We must act now to fill skills gap or leave toxic legacy for decades
Athriving economy, at its heart, is all about the success of its people. For the social contracts between business and society to endure and regenerate, four crucial components must be working effectivity and in conjunction with each other.
Education and training, the welfare and benefits system, the immigration regime, and the housing market are all cogs of a single gear – none can work without the others.
The UK’S capacity for growth will be constrained until government and business agree that these issues are being tackled in a coordinated fashion, responsive to economic needs.
I hear daily about the issues most pressing to the UK’S diverse business communities. While the range of priorities may vary depending on their location, size or sector, there’s a single issue that rises above all others: business’s constant need for access to people and skills.
The skills gap has been a problem plaguing the UK’S competitiveness and productivity for decades, and there are two primary causes for the failure to plug it.
The first is the lack of coherence and joined-up thinking between the necessary parties – the Government, education sector and industry. While all sides are investing in tackling the issue, they’re not doing so in a consistent fashion.
The second is constant tinkering by government, and piecemeal efforts by successive administrations to implement policies that are later changed or reversed. What we need is stability, and a coherent, long-term strategy that is given the resources and time to bed in.
A third problem is borne of the other two. The lack of a clear, enduring and shared strategy has led to anaemic levels of business investment in training, management and leadership over recent decades, with the effects of decisions taken a decade ago, or more, still reverberating in the economy today.
Some commentators are quick to jump to blame businesses for this long-standing investment gap. Yet the root cause of this problem is systemic instability and inconsistency. Who could blame firms for being sceptical of taking investment risks when the rules of the game, which they don’t control, are constantly being changed?
The problems are well known yet there are a number of practical and pragmatic steps that can be taken – now – to help bridge the gap. Most could be started quickly and generate confidence at home when its sorely needed.
Firstly, we need to resolve the imbalance between higher and further education, and make sure we achieve parity of esteem for academic and technical education. The funding and cultural bias that deters young people from earning and learning after leaving school, and from entering industries such as manufacturing and construction, needs to be addressed.
Worrisome talk about abandoning university tuition fees – which are finally encouraging young people to consider whether a university degree, or an early start in the world of work with an apprenticeship, is the best choice for them – must be stopped if we are to free ourselves of the dangerous “university at all cost” obsession. Embedding employability and applied learning into primary and secondary school curricula would help prepare students for the world of work from a young age.
Chambers of commerce have long wanted all students to have real-world encounters and experience with business during their education – which could include business talks,
‘Allowing five more years to slip by whilst dealing with Brexit would be an inexcusable failure’
internships, career days or mentoring programmes. Giving more teachers the opportunity to work for a time in industry would also help bring practical business knowledge and insight into classrooms. Few teachers have that experience, so a week in a business every year or two could create a real shift in attitudes and advice to pupils.
In a similar vein, having more business people on the governing bodies of education institutions of all types will bolster greater partnership and engagement between the worlds of education and business.
Businesses recognise apprenticeships as a valuable route for developing skills. While the Government’s pledge to create 3 million new apprenticeships by 2020 is laudable, it’s important not to become distracted by numerical targets – it’s about quality, not quantity.
Since the introduction of the Apprenticeship Levy, we’ve also been calling on the Government to allow greater flexibility for companies when it comes to using the funds. We’d like to see opportunities for levy-payers to pass any funding they’re unable to use directly to their own supply chains.
Businesses are committed to investing in workforce development and staff training, but many are constrained by cost and resource burdens. Further incentives to increase training opportunities through the tax system, such as allowing more training costs to be capitalised, would encourage greater training investment by firms.
Finally, employers tend to care more about the skill sets and work ethic of staff rather than what’s listed on their CV under the “qualifications” heading. When it comes to tackling the skills gap, the focus needs to be on outcomes, and the earning and productive potential of our workers, not just their qualifications.
We hear a great deal about the “cliff-edge” associated with Brexit. Yet the cliff-edges created by an ageing workforce, widening gaps between the supply of skills and the demands of business, and the political will to curb UK immigration across the board are far more concerning. If we do not start to bridge the skills gap – today – the effects of our failure will be a drag anchor on the UK economy for decades to come. Allowing five more years to slip by whilst dealing with Brexit would be an inexcusable failure and a toxic legacy for future generations.
The British Chambers of Commerce’s archives show that local business leaders were talking about their skills needs back when chambers started meeting as a national association in the 1860s.
Linking business and people will always be a priority – but I don’t want the acute concerns we’re hearing today to feature in 2060. The time to act is now.
Dr Adam Marshall is director general of the British Chambers of Commerce