Thursday, 28 February 2019
National Training Fund: Statements
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.
I welcome the Minister of State who is one of the most active Ministers of State in government. He is hard working and always willing to listen to those who make logical arguments. I welcome the good news he has brought to the House. However, as an employer, I find it hard to understand why some employers are being treated as fish and others as meat. In the context of the apprenticeship programme, for example, there is a significant financial incentive for employers in certain trades to take on apprentices. That is true of apprentice electricians, plumbers and those involved in the wet trades. However, under the new apprenticeship schemes that have been rolled out recently in auctioneering, the insurance sector and so on, there are no financial incentives for employers to take on apprentices. I have two apprentices working with me. They travel to Dublin one day a week. We are paying their wages and for their training. It is great to have them skilled up and put them on the path to employment. However, as their employer, there is nothing in it for me. I am not been treated fairly in comparison to an electrician or a plumber, for example. I urge the Minister of State to consider making a small payment for the days on which the apprentice or trainee is off site and engaged in a formal education course. Employers should receive some grant in that regard. It would encourage more of them to take on apprentices or trainees. We are talking about meaningful jobs at the end of the process and there is no better way to learn a trade than in the workplace.
I again welcome the Minister of State and appreciate all of the work he is doing in the Department. However, I urge him to strongly consider introducing a small grant for employers. It is hard enough to be without workers for a day but having to pay them while they are off site is quite a challenge for small employers. I ask him to raise the issue with the committee to which he referred.
I thank the Minister of State for his presentation, to which I listened in my office. I assure him that I am not running here to say something without having heard what he had to say. I thank him for coming into the House and wish to point out that it was me who requested his attendance to discuss the national training fund, NTF, in the wake of the publication by the Government of the expenditure report for 2018 which sets out some exciting, challenging and aspirational ideas. Many of the ideas contained therein make perfect sense. This morning I printed a copy of the wonderful press release from the Government, dated 17 May 2018, which referred to a review, which is important, and the need for ongoing training. I do not doubt for one moment the Minister of State's commitment. I know that he is a very keen advocate of apprenticeships, traineeships, internships and gaining work experience more generally. We all learn in different ways and not everyone is academic. Some are skilled with their head, while others are skilled with their hands. The profession of baker is as noble as that of a stock broker, if not more so.
We must consider the shortage of certain skill sets. We know that there are major issues in agriculture and farming. There are lots of people who are trying to get into the dairy sector, but there is a shortage of skilled personnel. People can be trained and acquire the necessary skills through apprenticeships. It is all about matching people's skills, capacities and abilities. Everyone wants to have a job to bring home a crust. That is normal and the Government is committed to supporting them in that endeavour.
We face a significant challenge in the form of the housing crisis. Everyone understands and recognises the importance of Rebuilding Ireland in that context. If the targets set in it are to be reached, we will have to start training and upskilling people in the construction sector as there is a need for more qualified electricians, plumbers and others with construction related skills. Representatives of the Construction Industry Federation, CIF, have appeared on numerous occasions before the Oireachtas Joint Committee on Housing, Planning and Local Government, of which I am a member. The federation has expressed serious concerns about the shortage of skilled workers. It has also pointed to the need to upskill many involved in the sector. The Minister of State at the Department of Agriculture, Food and the Marine was in the House yesterday to discuss forestry, a sector in which there are shortages of certain skilled workers too. We must find ways to make progress in these areas.
In the aforementioned press release the Government sets itself major targets. I am not going to start to throw lots of figures at the Minister of State, but I draw attention to the reference to the allocation of €182 million for ETB programmes, €122 million for apprenticeships and €37 million in additional funding for labour market focused courses at higher level. The Minister of State also referred to an additional allocation of €30 million for Springboard courses and €21 million for Skillnet Ireland. I am not interested in analysing the figures now because we are all singing from the same hymn sheet and all agree that there is a need to upskill workers and match their capacity to areas in the economy in which there are skill shortages.
I thank the Minister of State for his time. I urge him not to lose sight of the fact that everyone is entitled to have a job and should have equal access to employment opportunities. If that requires the provision of additional training and supports, the Government must not be found wanting. We must remember the people on the margins, particularly those in receipt of social welfare payments. Many of them could be meaningfully employed on a part-time basis and contribute to society through community employment initiatives run by local authorities, for example. We must determine if their skills can be matched, where practical and possible, to meaningful opportunities and whether they can be provided with additional resources and specialised, supportive training to enable them to get on.Everyone has to play his or her part. I thank the Minister of State for it. We should have an annual review of how this programme is going, but the Minister of State has done well.
