Seanad debates

Thursday, 28 February 2019

National Training Fund: Statements

 

10:30 am

Photo of John HalliganJohn Halligan (Waterford, Independent) | Oireachtas source

I am grateful for this opportunity to discuss the National Training Fund. This is an important and worthwhile fund and I will give the House as much information as I can on it.

Funding is allocated by the Minister for Education and Skills with the consent of the Minister for Public Expenditure and Reform in accordance with the provisions of the National Training Fund Act 2000.

In more recent years, due to the economic situation, the focus moved from training those in employment to training those seeking to enter the labour market with a view to meeting their diverse needs and ensure that they possess the relevant and enhanced skills required in the labour market, both now and in the future. However, there has been a fundamental shift in the labour market over the past five years with unemployment falling from 16% at one stage to 6% in January 2018.There was a need, therefore, to change or rebalance a suite of programmes to reflect the changing needs of the labour market and skills gaps in the market. Indeed one of the key features of the National Training Fund, NTF, is its flexibility and the way it responds to changing economic and labour market conditions. As the economic climate has improved, expenditure on training for those in employment has increased with a corresponding reduction in expenditure on training for those seeking employment, which makes sense. This trend is evident from 2014 to 2018 and, based on economic forecasts, will continue in 2019.

The Government announced increases to the NTF levy by 0.1% in 2018 to 0.8% and by a further 0.1% in both 2019 and 2020 to fund investment in education and training relevant to the skills needs of the economy. The Government is committed to reform of the fund to ensure that it continues to be responsive to the world of work. These increases in the NTF levy were accompanied by a package of reforms to the fund. The reforms were or are being introduced following a consultation process with the employers with the aim of making the fund more responsive to employer needs and to give employers a greater say in informing priorities for the fund. An independent review of the National Training Fund was commissioned by the Department of Education and Skills as part of the package of reforms. This independent review, which was undertaken by Indecon, was published by the Minister for Education and Skills on 17 August 2018. The report made 14 specific recommendations across four key areas which are about reforming the future direction of the NTF, utilising the NTF to support investment in higher education, enhancing enterprise engagement and input to NTF priorities and introducing improvements in the monitoring and evaluation of the NTF.

As part of budget 2019, a number of steps have already been taken to align with the recommendations set out in the report. There has been additional support for close-to-labour-market skills requirements. Additional funding has been provided to continue the expansion of apprenticeships and traineeships, increase the number of places on Springboard, support Skillnet Ireland to meet the skills gaps in the economy, and there are such gaps, and to invest in a new education and training board, ETB, employee development programme. Part of the NTF surplus is being prioritised to support additional higher education-further education and training, HE-FET, expenditures and the development of labour market skills. The Government has decided to ring-fence €300 million of the existing surplus over 2020 to 2024, which is €60 million per annum, to provide targeted funding to meet the skills needs of the economy and to respond to Brexit and other challenges facing the economy. The Department of Education and Skills will work closely with the new oversight arrangement to progress this issue and will launch a competitive call in the second quarter of 2019 for new courses that are aligned with the key objectives of the investment. I will return to this point shortly.

There is increased focus on supporting in-company training. The NTF is delivering €6.3 million in extra funding to Skillnet Ireland in 2019 and supplying a new funding line of €11 million for the implementation of the new SOLAS-ETB framework to upskill lower-skilled workers and to support small and medium-sized enterprises, SMEs. There already has been a re-allocation of NTF funding of FET for employment programmes below the national framework of qualifications, NFQ, level 5 to the Exchequer and this process, begun in budget 2018, has been accelerated in budget 2019. Some €57 million in investment in programmes with significant activity below level 5 on the NFQ, previously resourced from the NTF, will now be funded from the Exchequer. The NTF will be deployed to support close-to-labour-market skills programmes in areas of identified skills needs with support for enterprise-focused higher education programmes. That has increased from €37 million in 2018 to €120 million in 2019. This investment will be made in areas with identified skills needs as outlined in the national skills bulletin and in line with the priorities established by the National Skills Council. As was the case in budget 2018, the NTF will fund all of some programmes as part of this investment.

