Users urge chancellor to set timetable for training revamp

In the run-up to the budget next Wednesday, Nick Huber reports on what the lobbyists are pushing for.

In the run-up to the budget next Wednesday, Nick Huber reports on what the lobbyists are pushing for.

With the budget only days away IT users and suppliers are pressing the chancellor Gordon Brown to take urgent action to avert a potential crisis in the beleaguered UK training market.

Ministers announced plans last year to replace the Government's flagship national training organisations (NTOs) with sector skills councils, but although the NTOs were effectively abolished at the end of last month, there is still no timetable for their replacement.

The delays could spell bad news for business by slowing down important training projects and national initiatives to tackle the IT skills shortage.

With the closure of the Individual Learning Accounts (ILAs) last November in the wake of substantial fraud, many training organisations have been left in limbo and could go to the wall.

In a letter to Brown, the Institute for the Management of Information Systems (Imis) urges the chancellor to take urgent action in the budget to speed up progress on the UK's new training infrastructure for IT.

"Unless rapid action is taken the UK IT training infrastructure, both public and private, may well suffer irreparable damage this spring," said Philip Virgo, strategic adviser to Imis.

To end this uncertainty the institute urges the chancellor to announce a clear timetable for introducing the new training bodies, requiring government funding to be spent by the autumn.

"We suggest that you require that proportions of the funding for the new training structures be spent by the end of June and end of September to ensure that these are fully operational and delivering results in time to reduce the impact of the next skills crisis," the Imis letter said.

The group also stressed that a suitable training scheme to replace the ILAs should be introduced as soon as possible.

Other IT-friendly elements of the budget have already been announced. These include draft clauses for a volume-based research and development tax credit for large companies and tax relief on gains and losses for substantial shareholdings and intangible assets.

However, industry bodies have called on the chancellor to extend capital allowances for investment in IT equipment to companies of all sizes and ensure that it applies for broadband telecoms equipment.

Currently, only small businesses are entitled to a 100% capital allowance, covering the whole cost of their investment on computers, software and Internet-enabled mobile phones. The allowance is due to end next year.

"There is a sunset clause of 2003 [for capital allowances] and we hope that this can be extended to 2005," said Tim Conway, director of industry affairs at the Computing Services & Software Association. "2005 seems like a logical date [to extend it to] with all the e-government targets."

The Federation of Small Businesses also called on the Government to repeal the controversial IR35 tax rule. Under IR35 IT contractors are treated as employees for tax purposes despite the additional costs they incur by operating as limited companies.

After the Professional Contractors Group lost its case over the controversial IR35 tax in the Court of Appeal last December, lawyers and IT contractors are looking at new ways to tackle the issue.

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