Oil and Gas UK lobbies Scottish Energy Minister to delay introduction of new ‘training tax’

n-sea-oil-workers-general-scot-ent-report-2014The oil and gas industry is calling for the Scottish government to delay the introduction of the ‘training tax’ – the apprenticeship levy – until 2018.

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

The government estimates that the levy will raise £3 billion annually over the first five years following its introduction.

As the policy is devolved, the organisations are asking the Scottish Government for clarity on how it will be implemented across borders, affecting companies operating across the UK.

They are also looking for clarity on how companies will be allowed to invest the revenues, notably the type of training that will be included and whether companies will be able to transfer the entirety of their own levy funds to other companies. 

A delegation led by Oil and Gas UK and OPITO  have met with Jamie Hepburn MSP, Minister for Employability and Training, and  with Scottish Energy Minister Paul Wheelhouse MSP, to discuss their concerns over the introduction of the levy.

John McDonald, UK managing director of OPITO, said that – with less than 2% of companies across the UK falling into the scope of the levy –  the size and complexity of companies in oil and gas means the industry is likely to be disproportionately affected by its introduction.

“The oil and gas industry needs a clear understanding of how Scottish Ministers intend to implement the policy and the levy itself needs to be aligned and consistent across the four nations,” he said.

“Without that in place, the policy needs to be delayed. This is simply the wrong way to tax this industry and comes at a time when we least need the introduction of another tax, given the current climate in oil and gas.

“We need to act now to ensure that the implementation of the apprenticeship levy is fair and practical and that it will add legitimate value to skills development in the oil and gas workforce.

OPITO is also calling on Ministers to guarantee that oil and gas employers will have the flexibility to transfer up to 100% of their funding entitlement, not the 10% currently being proposed by the UK Government.

Alix Thom, workforce engagement and skills manager with Oil & Gas UK, said: “Given our member companies are spread throughout the UK and different systems will apply in each administration, as well as the fact that our industry is facing immense challenges as a result of the oil price collapse, we believe the UK Government should delay the implementation of the levy for at least a year. 

“There are too many unanswered questions, particularly in the devolved administrations, to allow employers to prepare fully for implementation of the levy in April 2017.”

 

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed