Call to boost employment and skills training in Pre-Budget Report

7 December 2009

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As the Government prepares to outline its enterprise policies in the Pre-Budget Report (PBR), the FPB is calling for a timely boost to employment and skills training for small firms.

The PBR is to take place on Wednesday, 9 December 2009. The Government will report on previous activities and set out its policy agenda for the run up to the spring Budget. The FPB has submitted a series of proposals designed to create ‘responsible growth' for small businesses and the economy.

These include bolstering financial support schemes for small businesses, introducing specific tax incentives and reducing the cost of complying with regulations. In addition, the FPB, which is asking members about their experiences of and requirements for training and skills in its next Referendum quarterly survey, is arguing that employment and skills should also take centre stage.

According to previous FPB research on the subject, which has been provided to the Government, 22% of respondents said they are forced to provide in-house basic skills training because of a lack of external providers. No business owners said they had found basic skills trainers close enough to their businesses and 28% said that existing courses were inadequate.

Further, 28% have to provide internal training on ‘employability attributes', with 22% finding that educational courses fail to adequately deal with this.

For vocational training, 21% reported a lack of local providers and 18% inadequate courses.

In all, 38% of the small businesses surveyed provide sales training in house because of the lack of availability of external providers and inadequate courses locally.

For the attributes required in multi-skilling, 32% of respondents said they train staff internally, with 16% citing inadequate training courses. In the area of marketing and new media skills it is 30% and 22% respectively.

In total, 27% respondents identified a lack of training provision for strategy and management, with 23% saying the quality of courses available are not good enough, and 22% reported a lack of training on legal changes.

On industry-specific computer skills not a single respondent said they are able to provide training in-house, 29% said there are a lack of local providers and 14% that courses on offer do not meet their needs.

A total of 19% of respondents educate their staff about business processes internally, with 27% citing the inadequacy of external courses.

"As we come out of recession, small businesses will seek out new opportunities and begin to take on staff again," said the FPB's Policy Representative Matt Goodman. "Further support and better sign-posting will be needed so that they are able to access the skills and training necessary to compete."

The FPB is calling on the Government to build on its work on apprenticeships, Train to Gain, the Jobcentre Plus network and supporting further education programmes enabling employers to access a greater pool of capable and motivated staff members in order to grow their businesses.

It should also create a tax and regulatory environment in which small businesses are better able to create these jobs when the economy returns to growth.

Further FPB research suggests that the UK's small firms spend almost £2.4 billion per year complying with employment red tape.

In order to get valuable workers back into jobs, and help small businesses to control costs at the same time, the FPB is proposing a 12-month reduction in National Insurance Contributions (NICs) for micro-businesses – those with fewer than 10 staff – seeking to recruit new employees.

This would reduce the cost of unemployment on the public purse and help the smallest businesses maximise the upturn in orders expected over the next year.

In addition, the FPB is calling for the 0.5% increase in employers' NICs, scheduled for 2011 when small firms are likely to need to recruit in earnest, to be delayed to help employers plan ahead and ensure they are able to deal with the economic upturn.

The approval in May 2009 of the European Commission's proposal to allow reduced VAT rates for some labour-intensive services, including home renovation and hairdressing, means the Government now has the opportunity to stimulate employment in several industries.

Reducing VAT to 5% would improve trade by making products and services more affordable.

It would also bring a significant number of businesses over the VAT threshold. Further, if particular emphasis was placed on the installation of green technologies, a VAT cut could help the Government to meet its carbon reduction commitments.

Mr Goodman added: "Helping to ease the cost of employment – including a VAT reduction for labour-intensive services, a temporary cut in NICs to help micro businesses grow and delaying the planned 2011 NIC rise – would be a real boost to employment and business growth at a time it will be needed most."

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