UK Levy Transfer Scheme Underutilised
A recent virtual roundtable attended by several leading organisations concluded the United Kingdom’s hospitality sector should be making better use of the levy transfer scheme for unused apprenticeship to tackle pending post-Covid-19 skills shortages.
During the discussion which was organised by Umbrella Training to mark National Apprenticeship Week, the leaders of five major organisations explained how they are collaborating to take advantage of funding opportunities afforded by the levy.
Senior executives from Sodexo, GlaxoSmithKline (GSK), Luxury Family Hotels, the London Progression Collaboration (LPC), and Umbrella Training discussed the benefits of levy transfers for transferers as well as transferees in a specially organised LinkedIn Live session.
The government launched The Apprenticeship Levy in April 2017 for all employers paying a wage bill of more than £3 million per year. Employers that meet this criterion are required to pay 0.5 percent of their payroll each month as a levy tax. This money goes towards supporting apprentices into the workplace.
Since April 2019, a levy-paying employer can transfer a 25 percent proportion of their levy funds to another employer for them to use in full to train an apprentice. Any monies left unspent in levy funds is lost and goes back to the Treasury.
The levy transfer scheme is designed to support the SME businesses who are not paying the levy and do not have access to additional levy funding to help them develop their teams.
However, according to the London Progression Collaboration, recent research conducted by London Councils found that only 46 percent of levy payers in London are planning to spend more than half of their levy in the next year.
Jack Gibson, senior business engagement officer at the London Progression Collaboration, said: “Whilst this research only relates to London, there is so much levy funding that is left unspent. There is lots of opportunity here for businesses to use their funds to support their industries.”
He also explained how large organisations are helping smaller businesses by transferring their funds. He said: “Levy payers want to transfer for different reasons. They want to help their sectors, build capacity, and support social mobility or CSR reasons. They are looking for businesses that share the same or similar values.
“Outside of this, when we do recover, businesses in the hospitality will be a source for jobs. Businesses in other sectors will want to support hospitality as it is going to be vital when the wider economy recovers.”
Whilst the option to transfer has been in place for more than a year, the panel discussed how the sector has not been utilising the scheme to its full potential.
Simon Maguire, managing director at Luxury Family Hotels, whose businesses benefitted from a transfer from Compass Group, said: “There isn’t enough knowledge about it. I was fortunate to hear about it through Umbrella but wouldn’t know anything about it otherwise. Given everything that is going on around us, I think hospitality business should get to a stage where they are all competing for this.”
He added: “I couldn’t believe that we could train so many staff and somebody else was going to pay for it.”
Suzy Read, learning & development manager at Sodexo, said: “It made good business sense for us to do this and it works hand in hand with how we support local communities. It’s a great example of how we can add social value as an organisation and, at the moment, we are encouraging other large organisations to do the same.”
Jo Simovic, COO, Umbrella Training, and event host added: “We are constantly trying to let people know that they can have access to this. This can play an important part in the development of organisation people strategies. The support is there and it is 100 percent fully funded.”
With the sector expected to face an increasing skills shortage post-recovery, hospitality businesses were urged to focus their attention on building skills capacity now.
Tim Buchanan, apprenticeship vendor manager at GSK, said: “We live in different times and we need as many skills as we can possibly generate across all sectors. We need people who are agile, adept, and more able to work in a changing environment.
“We need to be able to invest to continue to grow. We need new skills alongside traditional skills to keep moving the economy on.”
Maguire agreed, adding: “We have to remember that this is about individuals who benefit. Quite often, the first thing to be cut when times are bad is spending on training. That makes the sector less appealing. We don’t want to go down that route.”
LPC’s Gibson echoed the wider societal benefits apprenticeships can bring. He said: “What always inspires me is that the hospitality sector can take talent from any background and grow them into exceptional leaders. We are facing an employment crisis, especially with young people who already have barriers to work. We have a social imperative to support them into work.”