On the Home straight?

Can the Government’s relaunch of the Home Computing Initiative really make a difference to the level of IT literacy in the UK?

The Government mustered an impressive array of supporters for the relaunch of its Home Computing Initiative (HCI) in January this year.

Employers group the CBI, the TUC, leading IT players Intel and Microsoft and employers including Royal Mail, Nationwide and Siemens are all backing the initiative, which aims to boost IT skills through increased PC ownership across the UK.

The Government hopes the extensive support, new guidelines for employers, simplified regulations and a marketing campaign will combine to give the scheme the boost it needs to really catch on.

First launched in 1999, the initiative allows employers to loan their staff computers for use at home as a tax-free benefit. Most loan schemes are self-financing as employees accept a reduction in their gross annual salary in exchange for a loaned computer.

Policy makers argue that schemes like this can have a direct impact on competitiveness and productivity. The UK needs a skilled workforce, particularly an IT literate workforce, and the more people who have access to a PC at home, the higher the national level of IT skills.

There is certainly some way to go.

The latest figures from the Office of National Statistics show that just over half (55 per cent) of UK households own a PC, and 48 per cent have access to the internet. Recent research by pollsters NOP found that 25 per cent of full-time and 27 per cent of part-time workers do not have access to a PC at home.

Closing the gap

Its proponents hope the scheme will play a part in bridging the digital divide and closing the gap between the haves and have-nots in IT ownership. The HCI is particularly important for the vast swathes of workers who have little or no access to computers at work, but who will need to be IT literate in the future.

Terry Watts, chief operating officer of IT skills body E-skills UK says the HCI could have a big impact on the IT skills of the general population.

“One of things that limits the abilities of companies to grow is the lack of new technology skills. More than three-quarters of the UK workforce now need IT user skills and at least half of all employers say staff skills are not up to the level they need,” he said.

Research carried out for the Office of the e-Envoy – the Cabinet Office department charged with getting the UK online – shows eight out of 10 employees saying that their employer has seen a benefit from them having a computer at home, and just over half say they have learned skills at home which improve their performance at work.

But Martyn Sloman learning adviser at the CIPD warns that home-based learning is not an easy solution as the attitude and motivation of learners differs enormously.

“IT skills are highly valued by employers and having a PC at home can help employees to gain these skills,” he says.

“Customised content, relevant to a job is important and most learners need some personal intervention to support their learning activity. Simply offering content to people does not work on its own,” he adds.

Sloman points to qualifications such as the ECDL which has met a real need in recognising basic IT skills.

“Qualifications can be a motivator to learn. In the UK we are often dealing with people who did not like learning at school and we are asking them to start again. Establishing home learning is a challenge,” he says.

Kick-starting the idea

Despite its obvious advantages, the HCI has been slow to catch on, which has prompted leading IT companies such as Intel, Microsoft and BT to form the HCI Alliance to help kick-start the idea.

Alliance members point to the success of similar HCI schemes in other countries, including the US, The Netherlands, Norway and Sweden.

In Sweden, the percentage of the population living in households with a PC rose from 41 per cent to 76 per cent in the four years following the launch of its highly successful initiative in 1997.

Initial incertainty

Simon Dawson, Intel’s HCI Alliance director says that the idea has been slow to take off in the UK due to lack of awareness and initial uncertainty over the technical aspects of the scheme.

The HCI Alliance helped the Government to create a set of guidelines so that organisations can readily understand the implications of income tax, VAT, the Consumer Credit Act and a salary sacrifice scheme.

The alliance is encouraging employers to use external HCI providers to set up a scheme. Most providers will offer a complete service – supplying computer equipment, hand-holding through the legislation, amending payroll systems, promoting the scheme and providing sufficient technical support.

“Employees need an effective and efficient support function that provides telephone help and advice. The whole idea is that a provider offers this turnkey solution themselves,” says Dawson.

He stresses the financial strength of the scheme. All costs can be covered by the employee’s salary sacrifice and employers should gain from savings in employers’ National Insurance.

