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December 2006

Pre-budget report slim for UK businesses but Leitch report vital for training

There was not a lot for most UK business, let alone print, in the Pre-Budget Report. A stable macroeconomic outlook was announced to date. There were no shifts on corporation tax or business rates however there was an increase in landfill tax and fuel costs. It all equated to another “steady as she goes” offering from the PM-in-waiting it did not even go as far on environmental measures as expected.

More interesting than the Pre-Budget Report itself were the many reports delivered alongside it. Key for the printing industry was the Leitch report into skills, which explicitly called for a much more demand-led system of qualifications and funding:

The Leitch Report recognises:

- the pivotal role that employers will play in driving up skills, and therefore productivity/GDP of the UK economy. In particular it articulates the importance of employers, rather than candidates, as the 'demand' side of the sector. It also starts to formalise their role as 'provider'/trainer in the workplace. Responsibility for skills needs to be equitably shared between employer, candidate and government. Whilst employers have always been recognised, I believe Leitch goes a few steps further. In recent years, most skills within the printing industry have been developed in the workplace. Leitch's recommendations should make this process more effective with dividends for the productivity and competitiveness of the sector.

- explicitly outlines skills funding responsibilities between stakeholders. Whilst employers may want more money from government to pay for training, this 'crutch' support has rarely resulted in effective market delivery. By getting the government to focus on 'market failures' (in particular where these are caused by lack of information) training providers and customers should be able to develop an effective market for skills supported by the government. All company managers know that improved skills will deliver increased productivity and profitability. However many are unaware of what's available and how to access it which is often what prevents them training. If this could be addressed on both a national and sectoral basis, by government working directly with providers, I believe there would be far greater investment by employers.

- acknowledges that government policy must embrace adult upskilling, whilst not necessarily paying for it. The ambition for higher qualifications levels in employment as part of government policy is a shift from previous stances that left this to employers. Whilst the concept of lifelong learning has been a long-term part of the professional services sectors, it is less prevalent in manufacturing and other services. However with continuous technological and market change, up-skilling and training of adults is vital to underpin progress.

We hope that the commitment to use existing structures more effectively will also make the relationships between stakeholders less onerous, in particular looking at the importance of sectorally based bodies (e.g. sector skills councils) rather than a plethora of regional bodies (such as local LSCs). It is important now for all stakeholders including trade bodies such as ourselves, sector skills councils and other training providers to help the UK make the Leitch ambitions a reality.

Other areas of the Pre-Budget report that are of interest are:

The Varney Review of the delivery of front-line government services to business has already resulted in a consultation on a reform of the tax system to streamline system of payment of Value Added Tax, Income Tax Self Assessment (including capital gains tax), Corporation Tax Self Assessment, Pay As You Earn and National Insurance Contributions as operated by employers and National Insurance Contributions paid by the self-employed. Could this be a real, live manifestation of the much lauded but seldom seen 'Better Regulation Agenda'? Certainly, the Varney Review's recommendations of integrated public sector services driven by new technology will make life much easier for business; if they are fully implemented.

Kate Barker's recommendations into streamlining development planning systems will be welcomed by any printer that has tried to alter their premises and been met by a constant series of rejections on a huge range of shifting grounds.

In conclusion: the most promising areas of the Pre-Budget Report were the ones yet to be adopted by Government. Perhaps Mr Brown – or his successor at Number 11 - will have something more concrete to offer in his 2007 Budget.

To download an open letter from Sector Skills Councils in
support of the Leitch Review of Skills click here

For further information please contact:
Lizzy Hawkins
Public Affairs Officer
Tel: 020 7915 8319
E-mail Lizzy here

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