Lammy warns employers that skills tax could resurface

David Lammy signed off as skills minister last week with a warning to employers that they could yet be slapped with a skills tax.

Lammy, who was promoted to higher education and intellectual property minister in the government reshuffle earlier this month, said such a levy had not been ruled out.

He faced a grilling from MPs on the Innovation, Universities, Science and Skills Select Committee on Wednesday, who questioned whether employers across the UK were sufficiently committed to staff training.

Lammy responded: “In the absence of levies – that’s the elephant in the room that has not yet been put on the table – we are putting drivers in the system to encourage those more reluctant employers [to invest in skills].”

He added: “We have stopped short of levies – but we will revisit that decision when appropriate. That’s a future discussion that the committee might want to explore.”

A tax could be seen by Lammy’s replacement – former trade union chief Lord Tony Young of Norwood Green – as a means of ensuring that skills investment continues through the economic squeeze.

In the construction sector, firms already have to pay a sum proportionate to their wage bill into a central pot that can be accessed to pay for training. However, other sectors have long been against such a system.

David Yeandle, head of employment policy at manufacturers’ body the EEF, told Personnel Today: “We are strongly opposed to a levy. Our members have very bad memories of the old training levies of the 1970s and 1980s and we don’t want to go back to those days.”

Yeandle added that many employers were getting the skills message, and saw money spent on training as an investment rather than a cost.

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