“We strongly identify with the LGA’s complaint of discrimination. Businesses and organisations with a payroll under the £3m threshold are exempt from paying the levy. Many smaller schools, who would otherwise be exempt (because annual their payroll is under £3m), will still have to meet the cost of the levy because they are funded and employed by the local authority (LA), which is also responsible for the payroll of the other LA-funded schools, as well as the LA’s internal administrative and other staff . By contrast, a small academy school with similar staff numbers will be exempt from paying the levy.”
LA schools are reported to complain not only that the allowance works unfairly and is “discriminatory”, but that they have little opportunity to create apprenticeships. “This strikes a familiar chord” says Marlowe. “The payroll of recruitment agencies includes their own internal employees and the workers supplied to hirers, so their payroll will often exceed the £3m threshold, where a hirer with a similar turnover will be exempt from paying the levy. Agencies also have few opportunities to create apprenticeships.”
“It would appear that there is a common theme. Small schools and supply agencies both have artificially inflated payrolls, for different reasons, and both will suffer as a result of the government’s failure to address the disproportionate effect the levy will have on them. Surely the government does not want to load yet more cost on public sector employers such as schools, at more cost to the taxpayer? Agencies will need to protect their margins and so will either have to pass the disproportionate cost of the levy on to hirers, (both public and private sector) or to agency workers, yet neither will be able to benefit from the levy.
“None of this really makes sense and more work needs to be done to alleviate these anomalies . The current consultation demonstrates the right intention but would not resolve the issues to which I refer.
“We urge the government to reconsider how the levy applies before it is too late. So far as recruitment agencies are concerned, we believe there is a simple alternative which would avoid the conflicts that arise in the case of our industry, yet will enable the apprenticeship scheme to work better. We are due to meet government officials later this week to discuss our plan.”
ARC is due to hold a conference on the levy and its application on 9th February in London with various expert speakers. “We will report our progress at the conference” concludes Marlowe.
