Comment on the Department's proposals for two Statutory Rules

Proposed Statutory Rule under powers conferred by section 1 of the Employment and Training Act (Northern Ireland) 1950.

The Committee broadly welcomes the proposals outlined in the SL1 and by way of briefing from departmental officials on the 15 March 2001. Members welcomed sight of the proposals at pre-draft stage and will examine the Rule in more detail when it is laid in the Assembly Business Office.

• The Committee welcomes the proposal that persons in the Preparation for Employment Programme element of the New Deal 25+ and 50+, will not be treated as being in employment and as a consequence, potentially lose entitlement to other "passported" benefits. This change of designation will clearly benefit participants.
• The Committee also welcomes the clarification, which this Statutory Rule will provide, in respect of the self-employment option for those on New Deal 25+. Any earnings received by an individual who is trading whilst on the Preparation for Employment Programme, will be treated as income.
• The Committee was informed that the amount of training allowance paid would not be included as aggregated income for income tax purposes.
• Following members' questions the Committee welcomed Mr Gamble's offer to clarify how this proposed change would impact on those in receipt of Disability Living Allowance and Incapacity Benefit.

Proposed Statutory Rule under powers conferred by Article 3 (2) and 8 (4) of the Education (Student Support) (Northern Ireland) Order 1998.

The Committee is content with the broad principle underpinning the proposed Statutory Rule, which aims to improve the effectiveness of the student loan repayment process. Members recognise the benefits, which should follow; employers will benefit to the extent that the regulations will bring the collection of student loans into line with the procedures for the collection of Income Tax and National Insurance. Students should benefit from the faster transfer of data electronically, which should significantly reduce the possibility of deductions continuing after the loan has been repaid.

The Committee does however wish to register a number of concerns:

• Members are concerned about the impact of the additional administrative costs on small employers. There appears to be nothing in the proposed legislation which recognises this. The Committee notes the department's commitment to review the difficulties for small employers when the first batch of graduates comes into the system in considerable numbers. Members would wish to see the department taking a more proactive approach. Small employers, unlike the large corporations often cannot afford to absorb even the smallest additional costs and therefore every effort should be made to identify any potential negative impact in advance. The required support should be in place from the outset.

• Members have concerns over the lack of protection for the former student/ turned employee, in these regulations. The Committee takes the view that the Inland Revenue, having acquired new powers to collect loan repayments, should ensure that there is no loophole which could allow for a siphoning off or undue delay in passing on the repayments by a rogue employer. The Committee stresses that this is not a reflection on employers in general, but a matter of principle that if the Inland Revenue has acquired increased powers, they should be made more accountable.

• The Committee seeks clarification as to whether repayments are triggered on a monthly basis, or after the £10,000 threshold has been reached within any given tax year?

• The current threshold for repayment is set at £10,000, which is in line with other parts of the UK. The Education (Student Support) (Northern Ireland) Order 1998 allows secondary legislation to set the precise financial arrangements. The Committee wishes to re-emphasise that it recommended in its "Student Finance in Northern Ireland" Report, a threshold of liability for this contribution at an annual salary of at least £20,000.

22 March 2000

Dr Esmond Birnie
Chairperson

Minutes of 15 March 2001 Section 4 para 3 (briefing from DFETE officials on proposed SR.

Minutes of 15 March section 5, para1