Bringing forward the recovery: 2) Tax Free Training.

Recession is a time to catch up on maintenance and training. Slump is a time for radical change in order to survive. That means you will need a very different skills mix when recovery comes. But so will everyone else. You will go down in the competition for the new skills. The same is true for UK plc. Part of the national recovery package should be a short order “tax free training” programme to use the opportunity to reskill the existing UK workforce for the 21st century.

The 1996 report “The End is Nigh” , on how to avert the impending Y2K Skills Crisis, included a section (8.5.3, starting page 141) on how a tax free training programme might work. This section was drafted specifically for the then Shadow Chancellor, now Prime Minister. It needs updating but the basic principles remain the same.

The key was to stimulate employer-funded investment in training by reducing national insurance and income tax for those following professionally recognised and monitored skills   development and updating programmes. Those funding their own training would be similarly able to off-set costs against tax.

The recommendations included checks against abuse akin to those used successfully for the Millennium Bugbusters’ Programme. These were then ignored, very expensively, for the ill-fated Individual Learning Accounts: a great idea, but implemented without industry strength quality control – and with predictable (and predicted) consequences.

The main reason the concept was not adopted beyond a few unpublicised, Treasury-mandated, regional trials, was that departmental officials hated the idea of tax incentives as an instrument of policy. It was a direct threat to the hierarchies of committees and funding agencies that had step by step increased their stranglehold on the UK education and training industry since 1917: when Lloyd George laid the foundations for a centralised, standardised, silo’d public service – fit for the age of rail. 

The main change since 1996 is the sheer scale of need today: to retrain those millions whose skills have already atrophied or will no longer be needed in 2010. That need goes well beyond the ICT industries whose skills needs I was addressing n 1996.

Were I writing today, I would include a need to mobilise the Trade Unions and reputable associations of small firms in supporting local training programmes to NVQ level 3: the missing link in the UK skills chain.

I would also call for a cull of the education and training quangoes, with authority passing to those Sector Skills Councils which have demonstrable support from the industries they serve.