[Metrobeans]

B455 - Training Bill, TSR Liberal Democrats

An Act designed to ensure that the UK’s labour force remains one of the best trained in an increasingly competitive world

BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:-

1. Amendment to the Professional and Career Development Loans

(1) The criteria for eligibility shall be amended to those who are “ordinarily resident in the UK for at leastone year prior to the start of their learning programme"
(2) Beginning in the financial year starting 1st April 2013, the government shall offer a maximum of £100 million capital a year for banks to give Professional and Career Development Loans, providing that the interest rate on these loans does not exceed 4%
(3) A quarter of interest repayments shall be kept by banks to compensate for the management costs of the loans; the rest shall return to the central treasury

2. Changes to the Work Experience Programme
(1) From the 1st April 2013, the Work Experience Programme shall be open to all applicants who are aged between 16 and 30, providing that they fulfil the other criteria for eligibility
(2) From the 1st April 2013, the Work Experience Programme shall also be open to all applicants who are currently in work, providing that they fulfil all the other criteria for eligibility
(3) All applicants who are eligible under 2.2 shall be expected to do between 5 to 15 hours of work experience a week, instead of the usual 25 to 30 hours a week

3. Apprenticeship spending
(1) An extra £150 million a year shall be committed to ‘advanced level’ and ‘higher level’ apprenticeships
(2) For the purposes of this Act, ‘advanced level’ apprenticeships shall refer to apprenticeships which are equivalent to two A-level passes
(3) For the purposes of this Act, ‘higher level’ apprenticeships shall refer to apprenticeships which lead to qualifications at NVQ Level 4 or a Foundation Degree

4. Tax breaks
(1) From the 1st April 2013, firms shall be able to claim a reduction in corporate tax, equivalent to 2.5% of the firms total spending on ‘work-related training’
(2) For the purposes of this Act, ‘work-related training’ shall be defined as stated in EIM01220

5. Commencement, short title and extent
(1) This Act may be cited as the Training Act 2012
(2) This bill shall extend to the United Kingdom; and
(3) Shall come into force 1st April 2013, following Royal Assent.

notes

The current situation

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According to the OECD, the UK currently spends less than 0.1% of GDP on training-related ALMP (active labour market policies), well below many other developed nations (Denmark is the highest, at 0.5% of GDP, Germany and France both have almost 0.3%). According to one report, ALMP are one of the best ways of reducing unemployment, as "by improving the quality of the match between worker and job the inflow into unemployment is reduced" (Effective Active Labor Market Policies, Jan Boone and Jan C. van Ours, October 2004).

Apprenticeships

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According to the National Audit Office, every £1 of public investment in apprenticeships delivers a return of £18 to the wider economy. Government spending on apprenticeships has recently seen some major increases, to a total of £0.5 billion a year; however, there are some worries that this is less efficient than it should be as much of the spending is currently on lower level qualifications. From the National Audit Office - “Most apprenticeships in England are at a lower level than those offered by other countries. For example, only 33 per cent of apprenticeships are at an advanced level (equivalent to two A-levels), compared with 60 per cent in France.”

Work Experience

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A brief summary of the scheme, quoted from the Guardian:
“The Work Experience program is a voluntary scheme for people between 16 and 24 who have been unemployed for more than three months, but less than nine. Jobseekers who take part have an unpaid work placement for two to eight weeks, working 25 to 30 hours each week.

They continue to receive jobseeker's allowance throughout, and may get a contribution towards travel or childcare costs [note: many types of benefits have been abolished under the Welfare Act 2012]. However, anyone who cuts their placement short after more than one week will have their benefits stopped for two weeks [note: the government recently did a U turn on this policy]. By November 2011, 34,200 people had started a Work Experience placement.”

The Work Experience is clearly beneficial to those who take part; it allows them to train and acquire more experience, thus improving their chances of finding a job. As such we believe that this scheme should be expanded allow young people who are currently in work to take part, with some changes. We also believe that it would be beneficial to allow people over the age of 24 to take part if they wish (as has been recently suggested by some).

