Thu 27th Oct 2016
Businesses left in dark over apprenticeship levy
Ann McGregor (Chief Executive of NI Chamber); Michael Gould (Assistant Director of the Youth Policy Division at the Department for the Economy) and Áine Brolly (Director Ardlinn Executive Search, CEO Cpl Northern Ireland).
Some of Northern Ireland’s leading businesses have expressed their concerns about the risks of the current Apprenticeship Levy which is due to be introduced in April 2017.
Over 80 members of the local business community attended a Northern Ireland Chamber of Commerce and Industry (NI Chamber) briefing with the Department for the Economy earlier today (26 October 2016).
The levy will affect all firms across the whole of the UK with a payroll of over £3m and will be 0.5% of a company’s salary bill, paid through PAYE, alongside income tax and National Insurance on a monthly basis.
Speaking at the event, which was hosted by local recruitment specialists, Cpl Northern Ireland, Ann McGregor, Chief Executive of NI Chamber, said:
“Businesses are overwhelmingly positive about apprenticeships, and recognise that workplace training can help boost skills, business growth and productivity. However, NI Chamber members have fundamental concerns about the proposed Apprenticeship Levy on a number of fronts.
“The Apprenticeship Levy is scheduled to be introduced in April 2017, just 6 months away yet it is clear that a lot of businesses have limited awareness or understanding of the implications or potential impact. It is important that the NI Executive seek greater clarity from HMRC for Northern Ireland employers, particularly on how the funding raised can be accessed post collection. In this period of uncertainty, following the EU referendum, further uncertainty is damaging to business confidence.
“From a business perspective it appears almost as another form of ‘payroll tax’ and it is not clear what the benefits to those businesses that do pay will be. It is already challenging enough to scale up Northern Ireland’s business base and this levy has the potential to act as a disincentive to growth unless its impact on business is demonstrable.
“We do not think the practicalities of the levy have been fully thought through, particularly from a devolved perspective. For example, how will businesses access the fund? How much of the fund will be available? How will it work for businesses that are multinational and train centrally or businesses that have staff working outside NI?
“The Executive must also provide assurance that the monies they receive from the levy will be ring-fenced for apprenticeship/skills funding only. It is also important to understand how the levy will complement existing apprenticeship and training policy in Northern Ireland and incentivise the provision of high quality apprenticeships in the region.”
Aidan Flynn, Managing Director of construction firm Flynn, said:
“Flynn are one of the largest local employers in construction with around 250 staff mostly working within Northern Ireland. As a result of this, we shall be one of the companies hit by the proposed Apprenticeship Levy which will result in a tax on our business roughly equivalent to our retained profits in a typical year of trading.”
Mr Flynn commented that the construction sector already pays a similar CITB Levy and is now being faced with a further tax around apprenticeships. He continued:
“As a leading training and apprenticeship organisation, Flynn has a long track record of success in providing the skills and experience to give young people sustainable careers within construction. That position is put under threat by the imposition of this levy, which on top of the CITB levy and Assembly’s BuySocial clauses, means we are paying three times for apprenticeships with no increase in support or return from this new tax.
“The £3m wage bill cut-off is also a disincentive for smaller firms to grow permanent positions to a point where they will trigger this levy. Equally, large firms may well review their direct employment levels in an effort to reduce their wage bills below the trigger point. None of this is good news for creating sustainable employment within the local industry, already decimated by years of economic recession and government delay on investment in infrastructure.
“Our local Assembly must take note of the real concerns of construction companies who are striving to provide sustainable careers that add value to the economy. It would be unforgiveable that this region is neglected by our elected representatives whilst competitors across the UK are supported.”