Training levy on businesses may fall short by €30m

The money that could be raised for further and higher education from a proposed hike in employers’ contributions is €30m less than what two Government ministers have suggested.

Education Minister Richard Bruton and Public Expenditure and Reform Minister Paschal Donohoe are seeking responses from industry, employers, and others to their plan to increase a levy that businesses pay into the National Training Fund (NTF).

The plan is to increase it, between 2018 and 2020, from 0.7% to 1% of most employees’ earnings. This would see employers pay an extra €100 a year in respect of each worker on a €35,000 salary, but the ministers have set a deadline of April 13 for submissions on the proposal.

The potential increased income for the NTF by the time of full implementation of the rise in 2020 is around €170m over 2016 figures, rather than the €200m cited by the ministers yesterday.

Their press material spoke about a prospective increase of €200m a year prospectively arising from their proposed NTF levy rise. But the consultation report setting out the proposals state that the measure could raise up to €200m over the 2015 figure, which was around €30m less than last year’s NTF income.

Employers’ body Ibec said it will wait until it has consulted members before issuing a detailed response to the Government’s proposals. It had given a guarded welcome to the idea when the planned consultation was announced last October, saying extra money would have to be put to effective use.

But the detail of how much is proposed to be charged from employers was not previously known. The consultation is being undertaken in response to a recommendation in last July’s report from experts chaired by Peter Cassells on how to provide increased funding from the higher education sector.

However, while the NTF is mostly aimed at upskilling people already in work or who want to gain employment, the consultation paper is not explicit on how much of any additional funding raised through employers would be ringfenced for higher education.

The consultation was to have been completed and a report published by the two ministers by the end of April, according to details when the plan was first announced in Budget 2017 in October.

A spokesperson for Mr Bruton said it is still intended to finalise any proposals on employers investment, increased Government funding for the sector, and other funding sources in time for the minister to bring a full package to Cabinet colleagues before Budget 2018.

This should include proposals on what extra contribution, if any, would be made by students and if they are to be offered an income-contingent loan scheme to help with fee costs.

However, a recommendation on the question of student fees has yet to be made by the Oireachtas Education Committee, which is still deliberating on the Cassells report.

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