The Chancellor must reconsider his decision to scrap a scheme which raises the country's IT skills by encouraging employees to invest in a home computer, CBI Director-General Sir Digby Jones said today (Thursday).
In a letter to Gordon Brown, Sir Digby warns that the unexpected abolition of the Home Computing Initiative (HCI), announced in the Budget without prior consultation, will undermine attempts to boost computer literacy and will damage the longer-term competitiveness of the UK.
The Chancellor said the abolition of the HCI will recoup the Treasury about £150 million by 2008/9 but the CBI argues this is a price well worth paying to help build a more computer literate society.
Under the HCI employees could take out tax-free loans from their companies to effectively buy home computers. More than half a million households have taken part since its launch in 2004 but the scheme will now close on April 6.
Sir Digby Jones, CBI Director-General, today 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 taxpayers. 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."
He added:
"Even the Department of Trade and Industry was in the process of setting up its own HCI scheme and the Chancellor's decision was as much of a shock to the DTI as everybody else. Any fear of abuse of the scheme is not a reason to abolish it, but a reason to consult with employers to stamp it out."
Since the Budget the CBI has been bombarded with letters of concern and protest from businesses who supported the intention of the HCI and spent money to set schemes up. Many more had HCI projects in the pipeline.
In his letter to Mr Brown, Sir Digby says:
"It is difficult to square off the saving to the Exchequer with the commitments in the Budget speech to invest in re-skilling workers, the creation of a future-proof skilled flexible workforce, facilitation of better education and making a reality of second chances in education for all ages.
"These all chime with the original aspirations of the Home Computer Initiative and it has brought very real benefits to the workforce, particularly lower paid workers and their families."
More than 1,250 employers now have established HCI schemes - three times more than in 2004 - and many more were in the process of setting up schemes before the Budget. Their staff also want to keep the HCI - many low income employees and their families have benefited from the opportunity to pay for their computer by interest-free instalments out of their salary or wages.
The abolition will also have a severe impact on IT companies who had invested heavily in HCI arrangements in the belief that the scheme would run for at least five years and that there would be consultation on any decision to end it.
Sir Digby's letter adds:
"Not only does business continue to believe that the original objective [of greater computer literacy] was worthwhile but that it continues to be so. Businesses find it particularly difficult to understand why this move should have emerged on Budget Day with no prior consultation, a complete contrast with the very full joint consultation which led to the HCI launch."