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Allow large firms to pass levy funds to small firms in their supply chain

Last updated: 09:41am 11 January 2019

We will allow large firms to pass levy funds to small firms in their supply chain…

Conservative Party Manifesto 2017, p.53

Our verdict

The government has been making changes to apprenticeship funding. It introduced apprenticeship levy funds for all UK employers on 6 April 2017. Payment of the levy is mandatory for employers with a pay bill exceeding £3 million each year, or if they are connected to another employer that has such a pay bill.

With regards to this policy promise, the Department for Education stated that from April 2018, levy-paying employers could transfer funds to other employers through the apprenticeship service. Receivers can be any employers, including smaller ones in the same supply-chain as the firm making the transfer, or apprenticeship training agencies. Levy-paying employers could transfer a maximum amount of 10% of the annual value of funds entering their apprenticeship service account.  10% of all funds received in this way count as state aid, with a maximum permissible amount of two million euros over three years. The first payments were scheduled for July 2018.

Following low take-up of the scheme, the October 2018 Budget announced an increase in permissible transfer amounts from 10% up to 25%.

Despite problems convincing businesses to use the scheme, the promise to allow large firms to pass levy funds to small firms has been fulfilled, so this policy is ‘done’.

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