Responding to comments around the creation of a 'high-wage, high-skill economy', the Institute of Director’s Chief Economist Kitty Ussher, said:
“These are difficult times. British businesses have worked so hard during the pandemic to keep their teams together, and we have so much to be proud of amongst our highest performing firms. We want to work with government to look for solutions.
“One area that needs discussion is around the reluctance of business to invest in an uncertain economic climate and, as our Directors' Economic Confidence Index has shown, business confidence fell off a cliff in September.
“In an attempt to encourage physical investment, the March Budget included a welcome tax ‘super-deduction’ for capital investment in plant and machinery. But, as we have seen in recent weeks, we also have a gap for investment in retraining. We would therefore like to see the super-deduction apply to investment in human capital as well as physical capital, after all many of the jobs of the future will be in the service sector.”
In addition to the super-deduction for investment in retraining, the IoD has set out other measures that would help the UK reorientate to a higher skill economy:
- Reintroduce lifelong personalised training budgets to be used on accredited vocational and professional training.
- Widen the uses to which firms deploy their apprenticeship levy funding pots.
- Tax allowances for sole traders and the self-employed to incentivise investment in accredited professional and vocational training. Crucially this should include vocational/professional upskilling and reskilling as opposed to the refresher and CPD courses that are already tax deductible.
- Reenergise the Sector Skills Councils to ensure high-quality industry-specific accredited and modularised training and progression paths are available at every level of every type of work, online and in person.
The IoD’s Directors’ Economic Confidence Index, which measures the net positive level of optimism in the UK economy amongst directors, recorded a value of just under zero (-1%) in September 2021, down from +22% in July 2021.