Professional and Career Development Loans

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This is an already existing scheme to provide people in training with loans; the main difference between this and the scheme proposed in the first reading is that the PCD Loans are from private banks, not the state. No definition of training is included in this Bill as the PCD scheme already exists and has its own definitions. We believe the criteria for eligibility should be changed to one year residency instead of three to allow more people to take part in the scheme. The current interest rate is at 9.9%; this Bill would put in place measures for lower interest rate loans (at 4%, which is slightly below RPI). As such, for the state this would be a loss making loan (due to 4% interest and 25% of that going to banks); however, we believe this is a worthwhile investment to make into improving labour force productivity and skills.

Tax break

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Current spending on employee training programs is around £40 billion a year. As such, we could assume a cost of around £1 billion a year. The definition of EIM01220 can be found here

Costing

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Apprenticeships spending - £150 million per year
Low interest rate PCD loans- £100 million per year (maximum)
Tax reduction- £1 billion a year
Total (maximum) cost: £1.25 billion a year

Changes:

• Added apprenticeships based on comments about the importance of having experience
• Updated notes to make them more accessible- included costing
• Added a section on work experience
• Eliminated the state loans and instead amended PCD Loans
• Modified the tax break scheme

[toronto353]

First of all, I would like to commend the Lib Dems. This Bill is far more defined and in much better shape. I won't comment on spending here because you've given costings and I assume that you intend to recoup some of the money via increased tax receipts from the boost that this should give to the economy. I would like to examine section 1 for a little bit though. What is the logic behind a bank administering the loans and not, for example, a version of student finance designed for these loans (that might actually work properly I might add)?

[obi_adorno_kenobi]

(Original post by toronto353)
First of all, I would like to commend the Lib Dems. This Bill is far more defined and in much better shape. I won't comment on spending here because you've given costings and I assume that you intend to recoup some of the money via increased tax receipts from the boost that this should give to the economy. I would like to examine section 1 for a little bit though. What is the logic behind a bank administering the loans and not, for example, a version of student finance designed for these loans (that might actually work properly I might add)?

Banks administer CDLs at present. They're treated as a loan in the traditional sense rather than a "student loan" which isn't really. It could well be that they just want to continue with the current system and save the effort of starting a new one.

[stanlas]

(Original post by toronto353)
I would like to examine section 1 for a little bit though. What is the logic behind a bank administering the loans and not, for example, a version of student finance designed for these loans (that might actually work properly I might add)?

Essentially what adorno said; the system already exists and there is no need to create a new one. Plus the private sector already has experience with these loans; we would just provide the money for the banks to be able to offer loss making loans (from their perspective; from the state's perspective, the money comes back eventually via higher tax revenue).

[toronto353]

(Original post by stanlas)
Essentially what adorno said; the system already exists and there is no need to create a new one. Plus the private sector already has experience with these loans; we would just provide the money for the banks to be able to offer loss making loans (from their perspective; from the state's perspective, the money comes back eventually via higher tax revenue).

(Original post by obi_adorno_kenobi)
Banks administer CDLs at present. They're treated as a loan in the traditional sense rather than a "student loan" which isn't really. It could well be that they just want to continue with the current system and save the effort of starting a new one.

Thanks for clarifying. At the moment, I'm very impressed with the hard work that's gone into this. Assuming that my assumption about funding and raising the money is correct, I'd happily vote for this.

[jesusandtequila]

Considering your leader capitalises every single word, would it be too much to ask that Act is capitalised throughout the Bill? Oh, and this misses the point that the buildup of human capital is usually firm-specific, rather than general skills. I don't think we need a 'work experience programme' - why cannot people just email in and ask to get work experience? With RI they aren't compelled to earn a wage to survive, and should thus have the ability to further themselves through work experience and education and so on in their time. I don't think this is the place of government - but that if we wish to encourage aspiration, ambition then we should not be having centralised programmes that dictate in certain ways how work experience should work and so on. It should be down to the person wanting it, and the firm willing to give it.

Further to this, training benefits the firms who train - we don't need to be giving a tax break here and a tax break there. Much better to get rid of all these special exemptions, breaks and so on, simplify the tax code hugely and reduce the rates. More activity, more possibility for people to move themselves up the ladder, and lett opportunity and incentive to avoid tax entirely legally.

