Why Pumping National Training Funds Into Universities Could Backfire — The Hidden Risk No One’s Talking About

So, here’s a curveball for you—imagine you’re a small business owner, dutifully paying a 1% training levy, thinking you’re fueling workforce upskilling and lifelong learning, only to hear whispers that those funds might soon bankroll universities instead. Doesn’t that feel a bit off? Well, that’s exactly what ISME—the voice of small and medium enterprises—is throwing down the gauntlet about. They’re warning that diverting the National Training Fund surplus, a pot built since 2000 for practical workforce training, could be the biggest misstep yet for Irish SMEs who aren’t in this to subsidize higher ed spending. The irony? While Irish schools and colleges shine globally, adult skills are lagging, yet funds are running a €1.5 billion surplus with tight reins on employer-led training. This sparks an urgent question: should third-level education get a funding boost at the expense of adult learners and SMEs who foot the bill? Trust me, this debate hits at the heart of productivity, export potential, and who really holds the purse strings in this game. LEARN MORE

ISME has expressed concern that the government is considering diverting some of the National Training Fund surplus to fund universities.

The small business representative group said the majority of SME employers believe any such move would be “a serious misjudgement”.

The NTF was established in 2000 as a dedicated fund to support the training of those seeking to take up employment, those in employment seeking to upskill, and to facilitate lifelong learning.  

Employers pay 1% of payroll spend into the NTF via their PRSI deduction, which is called the training levy.

“The National Training Fund was never intended to be subsumed into general Government spending on the university sector and it would be a serious miscalculation to use the fund for that purpose. SMEs are not paying a levy to provide funding support for universities,” said Neil McDonnell, chief executive of ISME.

“Employers will lose faith in a levy imposed on them being channelled to a purpose other than intended by law. Amending the Act to allow such diversion will not change this,” he said.

Employers are estimated to provide €1bn per year to the NTF through the training levy, and their employees can avail of co-founded training opportunities from Skillnet Ireland in return.

This year, Skillnet Ireland will disperse about €60m in co-funding, or 6% of the total training fund.

If NTF monies are diverted into capital spending in the tertiary education sector in Budget 2026, ISME believes the fund will be depleted very quickly in a sector that has traditionally shown very poor financial discipline.

“ISME is not saying we shouldn’t spend more on third-level education. What we are saying is that any increase in university education should not be drawn from a fund dedicated by law to adult and life-long learning,” said McDonnell.

Irish school leavers and college graduates already score well in international rankings against peer countries.

However, the educational performance of Irish adults against those in peer countries is below OECD averages, which is not consistent with a country determined to increase its productivity and export potential, according to ISME.

Findings from the OECD Survey of Adults Skills 2023 showed that Ireland lagged behind international standards in some basic areas: 

• Level 4 literacy 9% of Irish adults against an OECD average of 12%
• Level 4 numeracy 10% of Irish adults against to 14% OCED average
• Level 4 Adaptive Problem Solving 3% of Irish adults against an OECD average of 5%

ISME is calling for funding for Skillnet to be at least doubled in Budget 2026, believing it to be farcical that the NTF is allowed run a €1.5bn surplus while employers are restricted in co-funded training.

The group also said there is an urgent need to implement the Action Plan for Apprenticeships, and improve innovation, entrepreneurial, financial, digital and export skills in our indigenous enterprise base.

“SME employers have a right to be consulted on the use of NTF funds. The training levy is their money. Such consultation has yet to take place,” said McDonnell.

(Pic: Getty Images)