Brown’s tax credit plans aim to boost productivity

Proposals outlined by the Chancellor in his pre-budget statement to help
employers become more productive and develop their staff have been welcomed by
the CIPD and the CBI.

Gordon Brown announced plans to provide financial support for employers
whose staff take time off for learning as well as free learning provision for
employees.

The Government is also to give research and development tax credits for
large companies to encourage innovation.

It is hoped that the workforce development measures will replace the
Individual Learning Accounts initiative closed down last month because of abuse
by some training providers. They will be tested through a number of pilot
schemes from September 2002.

These include the provision of tax credits to compensate employers for the
time employees spend on training and giving low-skilled employees between 35
and 70 hours of time off each year on full pay to devote to training.

The proposals also incorporate incentives for successful completion of
courses and levels of subsidy up to 100 per cent for courses and accreditation
costs.

John Philpott, chief economist at the CIPD, backed the Government’s plans to
give employers incentives to encourage workforce development.

He said, "Given the disappointing performance of Individual Learning
Accounts, we are delighted that the training tax credit proposals are to be
consulted on with employers.

"However, the institute believes that these should initially be
introduced as a temporary rather than a permanent measure so that their net
impact can be evaluated."

Digby Jones, director general of the CBI, said employers will be pleased the
Chancellor is pressing ahead with plans to introduce R&D and training tax
credits.

"Companies are crying out for tax credits for R&D which will be
particularly important to recession-hit manufacturers," he said.

"We must take action to sort out the basic skills problem, which is a
national disgrace that is harming our economy," he said.

By Ben Willmott

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