The Minister of State is very welcome. I know of his passion for apprenticeships and training. It is very evident in the work he does. It is something the Government wants to ensure is working right. I have a few questions about one or two of the things the Minister of State referenced in his speech. He talked about quarterly reviews. If something is found to not be working, will he be willing to look at alternatives, suggestions or input from employers?
Senator Boyhan referred to house building and how the lack of apprenticeships and skills in that area is a problem for Rebuilding Ireland. I attended a meeting with the Minister of State and some hairdressers from Limerick and Dublin prior to Christmas. There is a shortage of people who are skilled in that area but there are also a number of issues facing the employers. We raised them with the Minister of State on the day. One such issue is that when employers take on an apprentice it is for a three-year apprenticeship. As Senator Davitt mentioned, the apprentices go to college one day a week. The employers receive no incentive in that regard. They have to cover the full cost of their employees going to college. The employers are being left with the costs of everything. While they are training the apprentices and giving them very good apprenticeships, the employers are now beginning to feel that everything is being landed on them.
A new wage agreement is coming in on 4 March. It is not very clear whether apprentices are covered by that minimum wage legislation. It was signed into law before Christmas but only brought to the attention of some employers who take on apprentices this week. It is not clear from the document whether they are now to pay the full minimum wage or whether there is still an apprenticeship wage. That is another question I have for the Minister of State. These are things that affect the employers who give the apprentices these very necessary skills.
I am a big fan of apprenticeships because I do not believe that third level college is for everybody. If people are good with their hands, there are skills out there for them to learn. Apprenticeships have helped in taking many people out of unemployment. Lifelong learning is something about which we have always heard. We learn as we go along. No matter what age one is, whether young of not so long, it is never too late to learn. Academia may not be for some people and apprenticeships deserve full support. As Senator Davitt said, we cannot allow employers to be responsible for everything. It is an area which I would like to see the Minister of State looking at.
A number of people are being trained. Some people are operating out of mobile units or out of their own front rooms. That leads to the black market, which is in competition with people who pay their rates and who are on the high street. These people are taking in apprentices while the people on the other side are not being regulated. There are a number of issues. Those issues affect all skill sets. It is an area at which the Minister of State might be able to take a look. I welcome the increased funding and the emphasis on this area.
The education and training boards, ETBs, are definitely the way to go. The fact that the ETBs are responsible for different areas of apprenticeships is very important. Instead of all ETBs trying to be very good at teaching everything, it would be good if there was one leader in each area. The same rules should apply across all ETBs and the same guidelines should be set down in respect of all the different skill sets. That is very important to prevent people trying to put their own interpretations on things. Overall, it is very positive but there are a few issues which need to be looked at. I look forward to hearing from the Minister of State.
I welcome the Minister of State to the Chamber. I acknowledge the comments of Senators Davitt and Byrne with regard to his commitment to his role. I have a couple of short points to make. The important point to begin with is that Sinn Féin supports the National Training Fund policy. We think it is a progressive policy which puts us much more in line with best practice in Europe. We welcome the fact that it is financed through a levy on employers. We think that is the only practical way to go about this business. We believe that the funds for this policy should be prioritised towards apprenticeship programmes. Our current apprenticeship structure still leaves a lot to be desired. In 2017 just 391 people took part in the Government's newly established programme and only nine of the promised 15 programmes were introduced. Our party's own policy proposals, with which I ask the Minister of State and his Department to engage, set out a five-year plan to increase the number of apprentices to 60,000 and to develop 63 further programmes. We believe we urgently need to prioritise this sector. If one looks at countries like Germany, one sees that there is a much wider range of apprenticeships available. These are hugely beneficial not only to the people involved, but to the economy overall. It is what good long-term economic planning should be about.
