A new Skills Tax Credit could unlock £2.2 billion of additional investment in skills according, to new research commissioned by Enginuity and produced by Learning and Work Institute.
Engineering and manufacturing sectors have been identified by the Government as vital to unlocking higher growth and prosperity across the UK. However, several factors are currently acting as a brake on these sectors’ potential, including skills.
Firms face a range of barriers to investing in training. This is despite nearly all engineering and manufacturing employers polled for this research agreeing that spending more on training could bring benefits such as faster technology adoption, higher productivity, and greater business revenues. This points to the need to look at the underlying drivers of skills investment, including financial incentives.
The report recommends businesses receive a 20p tax credit for every £1 invested in eligible training. It estimates that an initial £900 million investment from the Exchequer could unlock £2.2 billion of additional employer investment, supporting growth across the UK.
As with any policy, there will be trade-offs. Any new relief will need to balance effective targeting and simplicity, maximising uptake, and minimising subsidy for training that would have happened anyway. The report also makes clear that fiscal measures are not a silver bullet and must be set alongside practical wrap around support and redoubled efforts to improve the quality of accredited training options.