Not Using the Apprenticeship Levy? Here’s How to Share Apprenticeship Levy Funds with Other Companies.
A key thing to remember with the Apprenticeship levy is that there is a time limit on spending the funds. If you don’t spend it, the government claims it back to fund apprenticeship training for non-levy paying businesses. But what can a business do with these funds to benefit your business as well as those around you?
Transferring Funds. Is That an Option?
You may be aware that you can combine your levy funds with other businesses in your company group structure. But did you know that you can share your levy with companies outside that as well?
The Education and Skills Funding Agency confirmed that from April 2018, it will allow levy paying employers to transfer funds to any employer. This includes companies in your supply chain and t apprenticeship training agencies. Initially you’ll be able to transfer up to 10% of the annual value of funds entering your apprenticeship service account.
As you’d expect, there are rules around the transfer of apprenticeship levy funds:
• If you want to transfer funds, you’ll need to agree the apprenticeships that are being funded by a transfer.
• Organisations receiving transferred funds can only use them to pay for training and assessment for apprenticeship standards.
• Employers can’t use funds to pay for apprenticeship framework training and assessment (only new apprenticeship standards).
It Can Benefit Your Business.
You may be sat reading this wondering how sharing your levy funds with other businesses can benefit you. Let’s look at 4 ways that this can benefit your business:
• Develop your supply chain- Use your levy to support your suppliers to develop skills in their existing workforce or grow their business with apprenticeships. You can also consider cross-business placements for both of your apprentices, assuming you both have apprentices on similar courses. This would help not only develop skills and behaviours but will also give an understanding of each other’s businesses.
• Grow cohort numbers- For a training provider to deliver a new course can require a big investment. This means courses can only go ahead if there is a minimum of apprentices on the course. Using your levy transfer to fund a full apprenticeship for other employers in the sector may mean an increase in numbers, allowing the course to go ahead.
• Cement partnerships- Using your 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 other cross-business opportunities.
• Show corporate social responsibility- Typically, third sector organisations have little to no budget for training and developing staff. The levy funds that you could share could help them develop their workforce through apprenticeships. Large charities are often levy payers, but they may already have fully committed their funds. A transfer from your organisation may make a huge difference to them and the work that they’re doing. Further support with the delivery of the apprenticeships could also be offered. For example, you could offer mentoring, coaching or work placements.
Deal with the Risk
One thing you need to ensure is that neither you nor the company you transfer funds to will run out of money mid-way through an apprentices training. If this were to happen, the apprentice can continue their training, but either you or the other business will need to contribute 10% of the training costs. With this in mind, ask the training provider who is delivering the training to forecast spend. Any good training provider should be able to manage the majority of the funding process for you.
A Few Things to Remember
There are a few does and don’t to keep in mind. Do make sure that you understand who can and can’t be funded through levy transfers. Also, make sure you understand the commitment you’re making. Some apprenticeships can last over 4 years and is not a decision to be taken lightly.
Don’t be tempted to ask for incentives to transfer funds and don’t be tempted by a looming deadline to rush to start lots of apprenticeships just to use the funds.
Transferring levy funds may not be the best option for your business. But, if your funds are going to be taken back by the government, this gives you a degree of control over how these funds are used and bring benefits to other businesses as well as your own.
For more information, come and talk to Eden today.