Apprenticeship Levy

Starting in April 2017, employers will require to pay the Apprenticeship Levy at 0.5% of their annual wage bill.  Each employer will receive an allowance of £15,000 per year to offset against the levy, meaning that in practice only employers with a wage bill of over £3million will pay the levy.

In Scotland, the system for distribution will differ from that to be established in England and Wales.  The Scottish Government has announced that a Workforce Development Fund is to be established in the autumn of 2017, to which employers will be able to apply for funding to upskill or reskill their employees.  The Workforce Development Fund is to be designed with employers’ input via the Scottish Apprenticeship Advisory Board and a working group is to be set up.

Therefore, it appears that the fund will not be restricted to funding for apprenticeships, although it remains a stated aim of the Scottish Government to deliver 30,000 Modern Apprenticeship starts per year by 2020.  In England and Wales, a system of digital vouchers is to be utilised, and at present is to be restricted for use to fund apprenticeships only.

PRIME MINISTER’S BREXIT SPEECH

Commenting on the Prime Minister’s Brexit speech, Bryan Buchan, our Chief Executive, said:

“The issues covered by the Prime Minister were very broadly expressed.  Two areas we really see as being crucial, are that legislation as it applies to business will now be our own preserve and won’t be controlled from Europe.

“In terms of trading with Europe, the fact that we are a vitally important market for both France and Germany should mean that we will not be subject to punitive tariffs.

“After the initial shock of the EU referendum result, engineering businesses in Scotland took up the challenge and are now widening our export trade, and expect to benefit from entering the growing market opportunities.

“Mrs May suggested that our industries were stagnating within the EU.  Let’s hope that we are sufficiently motivated to take advantage of the broader horizons opening up in the currently expanding markets of China, India, Malaysia and Brazil, while taking advantage of our special relationship with the USA.”

FIRST MINISTER’S BREXIT PROPOSALS

Commenting on the First Minister’s Brexit proposals for Scotland today, Bryan Buchan, our Chief Executive, said:

“The First Minister’s “second strand” proposal to devolve business and trade regulations from the UK norm would be totally impractical.  In the unlikely event that Scotland was allowed to be part of an EU while the rest of the UK had left, our manufacturing sector would literally have to adopt two regulatory systems if they were to continue trading with the UK which is recognised as our largest market.

“It would potentially make the tendering process so complicated that customers in the rest of the UK would probably opt for a more local supplier rather than try to accommodate the established Scottish supply chain”

Proposed increases to Statutory Maternity, Paternity, Adoption, Shared Parental and Sick Pay announced

These increases are proposed to take effect in April 2017.

  1. Statutory Sick Pay (SSP) – £89.35 (up from £88.45)
  2. Statutory Maternity Pay (SMP) – £140.98 (up from £139.58)
  3. Statutory Paternity Pay (SPP) – £140.98 (up from £139.58)
  4. Statutory Shared Parental Pay (ShPP) – £140.98 (up from £139.58)
  5. Statutory Adoption Pay (SAP) – £140.98 (up from £139.58)

It is currently unclear on what date the changes will come into effect as the statement released by the Department for Work and Pensions suggests 10th April 2017.  However, historically these increases have normally occurred on the first Sunday in April, which would be 2nd April 2017.

Members will be kept up-to-date via Members’ Briefings.

 

Press Release – QR December 2016

ENGINEERING INDUSTRY PERKS UP SLIGHTLY

http://www.scottishengineering.org.uk/wp-content/uploads/2016/12/QR-December-2016.pdf

For the first time in two years, Scotland’s engineering industry appears to be offering hope for the future.

According to our latest Quarterly Review of the industry, there has been an improvement in orders, output and staffing in the final quarter of 2016.  Though, after seven quarters of negative results, this improvement can be seen as coming from a fairly low base.

While the rest of the UK’s manufacturing sector appears to be growing at a greater rate than Scotland’s, Bryan Buchan, our CEO, explained: “We are not yet seeing the benefit of the weak pound due to the simple fact that, excluding oil and gas, the UK accounts for £48bn of Scotland’s total exports, compared to £11.6bn to the EU and £15.2bn to the rest of the world.

