Is idea of training tax on companies now dead?

4th July 2003 at 01:00
The critical question about the White Paper is whether statutory intervention in firms' training is off the agenda for Labour's third manifesto.

Leading up to the 1997 election, Labour was in danger of supporting three perceived taxes on business: the Social Chapter, the National Minimum Wage and compulsory employer investment in training. Labour dropped the latter.

In office, the line was that "voluntarism had reached the last chance saloon". If individual learning accounts and the University for Industry failed to bring a step-change in workers' skills Labour would consider statutory intervention.

But, in the run-up to the 2001 election, work-life balance overtook training as a priority. Consequently, this Parliament has seen new rights for maternity, paternity and parental leave, and flexible working.

Nonetheless, there is an expectation in some Labour circles that, because the 1997 government prioritised employment rights and the 2001 one prioritised work-life balance, forcing firms to develop their workforce should be a priority for a third term.

This calculation is not without foundation. Ed Balls, chief economic adviser to the Treasury, has stated that the Government is moving to a "post-voluntary system". More significantly, Gordon Brown in his Budget speech talked of a "right to lifelong learning". Even so, workforce development may still get low priority.

If, for instance, the Government concludes that compulsory employer contributions to pensions are required, it would be hard to also demand a levy for workforce development. And if the Government decides on statutory rights for flexible working, it may prove difficult to also give the right to time off to adults without a level 2 (GCSE-equivalent) qualification.

Ministers will also be mindful of employers' reaction. They are more likely to go for specific measures for statutory intervention than grandiose blueprints.

To be fair, it is difficult to make the case for a national "training" levy when state-funded learning is expanding across the post-14 education and skills system. It is not a lack of funding which is the problem but difficulty getting employers involved.

Firms that innovate tend to be the same as those who report skill gaps. A strategy for company innovation and skills improvement is needed.

Rather than a training levy, the writers of the third manifesto should consider a statutory levy for wider business support. And, rather than a blanket right to time off for adults without a level 2 qualification, they should consider giving employees a right to request it and employers a duty to consider it - with the option to refuse if it harms their business.

Mark Corney is director of MC Consultancy

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