The SNP has joined business leaders and student representatives in condemning a new apprenticeship levy that they believe could lead to Scottish businesses effectively subsidising further education in England.
Although the levy for large firms, announced by Westminster chancellor George Osborne in last week’s Budget, will be imposed across the UK, it has emerged that the funding generated will be used to “support post-16 apprenticeships in England” and will bring no direct benefits for the Scottish modern apprenticeship programme.
The move made “little sense”, the SNP told TESS, while the NUS Scotland students’ union described it as “a scandal”.
The levy was unveiled as a key means of achieving the Conservative Party’s manifesto pledge of creating 3 million apprenticeship starts in England by 2020. The Budget document says the approach will “reverse the long-term trend of employer underinvestment in training”.
A spokesman for the Department for Business, Innovation and Skills (Bis) said the devolved administrations would continue to have “complete flexibility over how to support businesses through training and apprenticeships” and could mirror England’s arrangements if they wished.
One-size-fits-all
Roger Mullin, the SNP’s Treasury spokesman in Westminster (pictured, inset), questioned the suitability of the scheme for the Scottish FE sector. He told TESS that Scottish and English apprenticeships were so different that it might not be wise to introduce a policy devised for a skills system “that bears little resemblance to ours”.
“The way to do this is not to have a UK-wide levy but to make sure that Scotland has the full taxing responsibilities to enable it to choose whether or not a levy is the way to go,” he said.
Vonnie Sandlan, president of NUS Scotland, said the apprentice levy was “a great idea in theory” but would only work in practice if it were set in Scotland with the money raised used to fund apprenticeships locally.
“If they introduce an apprentice levy across the UK but fail to pass the income directly on to Scotland that would simply be a scandal,” Ms Sandlan added. “We must now see the UK government urgently change direction to ensure any apprentice levy charged in Scotland can be set in Scotland, and will go directly to providing high-quality opportunities for apprentices in Scotland.”
`Strange’ strategy
David Watt, executive director at the Institute of Directors Scotland, said introducing the levy was a “strange thing to do”, and called for more details about how it would operate.
It was essential to encourage employers and offer incentives to hire apprentices, rather than imposing additional taxes, Mr Watt added. Most of Scotland’s biggest employers operated across the UK, he acknowledged, but the benefit from a UK-wide levy should be felt across the country, too.
A spokesman for the CBI agreed, telling TESS the levy should be used to boost apprenticeship provision “in every part of the UK”. The business lobbying organisation added that although the levy would increase funding for apprenticeships, it “guarantees neither quality nor relevance”.
The Bis spokesman said money raised through the levy for apprenticeships in England would “flow through the Barnett formula in the usual way”.
The Barnett formula is a mechanism used by the Treasury to adjust public expenditure allocated to Scotland, Wales and Northern Ireland, to reflect differences in spending between the devolved regions and England. Devolved governments may receive additional funding as a result of the levy, but the cash will not necessarily end up benefiting the businesses that have been required to pay it.
A spokeswoman for the Scottish government called for greater clarity on the plans: “We are studying the detail of the chancellor’s announcement of the apprenticeship levy and, at this stage, it is clear we need much more clarity and detail on what is intended and the potential impacts on Scottish employers and apprentices.
“The introduction of a new apprenticeship levy has to be designed in a way which works for Scottish employers and their current and future modern apprentices.”
`New recruits are the only answer’
In his 2014 report on developing Scotland’s young workforce, leading Scottish businessman Sir Ian Wood recommends “voluntary levy schemes” to recruit and train young people in areas experiencing skills shortages (bit.lyYoungWorkforceReport).
Groups of employers should be supported to collaborate on implementing this, the report says, with the Scottish government “providing co-funding”.
“In parts of the economy, at sectoral or geographic levels or both, there is often market failure, which leads to skills gaps and shortages that cannot be fully addressed by increasing wages or recruiting from outside of Scotland,” it continues, explaining that “the only answer in such situations is to train and recruit new entrants”.
The report cites the example of the construction industry, where a mandatory training levy has long been in place, and has achieved consistent investment in training young entrants to the sector.
