Funding of clergy training through the Apprenticeship Levy

In his Autumn Statement on 25 November 2015, the Chancellor announced the introduction of legislation for the charging of an Apprenticeship Levy (“the Levy”) on employers in all sectors whose annual pay bills exceed £3M, with a view to assisting the delivery of new apprenticeships. The legislation was introduced in Part 6 of the Finance Act 2016 and became effective on 6 April 2017. The Church of England expressed interest in the Levy and on 5 May 2016, in response to a question by Mark Spencer (Sherwood) (Con) [HC Hansard, 5 May 2016, Vol 609, Col 307], Caroline Spelman, the Second Church Estates Commissioner, said:

“The Church of England supports the Government’s drive to increase the number of apprentices. Apart from some of the central bodies and larger diocesan offices in cathedrals, most Church bodies will not be affected by the levy, because their payrolls fall below the £3 million threshold, but the Church is in the rather unusual position of having 8,000 office holders out of its total 24,000 employees, and the Church would very much like to see the levy being used to train more ordinands”.

Pressed on the status of ordinands as “office holders” rather than “employees”, she responded:

“In a way, the Church is an anomaly. Quite a lot of organisations have office holders—unless I am much mistaken, MPs are technically office holders—but every vicar in every parish is not in a position to employ an apprentice. Indeed, having a curate is quite a luxury, as it takes so much to train people. I hope the Government will support the Church’s quest to use some of the moneys from the apprenticeship levy to meet its shortfall of approximately 40,000 ordinands”.

On 13 May 2016, FE Week reported that the CofE was in the early stages of talks with the Department for Business, Innovation and Skills (BIS) about how it could use its levy funding in relation to clergy training; however at this stage it was not certain at what point in the training this would be, or whether the Church was planning to develop an apprenticeship standard.

The Levy

The Levy is charged on employers’ pay bills of over £3M at a rate of 0.5% and is payable through Pay As You Earn (PAYE) alongside income tax and National Insurance. To keep the process as simple as possible, the “pay bill” will be based on total employee earnings subject to Class 1 secondary NICs. Each employer will receive one annual allowance of £15,000 to offset against its levy payment. There will be a connected persons rule – similar to the Employment Allowance connected persons rule – under which employers who operate multiple payrolls will only be able to claim one allowance.

The Government has issued Guidance: Apprenticeship funding: how it will work on the operation of the Levy. To support the Levy there is the apprenticeship service – an online service that allows employers to choose and pay for apprenticeship training more easily – and a new “co-investment” rate to support employers who do not pay the Levy (“co-investment” is when employers and government share the cost of training and assessing apprentices)

Apprenticeships are a devolved matter; and the devolved administrations each manage their own apprenticeship programmes, including how funding is spent on apprenticeship training. In England, levy-paying employers can create an account on the apprenticeship service to:

• receive levy funds to spend on apprenticeships;
• manage apprentices;
• pay training provider(s); and
• stop or pause payments to training provider(s).

Funds in the account may be used to pay for apprenticeship training and assessment for apprentices that work at least 50% of the time in England, and only up to the funding band maximum for that apprenticeship. There are two forms of apprenticeship to choose from:

• apprenticeship standards – each standard covers a specific occupation and sets out the core skills, knowledge and behaviours an apprentice will need; they are developed by employer groups known as ˜trailblazers“; and

• apprenticeship frameworks – a series of work-related vocational and professional qualifications, with workplace- and classroom-based training.

A group of companies (“connected organizations“) is able to pay the levy together, collecting their funds into a single account. From April 2018, levy-paying employers will be allowed to transfer funds to another employer or apprenticeship training agency through the apprenticeship service, initially up to 10% of the annual value of funds entering the apprenticeship service account.

However, EU State Aid rules apply when transferring and receiving funds from other organisations. The maximum amount that an organization can receive through a transfer of funds is £2 million over 3 years. [This is because of de minimis funding rules]. Further information on transferring funds between organisations will be available in autumn 2017.

Apprenticeship Levy and the Church of England

Further information on recent trends in the number of vocations was given by Dame Caroline Spelman on 24 April 2017 HC Hansard 20 April 2017, Volume 624, Col 778, in which she informed the House:

“The number of people selected for training for ordained ministry within the Church of England has been stable for some time. However, the age profile of serving clergy means that larger numbers are retiring, leading to an overall decrease in the number of active clergy. The Church seeks to address that by increasing by 50% the numbers training for ordained ministry: an increase from about 500 to 750 by 2020.

[…]

Quite simply, we need to make it easier for people who feel the call to enter ministry to do so more flexibly. The Church offers not only a three-year residential course to become an ordained minister, but part-time peripatetic provision. As a result of the apprenticeship levy, resources will be available to the Church for people to learn on the job. That should make it a whole lot easier for people to enter ministry”.

In an informative article in the Church Times on 28 April, Department of Education backs funding of curacy training as an apprenticeship, Tim Wyatt wrote that the Church’s bid to use the Levy to fund curacy training had progressed after the Department for Education had given its backing in principle to the use of the funds in relation to curacy training. The Church was said to be consulting dioceses and other (ecumenical) partners to gauge support for a training scheme and if successful, the project could begin in 12 months’ time.

A spokesman for the Church is reported as saying: “We are currently consulting with various stakeholders, on an ecumenical basis, regarding what form the training would take”. It would be necessary for the Church to enter into partnerships with other denominations in order to use the funds for training curates. Normally, at least ten employers must be involved for a scheme to qualify, although officials have recognised that the Churches are a special case. The CT article concluded:

“If the scheme goes ahead, the new funds would not be used to cover curates’ stipends, but to fund additional training. Other church workers in training, such as youth pastors or administrative staff, could also be funded through the levy, working in partnership with other Churches.

The Commissioners do not envisage apprenticeships as becoming the standard way for curacy training to be organised or funded, but hope to set it up as an option for any dioceses that wish to use it. But it is understood, that eventually up to 300 assistant curates could be enrolled into the apprenticeship scheme; there are currently about 500″.

Comment

The term “apprenticeship” is somewhat misleading; as the NAHT observed in relation to the schools sector in its 2016 assessment of the scheme, “[it is important to] bear in mind that the term apprenticeship can cover professional development up to level 7 (Masters level) and that this is not restricted to young staff”.