The Shorthand - where’s the money gone for employee training?

Welcome to this week's edition of The Shorthand, your weekly digest of the top news stories that affect small businesses in the UK! Here, we break down the stories you may have missed during the week, detailing what they’re all about and, more importantly, why you should care.

And all that in under 5 minutes.

Go on, put the kettle on and we’ll have you caught up with the most pressing business news stories of the week by the time you’ve finished a cup of tea.

1. Employer investment in training falls by more than a quarter

What’s happening here?

Newly published research by the Learning and Work Institute shows that employers’ investment in training has fallen by 28% since 2005.

The average annual spend per employee on training is just £1,530, less than half the EU average. The institute’s report concludes that the UK is “sleepwalking to stagnation in skills” and argues that a change of policy direction is urgently needed.

Indeed, the report is critical of government intervention in skills training over the last two decades. “Increasingly”, it states, government policy “passively follows or reinforces employer choices”, based on business priorities rather than the longer term requirements of the nation’s workforce. Further specialist training of high-skilled workers has been prioritised over training for those most in need of upskilling, generally the younger and more socio-economically disadvantaged members of the workforce.

Why should you care?

Clearly this news is of real significance for small businesses who currently may not have the right incentives to invest more in employee training at a time when the economic landscape is at its most volatile in years.

One of the recommendations made by the Learning and Work Institute in their report was the introduction of a ‘Skills Tax Credit’, whereby small and medium-sized businesses could deduct a huge 230% of the cost of accredited employee training from their liabilities. They even suggest that in the government’s ‘leveling up’ areas, such as Plymouth, Derbyshire and Hull, owners of SMEs should be entitled to a ‘Super Skills Tax Credit’ of 300% of the cost of training investments.

Many small businesses in the UK are extremely keen to invest in employee training to build up a skilled workforce, but find access to government funding to be thin on the ground. Until the recommendations of the Learning and Work Institute’s report are considered by the government, there are some ways to access training funding or subsidies for your small business:

• Help to Grow – a government backed scheme aiming to help small business owners “learn new skills, reach more customers and boost profits”
• Construction Industry Training Board (CITB) – a skills and training fund for small and micro-sized construction businesses

Also, any small business with a total annual salary/wage bill of under £3m can hire apprentices to train on the job and will only have to pay 5% of the cost of their apprenticeship, with the rest paid by the government from the funds raised through the apprenticeship levy that was introduced in 2017.

2. Small manufacturers want their own minister

What’s happening here?

Business owners representing 24 engineering firms in the UK, under the banner of the Support UK Manufacturing initiative, have launched a petition calling for a dedicated ‘Manufacturing Minister’ to act as a point person for the interests of small and medium-sized manufacturers.

The UK’s manufacturing industry may not be seen as the backbone of the economy that it once was, but it still plays a hugely important part in the modern British business landscape. The sector employs 2.5 million people and boasts some impressive statistics that back up the claim that manufacturing is still an integral part of the UK economy in the 21st Century:

• £183 billion output
• 51% of all UK exports
• 64% of all UK R&D
• 15% of all business investment
• 12% higher wages than average.

Currently the only voice in cabinet explicitly representing small businesses is Paul Scully MP, who is Parliamentary Under Secretary and Minister for Small Business, Consumers and Labour Markets. The petitioners believe that this wide-ranging brief means that there is not enough representation at the heart of government for the small-scale manufacturing firms that make up the largest part of the sector. Indeed, 99% of manufacturing firms in the UK have 250 employees or fewer.

Why should you care?

Clearly this story is of interest to anyone from a small manufacturing firm, but the issues brought up in the petition apply across the small business economy. Concerns about the influence of large corporations on government policy are well founded and shared by smaller businesses across many different sectors.

Andrea Wilson, director of the small engineering firm Hone All Precision in Leighton Buzzard and the author of the petition, said:

The people feeding into government policy represent much bigger businesses. This approach often fails to work for smaller businesses, which represent 99% of the industrial supply chain in the UK

Whether or not the petition succeeds (it has just 500 signatures out of the 100,000 needed for a parliamentary debate), the issue of under representation in politics of the small business community persists.

3. Businesses may have to pay to use Twitter

What’s happening here?

Unless you’ve been hiding under a rock for the last month, you’ll probably have heard about how the world’s richest man (and CEO of Tesla and SpaceX) Elon Musk has bought the social media platform Twitter for $44bn. Since the takeover, one of Musk’s first announcements (made via a tweet) suggests that he is considering introducing a fee for businesses and governments to use the platform.

While Musk has pledged to continue to make Twitter a free platform for what he calls ‘casual users’, the prospect of differentiating between private citizens and corporations and governments has the potential to reshape how the platform is used in the future.

Why should you care?

So why would the actions of a multi-billionaire buying one of the world’s biggest social media platforms impact small businesses in the UK?

As a free platform with an active user base of roughly 300 million people, 40% of whom are active online multiple times per day, Twitter is one of the most engaged-with social media platforms around. For small businesses with limited marketing budgets, Twitter is a cost-effective way to creatively reach an engaged audience.

A fee for businesses to access the platform, however small, has the potential to skew the marketing power of Twitter in favour of larger, wealthier, more established enterprises. At a time of significant retrenchment in the face of rising operating costs, small businesses will have to seriously consider whether the platform’s reach is worth the additional spend.

Superscript’s own social media specialist, Francisco Silva, commented:

It is safe to assume that bigger brands will be able to spend money for the privilege of being on Twitter and not change their online strategy too much. However, smaller businesses that strive to showcase their distinction through clever and fun social media activity might have to think twice before putting the money down.

If Twitter goes for a paid subscription on brands and government profiles, it will tell us a great deal about both the profiles that stay and the ones that leave, shedding new light on the consumer/brand relationship.