Productivity woe as training budgets are cut

MANUFACTURERS are cutting training and skills budgets more now than at any point since the financial crisis, a dire sign for the economy’s future, as they seek to save money instead of making any commitments.

Businesses warn there is a skills shortage holding back growth, but at the same time told the CBI’S industrial trends survey that they are stepping back from fixing it with extra training.

The proportion of businesses cutting investment in training and retraining over the next year outweighed those planning to hike spending by a margin of 20pc – the most negative result since April 2009. That is a very sharp turnaround from a positive net balance of 18pc three months ago.

The same was true in investment on product and process innovation which fell from a positive balance of 22pc to a negative balance of 11pc, its worst performance

‘It doesn’t bode well for UK productivity, which needs all the help it can get’

since July 2009.

Howard Archer, chief economic adviser to the EY Item Club, said: “This does not bode well for UK productivity – which needs all the help it can get,” he said.

Meanwhile businesses said the red tape around tax should be cut to make it simpler to pay their share.

The burden of compliance has risen over the past five years, according to 75pc of businesses in a survey by the British Chambers of Commerce. VAT is identified as the biggest problem.