An implementation plan to deliver the recommendations contained in the independent review was published as part of budget 2019, along with details of a new advisory group to the National Skills Council in order to strengthen governance and oversight and to secure employer input into the strategic direction of the fund. This advisory group will be chaired by a member of the National Skills Council and will include representatives from the enterprise sector. The actions set out in this plan set out a clear path for transforming the National Training Fund into a strategic, enterprise-focused response to meeting the skills needs of the economy. The implementation plan has been designed with the intention that the majority of the recommendations stemming from the Indecon report have been implemented in 2018 or will be in 2019, so that the 2020 expenditure decisions will be made in a fully reformed NTF.

Regarding oversight, the implementation of the plan will be monitored by an interdepartmental group comprising the Departments of Education and Skills, Public Expenditure and Reform, Finance and Business, Enterprise and Innovation. Progress in implementing key recommendations will be reported in the quarterly Action Plan for Education progress reports.

I will outline some of the key actions outlined in the implementation plan. The NTF investment will be focused on close-to-labour-market skills areas, informed by skills and labour market data and employer input. Indeed, in 2019 the NTF will provide support for: 7,386 new apprenticeship registrations, 1,200 above the 2018 target; 5,000 trainee enrolments, 1,100 above the 2018 target; 62,000 training opportunities through Skillnet Ireland, an increase of 7,000; 9,000 Springboard places, an increase of 1,000 places; 17,000 higher education places in key skills areas and training for 5,000 lower-skilled workers through the new State-supported employee development programme. All of this is good news, way above the targets. We will issue a call for a new pilot targeting first time upskilling SMEs with a view to implementation in 2020. Greater investment from the NTF will be made in higher education programmes with an enterprise focus, and SME upskilling will be included in the performance and innovation fund.

The NTF advisory group that I mentioned earlier will advise on a new method of engaging with enterprise bodies to ensure there is a focused and structured input prior to expenditure decisions. That is good. An NTF evaluation report will be published annually by the Department of Education and Skills. All programmes will be evaluated for their efficiency and effectiveness. To do this in a consistent manner, a series of key metrics will be devised.

From January 2020, a new ring-fenced funding line, the human capital initiative, will be established within the National Training Fund to invest €60 million per annum from the accumulated surplus over a five-year period. The ring-fenced allocation, totalling €300 million over the period from 2020 to 2024, will form a key part of the Government's strategic response to Brexit and other challenges the economy might face. It will meet the future skills needs of the economy and provide additional investment at levels 6 to 8 in higher education, address skills needs at a regional level via the regional skills fora, give employers a greater role in determining the strategic direction of the fund and allow the education sector to take a more medium-term approach to budgeting through an agreed multi-annual allocation.Strict criteria in the oversight and use of the fund will ensure the funding is consistent with overall fiscal policy and guarantee that an adequate surplus is maintained in the fund at all times, which is of paramount importance for the future development of the economy. This is particularly important in the context of Brexit and the possibility that unemployment may increase again. Prior to 2012, income from the NTF levy had fallen from a high of €413 million in 2008 to €299 million. However, since 2012, receipts from the NTF levy have increased annually owing to improved employment levels. The surplus at the end of 2018 was estimated at €460 million. The accumulated surplus in the fund has been critical in maintaining expenditure levels, particularly in the provision of training for the unemployed in a period when receipts were falling. I must emphasise that while the surplus is rising, it is prudent to continue to maintain an adequate surplus in the fund to meet demand in future years. I have referred to the fact that while unemployment levels have dropped, we continue to take in as much as we can to the NTF to provide for future security. While the surplus represents a very significant sum, it would cover less than 12 months of NTF expenditure at current levels. The greater employer contribution to the NTF is enabling substantial additional investment in further education and training and higher education. Employers and learners will see real value from this investment such as through the continued implementation of the Government’s action plan to expand apprenticeships and traineeships, targeted support for close-to-labour-market skills needs and significant investment in enterprise focused higher education.

I hope I have made a satisfactory presentation on the NTF to the Seanad.

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