Apprenticeship levy will costs us £130,000 this year

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Edel Harris calls on charities to join her in campaigning for more support for organisations that can ill afford the new tax on apprenticeships

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16th May 2017 by TFN Guest 0 Comments

The UK Government's Apprenticeship Levy is a new way of raising funds directly from employers and came into force in April 2017.  

As one of the largest social care providers in Scotland employing over 2,200 staff, Cornerstone, alongside other major charities, is required to pay the apprenticeship levy from 6th April 2017.

At a time when the social care sector is facing increasing demands and a lack of investment, this levy, which is in effect an additional tax, is most unwelcome.

Edel Harris

Edel Harris

The social care sector is required by law to ensure all social care workers are registered with the Scottish Social Services Council (SSSC) and as a result are required to have as a minimum an SVQ. In addition there is mandatory core training to be funded on issues such as Health and Safety and Adult and Child Protection.

For the last 10 years Cornerstone has ring fenced 2% of payroll costs to fund the training of the workforce. In addition we have been successful in attracting additional funding for modern apprenticeships.

We are proud to have achieved Investors in Young People accreditation, have actively promoted and supported Scottish Apprenticeship Week and are involved in the Developing Young Workforce initiative. Despite all of this we feel like we are now being penalised.

The Apprenticeship Levy has been calculated in Cornerstone's 2017/18 budget as costing us £130,000. This results in a significant loss of training income which it is unlikely that we will be able to recoup. 

The decision to introduce an Apprenticeship Levy was taken at Westminster, although it is still not clear how the Scottish Government intends using the additional money allocated to Scotland as a result of this new policy. HM Treasury confirmed that the Scottish Government's allocation from the Levy will be £221million in 2017/18.

As I understand it the contribution being made by employers in Scotland will be used to invest in skills, training and workforce development to meet the needs of employers and the workforce, but as yet it is unclear how the monies will be accessed or allocated.

I have written to 62 politicians representing constituencies where Cornerstone delivers services and to the minister for employability and training at the Scottish Government to raise our concerns.

We have been informed by Mark McDonald MSP that there are plans to expand the number of modern apprenticeship opportunities as part of planned growth, sector specific skills support which includes the care sector and the development of a Flexible Workforce Development Fund to support employers to invest in their workforce. Funding through Individual Learning Accounts will be rebranded as Individual Training Accounts, which will improve the quality of courses and ensure they result in industry standard qualifications. This will supposedly make it easier for job seekers to gain access to qualifications and skills training.

Cornerstone's request is therefore that consideration be given to removing the statutory training costs from a business before the levy is applied. In our case annual training costs remain the same but we now have to find an additional £130,000 from a budget which is already in deficit due to the pressures on public funding for social care provision. The result will most likely be less of an investment in training and supporting young people into work, which is the opposite of what the levy was supposed to achieve.

As a charity we have an additional concern which relates to how we source our income. All Cornerstones' income is either from contracts with Health and Social Care Partnerships via local government or from charitable donations.  Our public sector contracts very clearly state how much public money we will allocate to the training and development of our staff and we now find ourselves mid-contract and without the necessary resource to fulfil our contractual obligations. In relation to our charitable donations, like all charities we must be seen to use funds gifted for the purpose they were intended. Sending £130,000 of charitable funds to the UK Government seems contrary to this.

The Scottish Apprenticeship Advisory Board, which has representation from employers in the third sector, exists to ensure that employer's views continue to shape the policy on apprenticeships. I would encourage those third sector organisations affected by this new policy to join us in campaigning for clarity on how the funds will be accessed and allocated in Scotland and on raising the issues that impact specifically on charities.

Edel Harris is chief executive of Cornerstone

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