An oil and gas skills organisation has warned employers may shift apprenticeship training to England after the Scottish Government revealed it would not ring-fence funds allocated via the new UK-wide Apprenticeship Levy.
Employment minister Jamie Hepburn confirmed that the £221million the Scottish Government is set to receive from in 2017/18 will not be safe-guarded in its entirety for investment into a flexible skills fund, Opito said.
John McDonald, Opito UK managing director, said: “By refusing to ring-fence the funding, the Scottish Government has given itself an additional pot of cash it can use to plug holes elsewhere in the Scottish budget rather than for its intended purpose of adding legitimate value to skills development in the national workforce.
“The very real risk to Scotland’s skills base as a result of this decision is that employers may choose to take their apprenticeships out of Scotland entirely and relocate them south of the border where the funding is protected and they will get a better return on their investment.”
Trade body Subsea UK is also concerned that the industry risks a “double-whammy” as many of its members already pay the ECITB (Engineering Construction Industry Training Board) levy. Almost 40% of the ECITB levies collected come from oil and gas companies.
Neil Gordon, chief executive of Subsea UK, said the Scottish Government’s decision was “bad news”.
He added: “Our larger employers will be paying two levies.
“The ECITB one is for training and learning and the way in which it is invested and how business can claim it back works well.
“However, it is now likely that the new money available from the Scottish Government under the apprenticeship levy will simply go into existing schemes, not deliver what it is intended to and be seen as an additional cost to business.
“The industry is not against the principle of either levy says and wants to create quality new apprenticeships. But we must not be unfairly affected in relation to other industries, particularly when we are facing such a severe downturn.”
Mr Hepburn insisted that all the funds allocated to Scotland will be spent on “skills, training and routes into employment”.
He argued that the money coming to Scotland was not “additional funding” because it is replacing UK spending on apprenticeships.
He said: “While the levy settlement forms part of the Scottish block grant, its proceeds will largely be replacing existing apprenticeship funding. This means that the £221million is not additional funding but largely replaces existing UK expenditure through the new tax.”
He added further details on funding for apprenticeships will be set out in the Scottish budget on 15th December.
From April 2017, all employers in the UK with an annual pay bill over £3million will have to contribute to the levy as a commitment to increasing apprenticeships.
The UK Government estimates that the levy will raise £3billion annually over the first five years following its introduction. As the policy is devolved, the money will be collected by HMRC and then redistributed to the Scottish Government.
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