The Budget should offer a ‘cash-back’ deal to firms that spend money on training their staff, to prevent development budgets being slashed during the recession, HR chiefs have urged.
Chancellor Alistair Darling should use Wednesday’s Budget to propose that the more money organisations spend on training, the more cash they would be entitled to receive from the government, according to a resounding call from HR directors.
Stephanie Oerton, head of talent and development at National Express, told Personnel Today that training was currently “low on the agenda” and serious financial incentives were needed to help employers provide it.
“There could be a system where, for the amount you spend on training, the government gives a certain percentage back to the company,” Oerton added.
The sum paid by the government could be worked out on a sliding scale with smaller organisations receiving 10% of their spend back, while larger organisations receive 3%, based on an Australian model, according to Oerton. “This would be a great incentive for companies to train, and they would have to invest first to access that levy,” she said.
Earlier this week, a survey of 2,000 employers by consultancy Hay Group found a quarter of organisations were scrapping or slashing training in response to falling revenue. It came just weeks after the Chartered Institute of Personnel and Development warned that a third of firms would reduce training budgets this year.
Akber Pandor, head of partner development at professional services firm KPMG, urged the government to set training targets for different industries with companies able to receive 10% off their training spend once targets were reached.
“This would act as an incentive to maintain a bit more training during harder times. There needs to be some sort of incentive or award for companies that have a strategy for preparing for the upturn.”
Jonathan Cawthra, group resources director at housing association Affinity South, said the government should also consider removing VAT on training programmes. “At the moment, 15% of what you spend [on training] goes on VAT, if this were to be removed you would get more for your money,” he said.
The Department for Work and Pensions announced plans this week to pay employers up to £2,500 for each individual they recruit and train who has been claiming jobseekers allowance for six months or more. But HR practitioners were concerned this was too little money to make a difference.
Cawthra said that the government should provide a personal training pot of up to £5,000 for each long-term unemployed recruit from jobcentres, to cover the extra training and supervision costs. “This kind of programme is part of the corporate responsibility agenda,” he said.
HR’s Budget wish list
- ‘Cash-back’ on training spend to encourage firms to make learning and development a top priority.
- A 1% cut in National Insurance contributions for employers that seek alternatives to redundancies, such as shorter working weeks, and make no job cuts.
- A freeze in business rates and national insurance levels to allow companies more money to spend on recruitment programmes.
- Credit for companies investing in green jobs, such as £500 per green job created, and money to invest in long-term job creation.