Over 40% of companies have reduced their funding for learning and development this year, and only one in ten expect to increase their training budgets this year.

According to a survey by the Chartered Institute of Personnel and Development, many companies are implementing cost-cutting measures such as moving training provision in-house, implementing e-learning systems or increasing the use of coaching by line managers in place of formal training.

The public sector has been hit particularly hard, with public sector organisations three times more likely than private sector ones to decrease their funding for learning and development.

However, the CIPD warned against reigning in training budgets too tightly in tough economic times.

Dr John McGurk, CIPD learning and talent development adviser, said: “With the full impact of the spending cuts yet to be felt in the public sector, maintaining support for employee development by linking it to organisational change is essential if organisations are to steer through these uncertain and challenging times.”

“It’s encouraging to see that during the tough times organisations have coped well with reduced budgets and shifted from external to in-house provision, as well as utilising less costly development practices. This has proved that the function is adept to new innovations, as well as cost control when the going gets tough. We expect to see public sector learning and development teams rely on similar methods as the cuts start to bite, already indicated by our findings.

“Although many firms are still struggling in the private sector, and some are still reining in spending on training, the picture has picked up since last year. Not only have we seen learning and development being prioritised more in the recent recession than in previous ones, we’re also seeing a strong bounce back from firms recognising that investing in skills is the best way of capitalising on recovery.”