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I raised this with ESFA in March, it was one of my first thoughts when I read the new rules. They haven't got an answer yet but have said they're working on it. I messaged them again recently (still no update):
Is there any further update on this? We’ve got a levy account holding employer that hasn’t paid the levy for years, and has no funds, who want to know whether they will still need to pay the 5% contribution. Other similar size employers won’t have to because they’ve never gone above the levy threshold. That problem is only going to get bigger as companies do change size and grow or shrink. More and more companies will end up falling into this weird category.
The only solutions I can think of would be:
- Just leave it and accept that it's not fair.
- Scrap the co-investment for all 16-21, including levy account holders with insufficient funds.
- Create a mechanism for employers to revert to a non-levy account.
The new rules do specify “Employers that do not pay the levy”, which actually makes C the most correct solution (though I assume very complicated to do). At the moment, the funding rules are incorrect because “Employers that do not pay the levy” includes some levy account holders, but there’s no way of us getting co-investment exemption for an employer like that. Option B seems the simplest, but that involves ESFA spending more. If option A is the answer, can the wording of the guidance be changed to say “Employers that hold a non-levy Apprenticeship Service Account” to make it correct? I guess another option would be to have a special code we can use to confirm it’s a levy account holder who isn’t paying the levy at the moment (how many months would it have to be?), but that’s really hard for us to evidence.
Hi Ruth,
I don't know if you have heard anything back on this, but I have had a reply on this.
They have said:
If employers haven’t declared (paid) levy within the last 2 years, then for any new (eligible) starts the co-investment waiver will apply.
Employers would need to contact the helpdesk though to get their AS account updated to show as non-levy.
They have said they are going to update the technical funding guidance in the next few weeks on this.
Thanks
Lisa
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Employer no longer declaring levy & new 16-21 rule
Created
Hi All,
I hope someone can please help me with something.
As far as I was aware once an employer had declared levy, they were always classed as a levy employer, even if it was years ago, they had a huge staff reduction and no longer had a wage bill of over £3 million the ESFA would still class them as levy.
This would impact employers with the new rule that non-levy employers don't need to contribute to 16-21 year old learners, as we have an employer who was levy year ago, has since made a lot of redundancies and is now class themselves as non-levy.
I spoke to the helpdesk yesterday and they said that once an employer has declared levy even if its only once they are levy, and in this circumstance although there wage bill has significantly reduced the ESFA would still class them as levy and they would not be entitled to take on a 16-21 without making a contribution towards their training as they wouldn't class them as non-levy.
Surely this isn't correct and there must be some kind of time limit on when an employer is classed levy if they are no longer declaring, as it seems unfair to bring the new rule in, but an employer that was levy but no longer is cannot use the waiver and pay no contribution?
Please let me know your thoughts on this, as I am hoping it is wrong.
Thanks
Lisa