“At worst case the benefit is cost-neutral, but at best it is revenue-positive. What better for an HR department to be delivering a contribution to the bottom line at the same time as improving skills,” says Dawson.

HCI provider, Nicator delivered more than 65,000 home computing packages to clients across Europe in 2002 and has helped the British Government to think through its relaunch.

Ian Scholes marketing director of Nicator UK says HCI schemes have been limited in the UK because of employers’ low awareness of the tax exemption and lack of knowledge and resources to run a scheme.

“The UK has just grasped the nettle, but we are still marketing a conceptual sale and having to explain the idea from scratch. There are still many sceptical employers thinking that the offer is too good to be true,” he says.

Martin Prescott managing director of provider Red PC says that for the first time government guidelines give employers a clear idea of what providers should offer. He has been involved in devising a provider’s charter setting out what employers can expect.

Prescott argues that the idea is finally taking off – there were fewer than 100 schemes across the UK last year, but Red PC claims to have more than 100 schemes in preparation.

How to finance an HCI intervention

Many employers choose to use salary sacrifice arrangements to offset the costs of a home computing scheme. Employees accept a reduction in their gross annual salary in return for the loan of a computer.

For example if an employee is loaned equipment worth £1,500 over a period of three years, he could sacrifice £9.62 per week from his gross salary. Net of tax this would be £6.44 for a basic rate tax payer and £5.57 for a higher rate tax payer.

But there is a cost saving for the employee. The combined tax and National Insurance savings effectively reduce the cost of obtaining a computer by up to 33 per cent for basic rate tax payers and up to 41 per cent for higher rate tax payers.

The employer can see a financial gain too. Most schemes run by an external provider are funded entirely through the salary sacrifice arrangements. And for each employee sacrificing £1,500 over a three-year period, the employer would save employers’ National Insurance payments of £64 a year.

Royal mail delivers home learning

Royal Mail launched its Home Computing Initiative late last year and more than 10 per cent of its workforce, 18,000 employees, have signed up for the scheme so far.

The majority of the workforce are postmen and women, allowing them the same access to IT resources and the organisation’s open learning centres as its office-based employees.

Before the scheme was launched, just 13 per cent of Royal Mail employees had a computer at home.

The scheme, branded Learning for All, has been promoted emphasising the training and support delivered as part of the package and the favourable loan conditions available to employees. Royal Mail is using salary sacrifice to offset the cost of the computer equipment and depending on package and salary level, employees are paying between £4.25 and £7.50 a week over three years.

“This is much more than simply giving people the knowledge to operate a keyboard, mouse and computers,” says group human resources director Tony McCarthy. “Computers are the most effective tools for learning available today.”

Software included in the scheme supports the national curriculum, including GCSEs and basic numeracy and literacy. It also includes training for basic office IT skills.

Taking technology home

Oil and gas exploration company Statoil began a global rollout of its home computing scheme in 1998 and now has nearly 20,000 PCs in employee homes. In the UK, Statoil offers employees a PC at home in exchange for a commitment to follow a training programme. It has 200 people (around 90 per cent of its UK workforce) taking part.

Under the deal, employees agree to train on business tools such as Microsoft Office, oil industry packages and some business school programmes. They choose from a mix of compulsory and optional courses and are assessed online. Most of the employees are not office-based, but working on oil rigs or in remote locations, and do not have ready access to a PC.

Paul Dean, Statoil’s HR manager, says that around 75 per cent of employees complete their training within a year.

“We are offering a financial incentive to train. It is an effective way of getting people to actively learn. It is very difficult to get them to do it at work when individual jobs are not linked to emerging technologies,” he says.  

Statoil has taken a different approach to other organisations, using provider Nicator to supply computers at no cost to the employee and funding any costs of a taxable benefit itself.

Further information

The Home Computing Initiative:  www.dti.gov.uk/hci

Consumer Credit Law:  www.oft.gov.uk

Salary Sacrifice:  www.inlandrevenue.gov.uk/specialist/salary_sacrifice.pdf

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