In 1999, the Government introduced tax legislation to encourage employers providing home computing equipment to employees. Placed in the context of Blair’s vision of “Broadband Britain”, the Home Computing Initiative (HCI) enabled employers to loan equipment to their employees, free of the tax liabilities which benefit and compensation packages usually attract.
At the beginning of 2004, a DTI survey of senior business decision-makers found awareness of the scheme lay at 37 per cent. Following the publication of new guidelines for such schemes and a concerted campaign, this figure has risen to 72 per cent. But is this new awareness translating into significant uptake?
Vivien Quinn, director of the HCI Alliance, certainly believes so. “HCIs are now used at 165 companies, covering 1.8 million employees,” she says. “There’s still a sense among some employers that this programme is simply too good to be true, and there must be a catch hidden somewhere. But when they realise there isn’t any catch, they’re more than ready to implement the scheme.”
Put simply, if an employer already owns the computer system, equipment up to a value of £2,500 can be loaned free of tax and National Insurance contributions (NI). If the equipment is not owned by the employer, but is leased to the employee, then no tax or NI are payable, as long as the equipment’s value is less than £2,500, and the value of the lease does not exceed £500 per year. By funding these schemes through ‘salary sacrifice’ – ie, the employee forgoes the value of that lease from their pay-packet, which amounts to around £4 per week – the employer can offset the cost of implementing the scheme against money saved through not having to pay tax or NI on this salary.
“This should be a cost-neutral programme for employers regardless of their size,” notes Vivien Quinn. “And there aren’t that many benefit programmes which are self-funding in that way.”
While the financial benefits for the company are attractive, the way in which the programme can key into other areas of HR can be managed according to the individual organisation. In some cases, the offer of a low-cost, high-quality computer loan is integrated into the organisation’s overall pay and compensation package. On the other hand, companies such as the Royal Mail have used HCI to promote learning among its workforce.
Other benefits include better work-life balance for employees, the promotion of IT skills, enabling workers to help with their children’s homework, and even enjoy shopping online.
Crucial to a successful implementation is the selection of a good HCI provider – a recognised IT company or partnership that will offer the products and support systems most appropriate to the workforce.
“A lot of employers think they can do it by themselves,” says Quinn. “But you do need a good consumer support package for every new user.”
The provider should understand the challenges of each new HCI scheme, as well as being able to manage early leavers from the scheme – employees who do not keep the computer and want to revert to their previous pay package before the full term of the loan is completed.
Equally important is the publicity drive behind the initiative. Brochures should be posted to all employees so they can discuss the initiative at home, while demonstration days and question-and-answer sessions will help achieve buy-in at all levels of the organisation. Launching the scheme should not be regarded as a one-off event. Once the first wave of users has signed up, word of mouth can ensure a second push will be even more effective.
“The benefits of the scheme can be felt by everyone,” says Quinn. “It’s company culture that determines which aspect of those benefits the company wants to focus on as the chief reason for implementing the programme.”
Case study: How HCI works for Siemens
Siemens branded its HCI initiative ‘Let’s Connect’, and first offered its individual business groups the chance to sign up to the scheme in October 2000. Using Fujitsu Siemens Computers as its provider, eligible staff were contacted individually and informed of the equipment available.
“It is essential that you communicate the scheme clearly to employees,” says Ben Debnath, head of policies and processes at Siemens. “There is much more to this than simply loaning computers at favourable rates to staff. They want to know the exact details of the scheme and the implications for their salary and other benefits.”
With an annual promotion backed by excellent word of mouth, the scheme now delivers to more than 50 per cent of eligible staff, boosting IT skills among workers who do not have access to a computer as part of their daily work, and saving the company over £900,000 in employee National Insurance contributions.
Having organised loans for a three-year period, the company is waiting to see how many employees who signed up during the first year will return this year for a second scheme, possibly sacrificing more salary to fund second computers in their homes.
“In hindsight, we would have monitored employee responses more closely during the very first phase of delivery,” says Debnath. “That way, we could appreciate fully the popularity of the scheme.”