2014: Time to Train?

Training was one of those areas that suffered as a result. According to government figures, total UK business spend on training fell from £45.3bn in 2011 to £42.9bn in 2013. However, with the improving economic climate the tide appears to be turning as businesses look to invest in skills to drive growth.

Research from the Forum of Private Business has revealed small businesses are making a conscious shift towards training to facilitate growth. The number of businesses engaged in strategic skill development, including management and business planning, grew from 16 per cent in 2012 to 28 per cent in 2013. Similarly, the proportion of small businesses undertaking CDP and training to build capacity grew by 12 per cent and 5 per cent respectively.

These positive developments are buoyed by a decline in other types of training such as training to replace lost skills and a fall in the number of businesses not training at all. The number of businesses engaged in efficiency training and skill replacement fell by 9 per cent and 13 per cent respectively, suggesting fewer redundancies and a more stable workforce. Similarly, the report which looked at small businesses’ training provision over the past year and future skills requirements, reflected the more positive employment outlook for 2014. Over half of Forum members indicated they were looking to increase staff numbers or up-skill their existing workforce in 2014.

This shift away from efficiency training to growth facilitation is encouraging but is a modest move rather than a seismic shift. Government data suggests nearly a third of all businesses are not training at all and when asked how to overcome the barriers to training a worrying 20 per cent of small businesses responded that they did not know or would do nothing.

As we emerge from the recession businesses are beginning to take stock of the skills in their workforce and the gaps that have developed. Small businesses reported time management skills topped the list of skills negatively impacted by the recession. 12 per cent of businesses reported these skills had grown worse over the last five years with owner managers forced to take on additional responsibilities as redundancies were made. 39 per cent of businesses also reported senior management skills had been neglected with time and cost being the major reasons why.

Time and cost emerged as the top two barriers small businesses faced to training, preventing many SMEs from taking advantage of the improving economy. Nearly a quarter of businesses highlighted time as the major barrier to skills development followed by about 20 per cent who noted cost. In contrast to previous years, time has overtaken cost as the biggest barrier to training and skills development.

Given the lack of time available for skills development and continued difficulties funding courses, it is not surprising that a fifth of small businesses do not know how to overcome the barriers they face to training.

These barriers are compounded when we consider that the vast majority of training undertaken by small business – almost three quarters – is mandatory training required to comply with regulations. Compliance training, despite government initiatives to reduce regulation, has increased in the last year.

Whilst attempting to reduce the regulatory burden the government has recently launched an initiative to boost the use of business support amongst the UK’s SME community. The Growth Voucher programme, a £60m project, went live last month. Whilst the vouchers cannot be used to fund training, they will help cover the cost of strategic support from a range of professionals that will enable SMEs to identify their growth needs and direct them to appropriate training or services.

In the few weeks since the programme began nearly 1,000 businesses have applied for the voucher programme. Already over half a million pounds worth of vouchers have been allocated through the programme, which provides all eligible businesses with a business support diagnostic but allocates the vouchers through a randomised process.

So what training support do small businesses really want to increase their access to, and use of? Forum members highlighted the need to balance compliance training with other forms of skills development. The punitive nature of compliance training, (where costs can escalate if a business is a day out of date) was highlighted as an incentive to prioritise compliance training over other forms of training regardless of the priorities of the business. Members also suggested the government should look at the tax system to incentivise training in a similar way as research and development is incentivised.

With time emerging ahead of cost this year as the greatest barrier to training it is essential the government take a holistic view of business when considering how to encourage training. Further action to create time savings through regulatory reduction would free up time for small businesses that could be used for training. The Forum of Private Business is developing a policy recommendation to introduce a limit on the number of regulatory interventions a government can make within a single Parliamentary term. This could potentially save employers a great deal of time and money as they would not need to train staff year-on-year to comply with the constant flow of regulatory change.

So whilst the growth voucher scheme will help SMEs identify areas where they need support and direct them to relevant training, it is evident that the balance between mandatory training for compliance and non-mandatory training for skills development and growth needs to be redressed.

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