THE oil and gas industry skills organisation is calling for clarity over the impact the introduction of the new Apprenticeship Levy will have on the sector as it continues to struggle with the low oil price environment.
From April next year, all employers in the UK with an annual pay bill over £3million will have to contribute to the apprenticeship levy at a rate of 0.5% of their annual pay bill as a commitment to traineeships.
The UK Government estimates that the levy will raise £3billion annually over the first five years following its introduction.
A significant number of oil and gas companies will be affected by the new levy which is applicable to all industries, regardless of whether they already operate levy systems or other collective training arrangements.
As a devolved policy, authorities in each of the UK nations are tasked with managing their own apprenticeship programmes.
While employers in England have been told how the levy will be implemented, the Scottish Government has yet to provide the same clarity for employers north of the border.
Apprentices are a vital part of transferring knowledge from the oil and gas industry’s ageing workforce and ensuring a sustainable pipeline of talent for the future.
Employer investment in training at an operational level has been on a downward trend across all sectors over the last 20 years, and the UK Government expects the levy will increase the number of skilled workers in the UK by placing the control and responsibility of employee skills in the hands of the employer.
We have to question however if now is the right time to be imposing a new tax burden on the UK oil and gas industry which is already struggling.
Tax receipts from offshore oil and gas in the last financial year were the lowest recorded since the early days of North Sea production and thousands of jobs have been lost in the last 12 months with more likely to come.
OPITO is engaging with a number of key parties involved in the design and implementation of the policy, including the levy implementation team at the Department for Business, Innovation and Skills, the UK Commission for Employment and Skills; the Skills Funding Agency and representatives from the Scottish Government.
This has enabled us to provide up-to-date information to stakeholders so that informed feedback can be communicated to governments throughout the implementation process.
What the industry needs most however is clarity from the Scottish Government on how the levy will be implemented and how the ring-fencing of funds will work.
Now that we have much of the information surrounding the principles of the policy, we would encourage Scottish Government to continue to interact with employers throughout the implementation period and we will happily engage on considered options.
Scottish oil and gas employers must be informed and able to plan for the future in the same way their English counterparts can.