The Charity Finance Group has warned that charity funds could be used to subsidise apprenticeship programmes at Starbucks and McDonald’s, unless urgent measures are taken to control the funnelling of apprenticeship levy funds.
Speaking to Charity Finance magazine, Andrew O’Brien, head of policy and engagement, said that aspects of the new apprenticeship levy scheme could make it difficult for some charities to fully utilise, leading to unspent levy funds being directed out of the sector towards training programmes at commercial organisations.
“These organisations frankly have their own profits that they could fund those skills with”, O’Brien said.
CFG is currently working with the government as part of its ‘transfers working group’ to assess the scheme’s effectiveness. One area being discussed is the ability of charities and other organisations to transfer unused levy allowance funds to other organisations within their sector. But a cap to limit these transfers has been proposed at just 10 per cent, according to O’Brien.
“This is obviously far too low,” he told Charity Finance. “We want that to be 100 per cent really because we don’t see why charities should not be able to transfer unspent levy funds to other organisations that they want to support. We could get the ridiculous situation where funds from a big charity could end up sponsoring apprentices at organisations like MacDonald's and Starbucks that have their own profits that they could fund those skills with. Frankly, why should we be subsidising that?"
O’Brien warned that “unless changes are made to the levy and more support is given to the sector to develop those standards and address the skills gaps, then it’s certainly very likely that a lot of those charities will just end up writing this off as an extra cost or extra tax".
'A hard stick for charities'
The levy, which comes into effect from April, requires all organisations with a payroll of more than £3m to pay 0.5 per cent of their total wage bill to the government. In turn, the government provides £15,000 to the employer to offset the cost of implementing the scheme. The difference in the amount that is paid out and received from the government, will be put into a pot for employers to fund apprenticeship schemes.
The programme’s initial announcement was criticised by some sector bodies, including the Charity Finance Group and Charity Tax Group, among others, with CTG chair John Hemming voicing “serious concerns” and calling for the brakes to be put on the scheme.
Speaking to Charity Finance this month, the RSPB, WaterAid, CRUK and Action for Children also criticised the scheme.
February's issue of Charity Finance is out now. Subscribers can read the full article online here.
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