The only place I think we need something vaguely similar to this is in the prison system.

[stanlas]

(Original post by jesusandtequila)
Considering your leader capitalises every single word, would it be too much to ask that Act is capitalised throughout the Bill?

Fair Point I Suppose. The Changes Will Be Made.

(Original post by Metrobeans)

Could you please capitalize the word act? (only sections 3 and 4 I think). Also, there appears to have been a change in formatting from the bill we have in the Lib Dem forum. Could you please re-add the spoiler tags to the notes sections? It looks nicer with them.

(Original post by jesusandtequila)
I don't think we need a 'work experience programme' - why cannot people just email in and ask to get work experience?

Because firms have little incentive to provide work experience. I've tried getting work experience myself; its amazing how much having the right connections can help in finding work experience. Why would, say, a lawyer's firm with 10 employees want to take on and spend time looking after one person for work experience?

(Original post by jesusandtequila)
I don't think this is the place of government - but that if we wish to encourage aspiration, ambition then we should not be having centralised programmes that dictate in certain ways how work experience should work and so on. It should be down to the person wanting it, and the firm willing to give it.

Again, I don't believe that firms really have any incentive to do work experience programs by themselves. Most people who do a work experience will probably end up working somewhere else. And getting rid of the work experience scheme would be regressive in a way; the alternative is often using family connections to gain a placement (trust me, I have several friends who use connections to get work experience in the City when they're not even 17 yet). Most people do not have those sorts of opportunities.

(Original post by jesusandtequila)
Further to this, training benefits the firms who train - we don't need to be giving a tax break here and a tax break there.

The training mainly benefits the people who are being trained. And if firms also become more productive at the same time- great! Don't have any problems with that

[jesusandtequila]

Because firms have little incentive to provide work experience. I've tried getting work experience myself; its amazing how much having the right connections can help in finding work experience. Why would, say, a lawyer's firm with 10 employees want to take on and spend time looking after one person for work experience?

Again, I don't believe that firms really have any incentive to do work experience programs by themselves. Most people who do a work experience will probably end up working somewhere else. And getting rid of the work experience scheme would be regressive in a way; the alternative is often using family connections to gain a placement (trust me, I have several friends who use connections to get work experience in the City when they're not even 17 yet). Most people do not have those sorts of opportunities.[/QUOTE]
They don't? These firms get projects and work done in the future, if they get outstanding candidates build a reputation with them and likely find new extremely good opportunities, for very little cost. I remember i did a week's work experience with an economics team of 6 - and they give you a project, spend a bit of time explaining what to do, and where to learn more things and leave you to your own devices. Considering the potential benefits to very little cost, firms have a huge incentive to offer it.

Of course, this doesn't mean every work experience application is going to be accepted, just as not every job application is accepted, but still we find even in these dire times that 90+% of people have a job. If people go looking for work experience, it is certainly there. Sure, you might cut down the number of applications or effort if you have some connections, but they certainly aren't a necessary condition to finding work experience.

The training mainly benefits the people who are being trained. And if firms also become more productive at the same time- great! Don't have any problems with that

And who are these people being trained working for? It benefits them, I assume in letter them earn higher wages, right? So why will firms spend more money on these people? Since they produce more. Indeed, as you ignored earlier - most human capital is firm-specific. Furthermore, I think this misses the point that also most human capital is done through learning-by-doing (http://www.parisschoolofeconomics.eu...omicgrowth.pdf), and thus incentivising training programmes isn't even the best way to increase it.

[stanlas]

(Original post by jesusandtequila)
They don't? These firms get projects and work done in the future, if they get outstanding candidates build a reputation with them and likely find new extremely good opportunities, for very little cost. I remember i did a week's work experience with an economics team of 6 - and they give you a project, spend a bit of time explaining what to do, and where to learn more things and leave you to your own devices. Considering the potential benefits to very little cost, firms have a huge incentive to offer it.

At higher 'levels' of work experience (something closer to an apprenticeship level), they might have incentive from the training. However, most work experiences we are talking about is in the 16-18 age range; how much will a firm gain from these candidates? If firms really could gain so much from this then there would be loads of work experience placements open to everyone; sadly, that is not the case.
Plus the work experience scheme is a voluntary one, so some firms can chose to opt out if they feel that they have the incentive to offer work experience without the scheme.