“What may provide a benefit to the Scottish manufacturing engineering sector is the decision by the Chancellor in his Autumn Statement to increase spending on infrastructure and productivity.  However, that is for the future and our industry needs more orders in the short and medium term.”

The Review figures show that if order intake for the last three months (39%up, 26%same, 35%down) is compared with the industry’s forecast for the next quarter (22%up, 60%same, 18%down) there is a similar positive four-point result.  This is also reflected in output figures as the last quarter shows (33%up, 45%same, 22%down) compared with an improving forecast for the next quarter (36%up, 42%same, 22%down).

Staffing levels show that the number of employees (22%up, 65%same, 13%down) has increased quite substantially more than the overtime levels (29%up, 44%same, 27%down).

 

Scottish Engineering Leaders Award 2017

This free competition, hosted by Primary Engineer and supported by engineers in Scotland, looks to create links between schools and industry by having engineers visit a classroom and chat about themselves and their work in engineering.  After the visit, pupils are asked: If you were an engineer in Scotland, what would you do? 

The wonderful results have included last year’s winner – a trolley for the elderly, a rotating park bench to ensure dry seats, a magnetic bar code in socks to sort them automatically, etc.

So far, we have had 10,000 pupils register for the competition, so we need all the help we can get to inspire the next generation of engineers.

If you could volunteer a couple of hours to visit a school, you can register here Eventbrite and search for the schools who need engineers here Scottish Engineering Leaders Award Map.

 

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ConnectUp – SME Event – Tue 25 October 2016

INVITATION TO ATTEND

The Weir Advanced Research Centre, part of The Weir Group, are holding a joint event in conjunction with Scottish Power, Doosan Babcock, Subsea7 and Stena Line, aimed at identifying new SME partners.

The two event themes, which reflect the broader innovation needs of the host companies, are Industry 4.0 and Energy Efficiency, and the hope is to attract SMEs working in these areas.

As part of the event, they plan to have various organisations exhibit, including ourselves – Scottish Engineering, as well as Scottish Enterprise, AFRC Innovation Centre and various universities, and more.

The day will consist of several networking breaks between presenters, and SMEs will have the opportunity to interact with exhibitors at these times.

The event is free, and to register please click on the link below:

https://connect-up.eventbrite.co.uk

Venue: Technology & Innovation Centre (TIC), University of Strathclyde, 99 George Street, Glasgow, G1 1RD

Concerns over apprenticeship levy

Comment by Bryan Buchan, Chief Executive.

Engineering companies throughout Scotland are expressing great concern about the impending apprenticeship levy that will come into effect early next year.

The main reason for their concern is the fact that the application of the scheme has been devolved to the Scottish Government, and while employers across England have been made aware by Westminster how they are going to be affected, Scottish employers are completely in the dark.

Starting on 6 April 2017, HMRC will collect a levy from companies throughout the UK with a wage bill above £3m.  This will be paid dependent on where the companies pay their tax.  Some Scottish companies will, therefore, be paying to Revenue Scotland and others to HMRC UK.

We are being inundated by requests from our member companies who want information on how this levy will be collected, when and how often it will be collected, as well as how they can claim their allowances back and how much they can claim.

The basis of this levy is that the UK Government have said that they want to create 3 million apprentices by 2020 across the UK.  In Scotland, I have received information from colleges and training organisations who already fear that there is going to be a significant downturn in the number of essential apprenticeships in key engineering disciplines in the coming year.

That flags up to employers a huge concern that we will once again be facing a deficit in skilled workers in Scotland within an industry where skills are paramount.

Questions have already been asked of the Employability and Training Department of the Scottish Government, but answers have not been received.

The word from politicians is that they cannot provide answers before the autumn statement, which means that it will be December before any clarity is provided, allowing at best four months to set up a system of delivery which already exists in England.

Post Brexit uncertainty creates engineering slump

QR September 2016 – Press Release

The uncertainty surrounding the Brexit vote and the subsequent allusions to another Independence referendum by the First Minister, are exacerbating negative trading conditions for the engineering manufacturing sector in Scotland as witnessed by the results in the latest Quarterly Review of the industry published by Scottish Engineering.

