By Jennifer Clarke
BBC Radio 4's Money Box
Chancellor Gordon Brown has asked for proposals to replace a popular scheme designed to provide home computers for low paid workers, BBC Radio 4's Money Box has learned.
The decison to suddenly scap the scheme caused an outcry
The government has been criticised for giving just 10 days notice that it was withdrawing the Home Computing Initiative after concerns it had been abused.
The Confederation of British Industry (CBI) called on the chancellor to reconsider his decision and has now been invited to design a new programme which will not be exploited.
But industry campaigners fear it will be too late for many of the companies whose sole business has been running the schemes, and which have already made staff redundant.
Almost half a million employees at companies including BT, Tesco and Royal Mail took advantage of the tax break.
The Treasury said the tax exemption was being exploited and that it was no longer the best way to provide help for lower income households.
But the 60 firms which have been set up to provide computer equipment for employers under the scheme reacted with anger at the lack of consultation.
CBI Director-General Sir Digby Jones told the programme: "For the chancellor to impose this without a moment's consultation... Frankly it's not the way to get Britain to be competitive."
He was very pleased when the chancellor invited him to come up with proposals for a replacement scheme.
"I think they realise that they have done a knee-jerk reaction and have thrown the baby out with the bath water," he said.
In a written statement, the Treasury confirmed that the chancellor remained "fully committed" to boosting IT skills.
And it added that he wanted to work with businesses "over the coming months" to develop new programmes which are "free from abuse".
But that has failed to reassure some industry campaigners.
Tristan Wilkinson works for Intel, one of the large IT companies which supported the HCI initiative.
He welcomed Gordon Brown's concession, but said any replacement arrangement may be too late for those companies whose sole business has been running the existing schemes.
"The clock is clearly ticking," he said. "There is an entire industry that has been built upon this specific legislation, and as soon as that legislation goes then a large part of that infrastructure will go with it.
"So I think any talk about what happens thereafter is possibly premature in that there will be some of those organisations that won't be around anymore for any future scheme."
He added: "I just really hope that the government can see their way clear to stop an entire industry being dismantled before we've managed to think of what could replace it."
Shadow chancellor George Osborne added his voice to the debate on Friday, calling on the government to amend the Finance Bill to prevent the closure of the scheme.
But there has been no indication that it is prepared to do that, and in the meantime some companies have already started making staff redundant.
BBC Radio 4's Money Box was broadcast on Saturday 1 April, 2006 at 1204 BST.
The programme was repeated on Sunday, 2 April, at 2102 BST.