(Original post by jesusandtequila)
Of course, this doesn't mean every work experience application is going to be accepted, just as not every job application is accepted, but still we find even in these dire times that 90+% of people have a job. If people go looking for work experience, it is certainly there. Sure, you might cut down the number of applications or effort if you have some connections, but they certainly aren't a necessary condition to finding work experience.

Still a regressive system though, especially in 'higher' level jobs. Sure, anyone could apply for work experience in a supermarket and probably get it eventually. But why would an investment bank in the City, for example, want to let in a 16 year old to watch, if it means that they will have to supervise him/her? The only reason why they would do that is if that boy's uncle is the chief executive of the bank (which in one of the cases from my school he was).

(Original post by jesusandtequila)
And who are these people being trained working for? It benefits them, I assume in letter them earn higher wages, right? So why will firms spend more money on these people? Since they produce more.

Apologies. Could you please rephrase the bit in bold?

(Original post by jesusandtequila)
Indeed, as you ignored earlier - most human capital is firm-specific.

Is that really a problem? Adults will often stay in the same job type; sure, the firms they work for might change but they will still be using the same techniques, software, equipment, etc.

(Original post by jesusandtequila)
Furthermore, I think this misses the point that also most human capital is done through learning-by-doing (http://www.parisschoolofeconomics.eu...omicgrowth.pdf), and thus incentivising training programmes isn't even the best way to increase it.

And can training not be a form of 'learning through doing?' Plus in some jobs with difficult machinery its always better to train someone rather than just letting them do it and learn (might cause some accidents).

[Rakas21]

Formatting issues need sorting

(1.2) You need something along the lines of CPI+1% rather than a set cap

I do not support (2)

(3) Fine.

(4) I object to this section as businesses are already receiving gain from cheap labour

[stanlas]

(Original post by Rakas21)
Formatting issues need sorting

I've asked the speaker. There have been some problems between getting the Bill from what we have in our forum to what you see before you (the spoiler tags which made the bill look much nicer have all been lost )

(Original post by Rakas21)
(1.2) You need something along the lines of CPI+1% rather than a set cap

The current scheme uses a fixed interest rate. We see no reason to deviate from already existing practices.

(Original post by Rakas21)
I do not support (2)

Glad to hear it. Will we also hear your reasons, or are you keeping those to yourself today?

(Original post by Rakas21)
(4) I object to this section as businesses are already receiving gain from cheap labour

Cheap labour? You'll have to clarify what you mean I'm afraid. I don't personally see the link between cheap labour and increased tax breaks for spending on training. Please enlighten me

[Birchington]

I commend this bill to the House.

[Rakas21]

(Original post by stanlas)
I've asked the speaker. There have been some problems between getting the Bill from what we have in our forum to what you see before you (the spoiler tags which made the bill look much nicer have all been lost )

The current scheme uses a fixed interest rate. We see no reason to deviate from already existing practices.

Glad to hear it. Will we also hear your reasons, or are you keeping those to yourself today?

Cheap labour? You'll have to clarify what you mean I'm afraid. I don't personally see the link between cheap labour and increased tax breaks for spending on training. Please enlighten me

If you copied and pasted the post then that is why, you should click quote on the post and that should come up with the field and spoilers ect along with the parliament symbol.

Should interest rates rise above 4% then these loans would be artificially low (i suggest BOE+1%).

Yes, essentially i am happy with the current system. I do not believe that 24-30 year olds need unpaid work experience as by that age the vast majority will have done. If you do not have work experience by age 24 then frankly it is your own fault and i will not have the state subsidising people wrong life choices. Also with the RI i am pretty sure that JSA no longer exists (though people can still register at job centres).

Cheap labour - £2.60 per hour for apprentiships and free work experience (infact paid by the government to take these people), hence businesses have already gained massively and i do not believe that a corporation tax rebate in this case is needed.

[obi_adorno_kenobi]

(Original post by Rakas21)
Yes, essentially i am happy with the current system. I do not believe that 24-30 year olds need unpaid work experience as by that age the vast majority will have done. If you do not have work experience by age 24 then frankly it is your own fault and i will not have the state subsidising people wrong life choices. Also with the RI i am pretty sure that JSA no longer exists (though people can still register at job centres).

