, to build relationships between your businesses and your people.
4. Demonstrate corporate social responsibility
Third sector organisations typically have little or no budget for training. Your extra levy funds could help them to develop their workforce through apprenticeships. Some large charities will also be levy-payers but if they have already committed all their funds, they may welcome a transfer from you. Your business could offer further support with the delivery of the apprenticeships, for example through mentoring, coaching, offering relevant work placements or events.
N.B. Apprentices must be employees, so volunteers aren’t eligible.
"Levy-paying employers have 24 months to spend their levy before it gets clawed back by the Government"
Manage the risk
If you’re already running an apprenticeship programme, ask your training provider, or the training provider delivering to the organisation to which you have transferred funds, to forecast spend and ensure that neither you nor the beneficiary of your funds runs out of money mid-way through an apprentice’s learning. It’s fine if you do – the apprentice can continue learning – but the employer (either you or the other business) will need to contribute 10% of the training costs.
If you have a good relationship with them, and they’re a good provider, they should also be able to manage most of the funding process for you.
- Be tempted to ask for any incentives to transfer funds.
- Be tempted by the looming expiry date to rush into starting lots of apprenticeships in the business just to use funds. A programme lacking in strategic direction, management buy-in and internal resources will end up costing you more than your lost levy funds in the longer term.
- Make sure you understand who can and can’t be funded through levy transfers.
- Make sure that you understand the commitment you’re making – some apprenticeships cost up to £28k and last 4+ years.
Ultimately, transferring levy funds isn’t always a good option for all employers, but if your expired levy funds are going to be clawed back by Government to fund apprenticeships with other employers, the levy transfer gives you some control over how those funds are used – and can bring benefits to your business too.