CBI jibs at loan scheme

July 23, 1999

Business leaders this week attacked government plans to make employers responsible for collecting student loan repayment.

The Confederation of British Industry said that the rules, to take effect from April next year, could place an unfair administrative burden on businesses, particularly the smaller firms that

the government is so keen to encourage. The CBI is negotiating with the government to minimise

the impact of the regulations.

Proposals could mean that companies have to set up procedures to deduct loan repayments from the wage packets of all graduate employees who earn more than Pounds 10,000 a year. The money, along with income tax and national insurance, is then passed to the Inland Revenue, which passes the money to the Treasury. The Student Loan Company will continue to administer the accounts.

A CBI spokesman said: "It is not in businesses' interests, particularly small businesses, to have an administrative burden placed on them. It is making businesses do the work of the Inland Revenue."

A spokeswoman for the Association of Chartered Certified Accountants said: "The government's plans ... could adversely affect graduate recruitment levels. For smaller businesses, this extra administrative burden could mean the difference between recruiting a graduate or not."

Carl Gilleard, of the Association of Graduate Recruiters, said: "It presents an extra administrative burden on employers but the Association of Graduate Recruiters believes that (the regulations) are workable. I would hope that it does not put off small businesses from recruiting graduates."

The Inland Revenue and the Department of Education and Employment have set up an employers' consultation group to look at mechanisms.

The government has also put the loan repayment regulations out to public consultation, with a deadline of August 20 this year.

A DFEE spokeswoman said: "There will be costs for employers but the scheme is being designed to place the minimum additional burden on them."

Graduates living and working abroad will make repayments direct to the Student Loans Company. Borrowers who are self-employed will repay the Inland Revenue through their self-assessment tax returns.

http://www.dfee.gov.uk/support /repayregs/index.htm

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