How UK can address growing IT skills gap

The government is to increase tax incentives for businesses conducting research and development (R&D), to improve the UK’s competitive standing.

Chancellor Gordon Brown said in his budget speech last week: ‘To lead in global competition – and particularly to secure our place in the high value-added, investment-driven growth sectors of the future – Britain must champion open-market flexibility and free trade.’

From April 2008, large company credit will increase from 125 per cent to 130 per cent, while credit available to small and medium-sized firms will rise from 150 to 175 per cent.

While the government’s efforts look valiant on the face of it, it is not going anywhere near far enough to ensure the UK’s innovative standing against the rest of the world.

Trade body Intellect is of a similar opinion. ‘R&D is fundamental to the success of the UK’s knowledge economy and the UK has lagged behind its international competitors,’ said Intellect deputy director-general Tom Wills-Sandford.

Intellect believes tax credit is an attractive incentive for companies embarking on R&D projects, but that rates need to rise to at least 150 per cent for large firms if the scheme is to have an impact.

Even if R&D tax credit increases further in coming years, the chancellor has overlooked another very important area that is crying out for a helping hand: skills and development.

There is growing evidence that a skills gap is developing. Earlier this month, recruitment software firm SkillsMarket conducted a survey of IT recruitment firms and concluded that a shortage of skilled staff is the biggest issue facing such organisations this year. The survey found development roles are particularly difficult to fill.

Smaller companies particularly struggle when it comes to attracting skilled staff, and a government-led incentive to make the process easier and more enticing would go a long way to at least beginning to address the problem.

Paul Stobart, chief executive for UK and Ireland at software firm Sage, told Computing earlier this month that Whitehall should consider applying tax incentives to training and development to boost the UK’s IT skills. ‘There are already tax incentives for R&D and they have absolutely encouraged us to increase our R&D activity,’ he said.

Small increases in R&D credits are to be welcomed, but if the UK is to become a truly innovative force to be reckoned with, it is imperative that we have the requisite skills.