Friday 24 November 2017

Employers face bigger tax bill to fund shortfall in education

Education Minister Richard Bruton. Photo: Tom Burke
Education Minister Richard Bruton. Photo: Tom Burke
Katherine Donnelly

Katherine Donnelly

Employers are expected to have to pay more towards the cost of further and higher education from next year.

It is part of the wider plan to put the funding of post-school education on a sound financial footing, another element of which could be a higher student contribution.

There is a related proposal to raise third-level fees, linked to a "study now, pay later" loan scheme, while the Government has also committed to increasing its investment.

No final decision has been taken on the employer contribution element, but Education Minister Richard Bruton wants to put a proposal to Cabinet before the summer recess, which would allow for an increased employer payment to be factored into the 2018 Budget.

Mr Bruton describes the forthcoming Budget as an "important deadline" in relation to moves to address what is widely recognised as a funding crisis in third-level.

Private sector employers already pay almost €400m a year through a levy based on staff numbers, into what is known as the National Training Fund, to support skills development.

The minister has proposed an increase of €200m a year (over the 2015 figure of €364m) in the levy, to be phased in between 2018 and 2020, and invited views from employers and others in a consultation process launched in March.

Employer reaction ranges from negative to cautious, with, for instance, the employers' body Ibec and the American Chamber of Commerce, representing US multinationals, arguing that such an increase should not be introduced in isolation.

Ibec, which favours a student loan system, said in its submission that raising the levy "should be part of a new funding model for tertiary education where the graduates, state and employers share the costs".

It argued that the proposal would see employers doing the "initial heavy lifting", due to inadequate Exchequer funding commitments and a lack of political will to address the contentious issue of tuition fees.

This appears to be an attempt at a short-term fix due to the absence of a credible and more sustainable solution.

The student loan plan has met considerable opposition and is currently being considered by the Oireachtas Education Committee.

Mr Bruton and Public Expenditure Minister Paschal Donohoe hosted a forum yesterday with representatives of the 28 organisations and individuals who engaged with the consultation process on the proposed new employer funding mechanism.

The Education Minister said it was "reasonable to ask employers to contribute more" as their future success depended on the capacity of the education sector to respond to their needs, at a time of growing global challenges. Mr Donohoe said if there was an increase in the levy, they wanted to tease out how it should be reconfigured in order to meet the needs of employers and the wider economy.

Irish Independent

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