OPITO: UK Energy Sector Apprenticeships Could Suffer

Oil and gas industry skills organization OPITO has warned that apprenticeships in the energy sector could suffer after the Scottish Government announced it would not be ring-fencing funds allocated through a new UK-wide Apprenticeship Levy.

Jamie Hepburn MSP, minister for employability and training, confirmed during a speech at the Scotland Policy Conferences in Edinburgh this morning that the $277 million (GBP 221 million) allocation the Scottish Government is set to receive from the UK Government, in 2017/18, will not be safe-guarded for investment into a flexible skills fund, which supports wider workforce development.

From April 2017, all employers in the UK with an annual pay bill over $3.7 million (GBP 3 million) will have to contribute to the levy at a rate of 0.5 percent of their annual pay bill as a commitment to increasing apprenticeships. The UK Government estimates that the levy will raise $3.7 billion (GBP 3 billion) annually over the first five years following its introduction.

With less than 2 percent of companies across the UK liable for the levy however, OPITO believes the size of companies in oil and gas means the industry is likely to be disproportionately affected by its introduction. The skills body believes Thursday’s 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 recognize the critical role apprenticeships play in generating a sustainable workforce,” OPITO UK managing director John McDonald said.

“We have long argued however that the Levy was an additional tax being imposed on employers at a time when oil and gas companies are already struggling to manage costs and 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,” he added.

The oil and gas industry has repeatedly asked the Scottish Government for clarity on how companies will be allowed to invest the revenues, the type of training which will be included and whether they will be able to transfer the entirety of their own levy funds to other companies, OPITO said in a company statement.

“It is our understanding that the model currently in place, which sees funding drawn down through Skills Development Scotland, is likely to remain broadly unchanged next year. With only a few months left before the levy is due to come into effect however, businesses are still without answers to many other critical questions about the funding structure and how it will be implemented across borders,” McDonald said. 


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