Aberdeen’s Oil and Gas skills body warns training jobs may flit to England after Scot-Govt refuses to ring-fence £220m Apprentice Levy windfall in Scotland

The Apprentice Levy: 'an additional tax'
The Apprentice Levy: ‘an additional tax’

The Scot-Govt has rejected a plea by the oil and gas industry training body to ‘ring-fence’ the estimated £220 million the new Apprentice Levy is expected to raise in Scotland for use in skills-training.

Jamie Hepburn MSP, the Scottish Skills and Training Minister, today confirmed that the allocation the Scottish Government is set to receive from the UK Government in 2017-18 will not be safe-guarded in its entirety for investment into a flexible skills fund which supports wider workforce development and meets businesses’ growth needs.

In response, the Aberdeen-based oil and gas industry skills organisation OPITO issued a stark warning about the likely adverse impact on apprenticeships in the Scottish energy sector.

From April 2017, all employers in the UK with an annual pay bill over £3 million will have to contribute to the levy at a rate of 0.5% of their annual pay bill as a commitment to increasing apprenticeships.

The UK Government estimates that the levy will raise £3 billion 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.

But with fewer than 2% of companies across the UK liable for the levy however, the oil and gas fears the industry is likely to be disproportionately affected by its introduction.

A spokesman for the skills body said: “This announcement is a severe blow for employers and may prompt some to review their current apprenticeship offering.

“Businesses are committed to helping to deliver the skills that Scotland needs to succeed in a global economy and recognise the critical role apprenticeships play in generating a sustainable workforce.

“We have long argued however that the Apprentice Levy was an additional tax being imposed on employers at a time when oil and gas companies are already struggling to manage costs and while thousands of jobs have been lost across the sector.

“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.

“The damning message this sends to oil and gas employers is that they will be paying an additional tax but should not expect to see any additional returns.“

Utility companies set up new energy jobs website under industry Skills Accord

Meanwhile 27 of the Britain’s biggest utility companies – including Perth-based SSE and Scottish-based contractors – have launched the Skills Accord –  a voluntary, cross-industry partnership designed to address the skills gaps that threaten to undermine the future health of the UK’s energy sector.

With one fifth of the sector’s skilled workers approaching retirement age, 36% of vacancies proving hard to fill in the sector (higher than any other UK sector), and 14% of all employers reporting skills gaps within their existing workforces, an Accord was determined to be the best way for the sector’s supply chain to drive sustainable skills while remaining competitive.

Administered by Energy & Utility (EU) Skills, the agreement encourages its signatories to address their current and future workforce needs by putting an increased proportion of their employees through formal structured development, either in specific skills that the sector currently requires or for which there is a demonstrable future requirement.

Kevin Fowlie, Amey’s Managing Director for Utilities, commented, “We have been focused at Amey over the last few years on recruiting graduates and apprentices to address the well-known skills shortages and recruitment challenges our sector faces, but by collaborating with other organisations we have an even better chance of securing the talent and skills that we all need. We are proud to be one of the companies leading this initiative.”

Keith Waller, Senior Advisor at the Infrastructure and Projects Authority, part of the Cabinet Office and HM Treasury, added: “One of the key challenges in the National Infrastructure Plan for Skills is how to incentivise skills investment through procurement.

“This requires innovative approaches to encourage the retraining and up-skilling of the workforce to meet future skills demands.”

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