By Dan Ilett, 3 April 2006 14:10
NEWS
The Treasury could replace the Home Computing Initiative - a scheme to give employees access to cheap computers - after a number of business groups objected to government plans to scrap the scheme.
In his budget speech last month, Chancellor of the Exchequer Gordon Brown axed the scheme, which gave tax breaks for businesses that provided employees with PCs.
But following criticism from business leaders, the Treasury said it is looking at alternative ways of boosting IT skills for employees.
A Treasury spokesman told silicon.com the scheme had been abused: "There's been a lot of controversy over the Home Computing Initiative. It had to go. But the government still has initiatives for raising education and skills in IT.
"We are looking at potential vehicles to do that. There's nothing concrete yet. We are putting together the best proposals to move forward."
The Chancellor initially said the abolition of the HCI will recoup the Treasury about £150m by 2009.
Under the HCI, employees could take out tax-free loans from their companies to buy home computers. More than 500,000 households took part in the scheme.
General Secretary of the TUC Brendan Barber has welcomed signals to replace the scheme.
In a statement, he said, "While we think stories of its abuse have been exaggerated, we would have no problem with a new scheme that targeted assistance more effectively.
"Tighter rules on what the money could be used for, stopping higher rate tax payers and reducing the amount that can be spent on hardware to ensure that the help goes towards reasonable standard entry level PCs, while keeping an element for training and support on top should all be explored."
Sir Digby-Jones, director-general of the Confederation of British Industry, also criticised the Treasury, stating it would undermine attempts to boost computer literacy.
Last week he said: "This flies in the face of everything the country is trying to achieve on skills. Seventy-five per cent of people affected by this change are lower rate tax payers.
"They will want to know why the government has deprived them, and their families, of this opportunity and companies will want to know why they have only been given two weeks to work out what to do with their schemes. Computer literacy has to be a given in a globally competitive economy."
Comments
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1. David Pugh
Encouraging news - but probably only spin.
However, this was NOT mentioned in the budget speech, but only in the small print issued by the government after the speech. Like so much bad news in Gordon Brown's budgets each year, he never mentions such bad news in his budget speech (another example of spin), and it is only covered in the subsequent detailed press releases.
2. anonymous
You don't need to be so special these days to be hit with higher rate tax on your earnings. And just because you are, it doesn't follow that you are computer literate. If an employer wanted to provide tax-free loans for employees to get their own home computers, it should be an across the board arrangment for all, without any form of discrimination. After all, some of the least computer literate people I have to deal with are extremely well paid. The financial benefits of the scheme to them are small in comparison with people on lower salaries. The benefits to the organisation, however, in reducing support costs and improving efficiency by having executives well-trained in the use of IT are substantial, and will be felt by all. The rules might need some tweaking to prevent abuse, but not stopping altogether. This is the all action of, in my opinion, an intellectually challenged government that can only ever see symptoms and not root causes, and appears to have a vendetta against any form of financial success resulting from sheer hard work and commitment. And not only that, but from a chancellor who, it seems, expects to walk straight into the door of No 10 without actually being elected, either by his party or the populace at large, into that office. Now there's democracy at work for you!!
3. Simon
I'd like to see some tax help towards training. It's a complete farce (though to be expected from the lying b*****ds in power) to claim that they're pro-education & training when they tax it so heavily.
If my employer sends me on a course, for every pound spend it costs my employer ... one pound.
If, like me, you aren't able to persuade your employer to pay but still want to better yourself, then you have to pay out of your taxed income. So for every pound of the (ex vat) cost of the course, the government takes (in VAT, Income Tax, and National Insurance) another whole pound near enough.*
So there's effectively a 100% tax on self improvement - how can that be right ?
* There is income tax relief if the training is essential for the job - but few of us are in that position. There's very few legally required qualifications in the IT industry.
4. anonymous
The main befits of these incentives went towards enhanced buying powers for companies through economies of scale rather than to the employees. Why not just give tax relief direct to staff for the purchase of PCs and the cost of broadband/internet charges instead?