With regard to recent national training fund developments, I am worried about the decision to give greater power and say to big business in terms of how the fund is spent. This may be an ideological difference between ourselves on the left and our colleagues in the Chamber. The money is to be spent in a way which keeps the public interest central yet we are allowing private enterprise to dictate to the State how this money should be spent. I know the Minister of State takes good cognisance of the trade union movement and I am glad to say that the ICTU and a host of academics have come out quite strongly against this idea. For instance, Professor Kathleen Lynch of UCD has criticised the move as allowing commercial interests to influence State education. The general secretary of ICTU, Patricia King, was also unequivocal in her stance against this development. She stated:
Education policy and decision-making must continue to be autonomous and unconstrained of employers. This move not only erodes academic freedom; such a policy approach is out of step with the times...
She further stated, "The Fund’s priority cannot be confined to initiatives directly relevant to the needs of employers." I ask the Minister of State and the Department to take cognisance of those words because - let us be clear - the trade union movement has, or at least should have, a massive role to play in respect of the apprenticeships schemes. I ask the Minister of State to recognise that this move is problematic. The education sector and the private for-profit sector do not share the same objectives or interests. To conflate the motives of these two groups is to be naive and is potentially very dangerous.
I thank the Senators for their very valuable contributions. I know that all of them have an interest in apprenticeships and in developing apprenticeships and skills. We should look at where our economy is today and then look back ten or 12 years. As I have always said, during the recession the area of apprenticeships practically collapsed. This happened for a number of reasons, including high levels of unemployment. Before the recession, many basic apprenticeships collapsed. I do not like to use the word "basic", but I refer to apprenticeships that are essential to the progression of our economy in the building industry such as carpentry, plastering, and bricklaying apprenticeships. These collapsed because builders trying to get work done as quickly as possible did not really have time to take on apprentices. I have no hesitation in saying that as they may have felt it was what had to be done. We took in many people from abroad, with which I have no problem, so the number of apprenticeships dropped. It was, therefore, an enormous task for me, when I was appointed Minister of State with responsibility for apprenticeships, to make sure that we again developed the basic apprenticeships, but also that we enhanced apprenticeships. I believe we have done that.I will not call the full range of apprenticeships out but there are 41, including for advanced quantity surveyors, horticulture, hairdressing, healthcare assistants, HGV drivers, equipment engineering, sports management, supply chain associates, science, aircraft assistants, pipe-fitting, hospitality, engineering, accounting and so on. The 41 apprenticeships include 17 new apprenticeships this year. I think we have done exceptionally well.
Senator Davitt spoke about employers. I have a lot of sympathy for employers. I understand that there is a complexity and it is important for us to be able to get the message to employers that, when they take on apprentices, they further develop their own company. When talking to employers, especially in the high IT sector, we have found that they are more than happy to take apprenticeships. We are short on high skills which is a debate we should have at some stage. Employers are happy to take apprentices on and train them at that high end of the employment bracket.
Senator Davitt is correct to a degree. I have been to a few countries around the world which have a different funding scheme for apprenticeships where the Government will co-fund, to a large degree, the apprentice working with the company. One also finds that it is not unusual for employers to go into third level or leaving certificate institutions to find out the skill factors of the students there, if they are good at science, technology, engineering and mathematics, and to take them straight away and co-fund them. It can work either way. I will look at that. Assessing the effect it has is part of the remit that I have set out for myself. The Senator is correct that it can sometimes be very difficult for small employers to do the same financing as big employers. We will look at that.
Senator Boyhan said exactly the same thing and I will do that. I know the Senator is a great supporter of the education and training boards, ETBs, and they do valuable work for us. Our association with employers is very important in this regard. I asked about the whole fund a number of years ago so that when I faced questions like this, we would have had an independent review carried out. I do not think we could go too far wrong with having independent reviews of all the funds that we spend in the Department. We had a concise, independent review by Indecon. The Department and I decided that we would follow through on almost all of Indecon's recommendations. We will work through that over the next couple of months.
Senator Gavan spoke about the impact of businesses and whether they have too much of a say. I looked into that. It is important for businesses to come to us to tell us where there is a shortfall in skills, whether in engineering, hospitality or pharmaceuticals. They are the experts. We continually engage with businesses through our nine skills fora. They regularly meet with businesses, whether pharmaceutical, agricultural or whatever else, on behalf of our Department and then come back to us to say that we are short on skills for a business sector. In my engagement with employers throughout the country, I have not found them taking advantage of apprenticeships or skills. They work within the sector.