The support group for Scotland’s engineering companies has seen a slump in orders and a sharp fall in output volume in the last quarter as well as a drop in employment levels.

Circumstances outwith the control of the Scottish economy, particularly the fall in Sterling against the Euro and Dollar, have impacted many costs for Scottish businesses.  Bryan Buchan, CEO of Scottish Engineering said: “We appear to have been hit on all fronts. The potential benefits of a weaker pound for exports have yet to be realised and our figures show there has been substantial downturn in export orders. At the same time, we have seen a significant rise in commodity prices, notably metals including nickel and zinc which is impacting directly on companies involved in fabrication and galvanising in particular.”

Order levels have been negative for eight consecutive quarters and have only been worse during the global slump of 2009.

Output volumes (21%up,31%same,48%down) are also at their lowest level since 2009.Staffng levels which have tended to be less volatile of late have dipped considerably (20%up,51%same,29%down) in this third quarter of 2016.

The guest writer in the Review, Lord Andrew Dunlop, Parliamentary Under-Secretary of State also comments on the result of the EU Referendum, stating: “There may be some turbulence ahead as our economy adjusts to this new reality and I fully recognise the concerns and questions which have arisen from the uncertainty of this decision for engineering businesses and their employees.”

He added: “I am pleased that the Treasury acted to secure the status of EU-funded projects, providing certainty in the medium-term on projects which are currently underway. It is important that we make it clear that the UK remains open for business.”

He concludes by suggesting that this Government: “Will hold fast to a vision of the UK that is respected abroad, tolerant at home, engaged in the world and working with our international partners to advance the prosperity and security of our nation, that truly works for everyone.”

Mr Buchan also hopes that the Bank of England’s recent package: “Will promote some improvement which will extend to our sector, but we now look to our new Chancellor Philip Hammond, to step in with further measures to defend our economy.”

BREXIT

Brexit comment by Bryan Buchan, Chief Executive, Scottish Engineering.

At the time of writing, we are starting to feel the force of the predicted maelstrom following the Brexit vote.

From an engineering manufacturing point of view, it is difficult to see any accrued benefit.  While the export market, which comprises Europe, has grown in the number of member states involved, in percentage terms it has fallen in value from some 54% to 42% over 12 years.  Still, however, a very significant market for ourselves, and equally we constitute a substantial market for European countries, notably accounting for 7.4% of German exports and 7% of French.  We are now plunged into an even deeper trench of uncertainty than that around the previous phases post-recession, with companies struggling to foresee the future and facing intangibles in terms of investment validity and potential scenarios for extended stagnation, or indeed reversal of growth.

Chaos prevails in the UK, with internal fracturing of the two major political parties, and a new Prime Minister in Theresa May bringing associated prevarication on the invocation of Article 50 to initiate the process of exit.  It would appear that our strongest ally within the block is the ever-pragmatic German Chancellor Angela Merkel; however, she will be facing an election next year and this should be a point of concern for our principal negotiator.  It is clear that if we wish to retain full access to the EU market in the manner of Norway, that a substantial contribution to EU funding will be called for, as will almost certainly free movement of people within these boundaries.  The promises of the ‘leave’ camp in terms of NHS funding have been exposed for the flagrant lies which they were, and their proponents have now virtually all existed stage left.  Therefore, we have given away a place at the bargaining table, devalued our currency and placed our economy, particularly financial services, at risk – for what?

What has brought us to this point appears to be anger on the part of the less advantaged areas of England and Wales in particular, fuelled by concerns over immigration, globalisation and EU social policies.  There is a stark division in the country with Scotland, Northern Ireland and Greater London clearly pro-EU.

Manufacturers will look to an easing in their export conditions, with the collapse of the Pound; however, this will be offset by significantly higher raw material costs when sourced from either Europe or the US.  One shaft of light might come from the fact that oil is priced in Dollars, and the price per-barrel realised price might now put some marginal fields back into contention in the UKCS, with a concomitant beneficial effect throughout the supply chain.