Labour aims to end pilfering of skills pie

19th October 2012 at 01:00
Employer contributions proposed to encourage firms to train

Labour is considering extending construction industry-style levies to fund training and prevent some employers from poaching "free labour".

The policy is one potential solution to the problem posed by Ed Miliband in his party conference speech, where he announced that Labour would put pound;1 billion of skills funding under employer control in return for a commitment from them to invest.

"You get control of the money for training as you have long asked for, you set standards, but you have a responsibility to make sure the training happens," he said. "In One Nation, there is no place for free labour - the firms that don't train poach workers from firms that do."

Shadow skills minister Gordon Marsden told TES that one option for securing employer investment was to introduce more levies, where industries or regions were in favour. In the construction industry, employers pay more than pound;160 million a year in levies, which is then used as training grants.

"We are at a very early stage at the moment. There are specific industries, like with the Construction Industry Training Board, which have had levies for a long time," said Mr Marsden. "We have to be very careful whether in extending that to other areas or other regional associations or employer-led groupings it would have a negative or positive effect.

"It works if there's a consensus in the industry and it's not going to give one group a competitive advantage over the others. We also want to make sure it isn't something that's imposed: we want to take industry along with us."

Labour is also looking at alternatives to levies, such as additional help for group training agencies, where employers band together to take responsibility for apprentices; using the growth and innovation fund to encourage employer investment; and supporting employers to help train their entire supply chain, Mr Marsden said.

The CBI said that employers were not necessarily opposed to levies with industry backing, but said they generally preferred other options. "It's fine if sectors want to come together and work out the best way to deliver skills for their industries," said Jim Bligh, head of labour market policy at the CBI. "But levies aren't the best option for every industry: they can be a blunt instrument if they're not used properly. Ultimately, we want employers to be in charge of their own skills funding."

He said there was more support for large companies assisting with training smaller suppliers, as companies such as Microsoft do, or forming voluntary training groups by sector or region. Levies carried the risk that employers would not have the freedom to vary the amount they spend on training when necessary, he said.

One sector has been trying to introduce a statutory levy for the past eight years, however. And for the past four years, the film industry, supported by its sector skills council Creative Skillset, has been blocked by regulatory red tape.

Its experience also shows how initial voluntary measures can create a demand for statutory levies. The Skills Investment Fund was set up in the 1990s and pays for 2,200 people a year to gain craft, technical and creative skills for the film industry through largely voluntary contributions. Industry figures such as Andrew Macdonald, producer of Trainspotting and 28 Days Later, regard it as essential. "The Skills Investment Fund is the only way that the industry is going to be able to support itself in the long term," Mr Macdonald said.

But by 2004, the industry was seeking a statutory levy covering all employers because a minority of voluntary contributors were covering too much of the costs and there was agreement that funding needed to increase. The Film Industry Training Board was established in 2008, but legal hurdles have so far prevented it from collecting funds.

Among the measures proposed but never implemented in the government's response to the Leitch review of skills was one to make it easier to introduce levies, which could remove these barriers for the film industry.

Despite all these problems, however, a report published earlier this year by the UK Commission for Employment and Skills (UKCES) found there was still "strong and continuing support" for the levy.

The UKCES report also found that there was evidence that the construction industry levy, paid by all employers based on their labour costs unless they earn less than pound;80,000 a year, was successful in helping small employers train.

While some employers said they could organise and fund their own training at a lower cost, others said there would be less training across the industry without the levy. One told UKCES: "It inspires you to claim and train, because if you do not you pay twice."

Original headline: Labour's levies aim to end pilfering from the skills pie

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