A number of Senators asked if we should find some way to help to finance apprenticeships and skills through the employer. I think that is a valuable suggestion, to see if a fund could be set apart to help once we make sure that apprentices and employees are treated well and paid the required wage, whether the apprenticeship wage or the cost of living at the time. I am unsure whether the apprenticeship levy stays under the new public service pay agreement or if there is an increase in it but I will find out. I agree with Senator Gavan in that sense, that we have to make sure all employees are treated respectfully and paid what they are entitled to. Up to now, we have not had any indication from the independent report that there are apprentices who are not being treated well.
A question was asked as to whether we have apprenticeships in agriculture, which is very important. We have applied horticulture, which is maybe not agriculture, farm management, farm technician and agricultural mechanics apprenticeships. We are doing very well for the first time in the last number of years. I do not think there is an area of business for which we do not have an apprenticeship. The question was asked as to whether we can be as good as Germany. We are dealing with 4.6 million people and a very buoyant economy which came from a recession. We do not have the same big car manufacturing firms or engineering companies that Germany and such would have, where there are an awful lot of apprenticeships. We cannot match that percentage because we do not have those big companies. All the top pharmaceutical companies in the world are here in Ireland and a different level of skills is required for pharmaceutical companies. Up to seven or eight years ago, pharmaceutical companies which were upskilling their workforce or doing research would have gone back to base if they were from Israel, America or France. They do not do that now. They engage with our universities, institutes of technology and with this Department through the skills fora that I mentioned, to look for our apprentices and skilled workers.
A shortage of skills was mentioned. There is absolutely a shortage. I have been to all the top companies, including one that wins huge contracts from the European Space Agency. Most of its top workers are from outside Ireland because it cannot get the skilled workers here. It advertises for them here. We need to talk about that. I firmly believe that if we are not innovative in our economy and do not invest in innovation and in the high skills factor, we will suffer. There is no question about the advancement of technology across all sectors, including agriscience, pharmaceuticals and so on, in which we are doing well, being number one in the world in agriscience. The point remains that if we do not upskill in all these areas, we will suffer since we are not meeting the educational requirements of our workforce so that they have abilities to use when employed by companies, including top pharmaceutical companies. There is a lot to be done.
I think straight and say it as it is. The National Training Fund has been fantastic. It has done exceptionally well. The small contribution that the employer makes, the 0.1%, is significant in a sense and it is balanced. We meet employers all the time who say they are happy and get good apprentices. There is a question of whether we pay apprentices enough. I worry that with a buoyant economy, which is doing exceptionally well, people may not want to go into apprenticeships.They can get a ready-made job in a factory that pays well or a ready-made job elsewhere. We have to consider the possibility of upping the apprenticeship payment. We may have to do that over the next few years if we see numbers dropping. Right now the numbers are increasing and we are ahead in some apprenticeships, as I said earlier. That could, however, be an issue down the line for apprenticeships. Would we have to entice more people into apprenticeships? A sure way to entice people into employment is if it is good employment with a reasonable rate of pay. We will have to look at that issue in the coming years.
Reference was made to whether we check with employers. There is a review every quarter from my Department. I am part of that review. When it is carried out, I look at every part of the review to make sure there is accountability across all the sectors I deal with around apprenticeship skills and so on. On all the money being taken from the National Training Fund, there is no doubt that there is accountability with regard to every cent of it. We make sure of that.
Some have questioned why we have the surplus. I explained why we need the surplus. It is due to the fact we could be headed into uncharted waters with Brexit. The sum of €430 million may sound like a big surplus but it is not. In the greater scheme of things, that surplus would be eaten up in normal economic output in one year. The money needs to be held and we have ring-fenced €300 million. I will outline the reason. In my opening remarks, I said the NTF had to be transferred, to a degree, because unemployment had dropped so the fund was not being used. However, we are unsure of what will happen with Brexit and if unemployment figures will rise again so rather than having to go back to the employers, for the first number of years we have a surplus we could use to deal with that. While some people may not agree with it, I agree with the surplus and if I had my way it would be increased until we are out of this uncertainty with regard to the economic position we may be placed in due to Brexit.
I hope I have answered the Senators' questions. Over the coming months, my plan is to get representatives from all the Departments to meet my Department to talk about skills and apprenticeships. Many of the proposals and suggestions made by the Senators should be brought to that meeting. They would be best brought by the Senators rather than second-hand by me. Over the coming months, I plan to have that meeting. I will certainly write to the Senators on the apprenticeships payments.