April 13, 2016

Charities fear apprenticeship levy laws could undermine public confidence

The Charity Finance Group (CFG) recently met with Skills Minister Nick Boles to discuss the implications that the new rules would have for the third sector.

Mr Boles confirmed that charities would not receive special treatment, despite ongoing concerns that the system would put additional financial pressure on organisations.

The levy, which is set to take effect on April 1st 2017, requires all employers who have a payroll in excess of £3million to pay the Treasury a levy of 0.5 per cent on their payroll.

There are fears that under the arrangement, levy money paid by charities could end up being used in the private sector.

Anjelica Finnegan, the CFG’s senior policy and public affairs officer, said the meeting with the minister was “productive” but the way the system would work remained a cause for concern.

“We still have significant concerns that without introducing greater flexibility for charities – for example, allowing them to use the levy to cover the core costs of employing apprentices and not just on training – there is the very real risk that charities will not be able to spend their levy. This will result in their funds being redirected to other employers, potentially in the private sector.

“If it is found that charitable resources are being redirected to subsidise training in private companies, this could not only undermine public confidence in the policy, but could also lead to a fall in donations as donors question how much of their money is going to their chosen cause.”

Royds has a wealth of experience advising charity clients on the laws and regulations affecting the sector. For further advice on employment issues affecting the not for profit sector please contact Gemma Ospedale.

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