Just two years after it was created, the Department for Innovation, Universities and Skills was scrapped last month in favour of the new Department for Business, Innovation and Skills. Pam Loch and Wendy Hayes discuss whether employers are right to be sceptical.
Last month, in yet another revamp by the government, the Business, Enterprise and Regulatory Reform (BERR) and the Department for Innovation, Universities and Skills (DIUS) were merged together to become the new Department for Business, Innovation & Skills (BIS).
Only a few years ago, BERR superseded its predecessor, the Department of Trade and Industry (DTI) although many still refer to it as the DTI to this day. However, the warm welcome to the latest proposal that had been hoped for has not been forthcoming. In the middle of a potentially deep recession, there have been raised eyebrows and questions asked as to the benefit of such a merger and the merit of additional costs being incurred to implement it. Many businesses are also sceptical about the impact of the merger.
So, are businesses correct to question the merit of this merger?
The rationale for change
One of the key aims of the creation of BIS is to improve global competitiveness. In the employment arena it plans to do this by providing better employment opportunities and better skills and training.
Unlike BERR and DIUS, the BIS remit will be to focus on current and developing global issues which the recession has highlighted as a major factor in the UK economy. It will also be responsible for the development of higher and further education and the government’s ambitious plans to expand apprenticeships. Yet some employment experts warn that the merger will further complicate the skills system, which many employers say is already too confusing.
When BERR replaced the DTI it was estimated that it cost just over £200,000. It is likely the costs will be more significant this time around and there has been much criticism of the decision by the government to incur additional costs like this at the expense of the taxpayer.
There is of course additional costs for businesses. As well as management having to spend time working out what the changes will mean for their business, there is also a tangible cost to take on board. Some businesses will have to incur direct costs as they may have to spend considerable sums of money reprinting and changing their documentation to reflect the new position.
With very few businesses aware of the rationale for the change and unable to recognise the immediate benefits in the middle of a recession, the government has been heavily criticised. It is unclear why the government has decided to embark on yet another reorganisation, spending more money on a merger that does not appear to offer significant improvements for most businesses.
The employer’s perspective
On the plus side however, it is hoped that the merger will help to build the UK’s economy by developing businesses which will in time increase recruitment opportunities.
The government’s key aid to achieving this is a training and development tool called ‘Train to Gain’. It is designed to play a key role by focusing on providing aid to businesses which allows employers to receive up to £1,000 towards recruitment costs when they take on a jobseeker who has been out of work for over six months.
Most employers have reduced their funding on training and this is clearly a symptom of the current financial climate. This is exacerbated by the fact that many employers are less likely to recruit and are more likely to be reducing their headcount during a recession. The result is a much reduced requirement for training. Going forward though, the government believes it is crucial to continue to train employees to ensure the businesses remain competitive going forward. To encourage this investment, employers will now have access to training support via BIS.
Time will tell as to whether the merger and the BIS offerings will encourage employers to recognise that in a tough economic environment, it’s important to maintain a competitive advantage and that ‘skilling up’ their workforce is one important tool to achieve that.
Conclusion
In the current financial climate, few would doubt that providing assistance to businesses and employees is essential. Combining the skills and strengths of BERR and DIUS could add up to a better way to try to ensure UK businesses can compete more effectively in a changing global economy.
It’s too early though to comment on exactly how the merger will impact on UK businesses. With a Labour government having pushed ahead with the merger at this stage, it’s also possible that a de-merger or more changes could be afoot if there is a change of government at the next election. It will be interesting to see what positive impact this merger can have before the next election, and if the next government will take a different view of what combines best. It may well be a case of watch this space.
Pam Loch and Wendy Hayes are from employment law firm, Loch Associates.
