The government is promoting a £350m training package for small businesses to help them withstand the recession . But will it answer their needs?
Over the next two years, the government will pump £350m into the Train to Gain initiative specifically to help small and medium-sized enterprises (SMEs). Such companies, employing up to 250 people, have traditionally been wary of government-funded training provision. But skills secretary John Denham says they are “an important engine of our economy and we must make sure that we support them during tough economic times”.
The initiative follows research for the Sector Skills Development Agency suggesting clear links between training provision and business survival. Of more than 2,000 companies tracked between 1998 and 2004, the proportion that failed to invest in training and subsequently closed was well over double the failures among those that offered training.
Last month, a coalition of top business and union leaders highlighted the danger of slashing training budgets during a slowdown by publishing an open letter in national newspapers.
Ensuring take-up of the funding will not be easy, however, and Denham promises an overhaul of the training system to minimise bureaucracy. The Federation of Small Businesses (FSB) points out there are 1.5 million small employers whose average workforce is fewer than 20 people, posing considerable problems in publicising what is on offer as well as delivering the training itself.
FSB spokesman Stephen Alambritis says SMEs are traditionally wary of training that is eligible for grants because, apart from the bureaucracy, it tends to take staff away from the workplace. It also arouses concern that larger companies will poach staff with recognised qualifications. As a result, training is often delivered in-house.
He adds that training offered with grant aid attached is only applicable once people have basic writing, literacy and social skills. “What our members are saying is that these are the skills they would expect schools to sort out but their staff are often lacking.”
Because the £350m earmarked for SMEs is incorporated into an expansion of the Train to Gain annual budget from the current £520m to £1bn by 2010-11, it will not mean a shortfall in other areas of training provision. Train to Gain provides skills services for all employers and is provided through the Learning and Skills Council (LSC).
Expansion of training in leadership and management training began this month for any business with between five and 250 employees. Previously, the lower limit was 10 employees. Grants of up to £1,000 are available, but this must be match-funded by the employer.
Other forms of training will be available by January and are free, apart from level three training for people over 25 years old. Here, subsidies of at least 50% are promised.
Karen Woodward, LSC director of business support, says the emphasis will now be on learning skills that bring crucial benefits to the business. “It’s where they can look to reduce their costs and improve their quality. A previous concern of smaller organisations has been that full qualifications are not necessarily suitable for their business.”
Eligible for funding
The change means ‘bite-sized chunks’ of training are allowed even though they do not necessarily lead to a qualification. With leadership and management training, for example, everything from an MBA course to using an executive coach will be eligible for funding.
In addition, workers will no longer be prevented from receiving training up to level two even if they already have a previous qualification at this level.
SMEs will also be encouraged to formalise some of the internal training they already undertake so they can set a benchmark for themselves against national standards.
And an existing incentive for businesses with fewer than 50 employees, where funding covers the wages of staff while they are being trained, is being re-jigged. The training package can either be accessed through accredited training providers or through the Train to Gain brokerage service, which assesses company training needs and finds appropriate training packages.
Woodward acknowledges that dealing with such a fragmented sector does pose problems, but says much of the training can be delivered in the workplace.
She adds there are good examples of this already happening on business and retail parks. “We are really keen to find examples that we can build on.”
Despite the obstacles, the FSB agrees that a downturn in the economy is a fitting moment for companies to focus on training, particularly in areas such as sales, budgeting, gaining contracts and enhancing business reputation. “Now is an ideal opportunity to take advantage of Train to Gain, when you aren’t overly busy and there’s time to look at your training needs,” says Alambritis.