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Boost for training in Pre-Budget Report

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The Pre-Budget Report has declared that improvements in access to work-based training are a priority. The Chancellor said that the Treasury are examining the CBI-TUC joint report on Productivity which recommended a tax credit for training, and although this was not yet confirmed as policy, it is likely to be one element in a package of initiatives to improve the skills of the UK's workforce.

Gordon Brown stated that from September next year the government will "pilot a new approach combining direct financial support for business - especially small business - with time off for training, under which employees, employers and government each accept their responsibilities". The main areas of concern were the proportion of the workforce lacking basic and level 2 qualifications, and SMEs (small and medium-sized enterprises).

The pre-budget report and the Chancellor's speech also referred to the Performance and Innovation Unit's report Workforce Development: "In demand: adult skills for the 21st century", which was published yesterday, and endorsed its analyses. The PIU noted that a large proportion of market failures are associated with unskilled workers in SMEs, and recommended government action on the supply side of training to respond to business needs, including increased attention to schooling, Investors in People processes and accreditation. The Unit noted several factors inhibiting workforce development: companies and individuals with no record of training are the least likely to start; both employers and employees may be ignorant of the financial advantages of training, and both also lack the credit to finance it; companies fear trained employees may move on.

The Chancellor recognised that these were concerns for everyone, but that current market failures and the social benefits of improving this situation justified government intervention. He stated an intention to increase the demand for training and cited the Skills for Life initiative, the University for Industry and union learning representatives as current programmes which are working towards encouraging individual and company-led demand. However, he stressed the need for a new approach, and identified four possible steps:
- support through tax credits or similar incentives for companies allowing staff time off to train
- free learning and accrediation for the unskilled, up to level 2, from accredited providers
- a minimum requirement to time off for training
- better information resources on training, more forms of guidance along the lines of union learning reps

The report included other tax changes for enterprise: a research and development tax credit for large companies, an increase in the reach of share option schemes, reductions in some bands of corporation tax, and a flat rate and simplified system for VAT.

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