The Apprenticeship Levy is a tax on any employer with a payroll in excess of £3 million, which is set to be collected across the UK from April 2017 onwards but available for English businesses to spend through new vouchers. In Northern Ireland, along with Scotland and Wales, it cuts across the devolution settlement in terms of skills policies and investments.
Dr Farry added it was disappointing the Executive appeared to be adopting the Levy, given local businesses paying it do not seem set to obtain any additional skills benefit. Dr Farry added it was a point of grievance for companies required to pay the tax.
“The money raised from Northern Ireland companies is set to be assigned to the Executive with the discretion to spend it as it wishes. This is offset by the negative Barnett consequential resulting from a reduction in apprenticeship spending in England. In year one for Northern Ireland, this amounts to £76 million coming in but £52 million going out.
“However, it is implicit from today’s joint statement from the Finance and Economy Ministers the net amount will be directed as a matter of priority to addressing the consequences of the Levy on the public finances and public sector employers.
“Therefore, this does nothing for local private sector employers. While the same baseline in terms of government skills spending may continue in the future, local employers will however see an extra tax burden in the name of skills but with no direct additional benefit from additional spending on skills.
“I would urge the Executive to be a little more creative, and to absorb some of the pressure from the negative Barnett consequential and the losses from the additional pressure on the public sector bodies. They can then use the proceeds from local businesses to make additional investments in further education, apprenticeships and other forms of in-work training. Even when addressing the levy paid out by the public sector, there is an opportunity to be creative and invest in training programmes to assist those working in that part of our economy. Without doing this, local businesses are going to experience a significant sense of grievance in being taxed without any benefit.
“Across the UK, the Apprenticeship Levy is viewed more as a further tax on business rather than a genuine means to really facilitate a step change in the investment in skills, in particular the high quality skills required for increased productivity levels and hence prosperity.
“I concur with the sentiment of the Ministers that this Levy has little benefit to Northern Ireland. However, if it is going to be raised in Northern Ireland, then a significant proportion of it should be spent on additional skills investment.”