What like studying for higher degrees? People who undertake their PhD with no breaks between school and graduation will finished at about 25 or 26 depending on when their birthday falls. 3 year degree, 1 year master's and three year doctorate. If you're lucky to get funding, you don't need to work - indeed you're prevented from doing so - which means you don't get the work experience. Are you calling would-be academics out for "wrong life choices"?

[toronto353]

(Original post by obi_adorno_kenobi)
What like studying for higher degrees? People who undertake their PhD with no breaks between school and graduation will finished at about 25 or 26 depending on when their birthday falls. 3 year degree, 1 year master's and three year doctorate. If you're lucky to get funding, you don't need to work - indeed you're prevented from doing so - which means you don't get the work experience. Are you calling would-be academics out for "wrong life choices"?

However, many universities do have work experience programmes as well that run alongside degrees either during term or post-exams when lessons have finished. Teaching is one example, but there are probably others and then there's the summer which could also be used for work experience. I'm not saying that you're wrong in your point about academics, but I would like to point out that work experience is entirely possible.

[obi_adorno_kenobi]

(Original post by toronto353)
However, many universities do have work experience programmes as well that run alongside degrees either during term or post-exams when lessons have finished. Teaching is one example, but there are probably others and then there's the summer which could also be used for work experience. I'm not saying that you're wrong in your point about academics, but I would like to point out that work experience is entirely possible.

Mine didn't. It kind of expected people to live in London and thus be able to take up those internships that don't pay you for your efforts. As for me, I went home and businesses said - nope, we would rather someone from Cardiff or Glamorgan who is here the whole year round.

[Rakas21]

(Original post by obi_adorno_kenobi)
What like studying for higher degrees? People who undertake their PhD with no breaks between school and graduation will finished at about 25 or 26 depending on when their birthday falls. 3 year degree, 1 year master's and three year doctorate. If you're lucky to get funding, you don't need to work - indeed you're prevented from doing so - which means you don't get the work experience. Are you calling would-be academics out for "wrong life choices"?

To be honest i do not know of many people doing PHD's that would a career in which the work experience would provide (menial, retail ect..).

I value education significantly and am one of the few in my party who would rather have ever greater graduate numbers purely out of the principal of greater education (plus i tend to think globally in which there is still a net graduate shortage).
So i would actually consider higher education an excellent life choice.

Toronto sums up the rest of my thought well.

[stanlas]

(Original post by Rakas21)
Should interest rates rise above 4% then these loans would be artificially low (i suggest BOE+1%).

They are supposed to be artificially low though. That's the whole point of thee government providing the credit (as somehow I doubt that banks would, even if it was for the good of the economy as a whole).

(Original post by Rakas21)
Yes, essentially i am happy with the current system. I do not believe that 24-30 year olds need unpaid work experience as by that age the vast majority will have done. If you do not have work experience by age 24 then frankly it is your own fault and i will not have the state subsidising people wrong life choices. Also with the RI i am pretty sure that JSA no longer exists (though people can still register at job centres).

We know that JSA no longer exists; thats sort of why we dont mention it anywhere in the Bill. We can assume the JSA criteria was removed in TSR land, and instead it simply requires a couple of weeks of unemployment to take part (instead of a couple of weeks on JSA as in RL). And why can't someone who is 26 benefit from work experience if he/she wants to? It is a voluntary scheme, and if they dont want to take part then it is their choice.

(Original post by Rakas21)
Cheap labour - £2.60 per hour for apprentiships and free work experience (infact paid by the government to take these people), hence businesses have already gained massively and i do not believe that a corporation tax rebate in this case is needed.

You're complaining about cheap labour- does that mean you are opposing the repeal of the minimum wage? I would like to remind you that the Welfare Act 2012 solves all poverty related problems (now you know how annoying that line is ).

Plus they can't exactly be put to very productive work; people on apprenticeships are supposed to still be learning while working, so using them as 'cheap labour' wont do a lot.

[Metrobeans]

This is in cessation.

[Metrobeans]

Division!!