Training and raising skill levels is key to success

The UK is at crossroads where it must ensure there is no skills gap into which the economy could stumble, as Mark Milner reports

Six years ago, in a government-commissioned report, Lord Leitch delivered a stark warning of choices facing the UK’s economy. Mounting competition from countries with greater natural resources and lower labour costs meant the UK had to work smarter and faster, developing an economy which was more service-led and a manufacturing industry which focused on high added value.

If the UK was to meet that challenge, Lord Leitch warned, it had to ensure its businesses had access to enough people with the right skills.

Get that right, he said, and the rewards could be huge: a possible net benefit of at least £80 billion over 30 years, built on a 15 per cent improvement in productivity and a 10 per cent increase in employment.

“In the 21st century, our natural resource is our people, and their potential is both untapped and vast,” he said. “Skills will unlock that potential. The prize for our country will be enormous: higher productivity, the creation of wealth and social justice.”

Get it wrong and fail to deliver on the skills front, however, and the consequences would be severe: “Without increased skills, we would condemn ourselves to a lingering decline in competitiveness, diminishing economic growth and a bleaker future for all.”

The number of people taking on apprenticeships in 2010-11 was up sharply

The current government has continued the emphasis on the need to make the UK a world leader in skills, driven in large measure by its desire to rebalance the economy, curbing over-reliance on the financial sector as an economic driver, rather than as a key support measure for broader economic growth.

In November 2010, after a wide ranging consultation, the Department for Business, Innovation and Skills unveiled its Skills for Sustainable Growth Strategy. Echoing Lord Leitch, the strategy was blunt in its assessment of the problems facing the economy.

“There should be no illusions about the scale of the challenges we face,” it says. “Our working-age population is less skilled than that of France, Germany and the US, and this contributes to the UK being 15 per cent less productive than those countries. We are currently weak in the vital intermediate technical skills that are increasingly important as jobs become more highly skilled and technological change accelerates. Approximately 80 per cent of the people who will be in the workforce in 2020 have already left compulsory education. If we are to achieve a world-class skills base, we need to increase the level of their skills and meet the demands of our economy.”

Despite the atmosphere of austerity stalking the corridors of Whitehall, the strategy promised a raft of measures designed to improve skills levels: funding for courses for those who left school without basic literacy and numeracy skills; increasing the number of adult apprenticeships; backing training for 19 to 24 year olds to improve their qualifications; and pledging support from next year for those over 24 working for higher qualifications.

But the strategy warned that government support alone would not be enough. Employers and workers would have to take on greater responsibility to improve skills levels.

So is the strategy working? The government can point to successes. The number of people taking on apprenticeships in 2010-11 was up sharply on the previous academic year, with three-quarters successfully completing their training.

Tom Wilson, head of the TUC’s unionlearn programme, reports its increasing popularity with both workers and companies, with more than a quarter of a million people receiving training through unionlearn in 2011-12. Even non-union employers are signing up.

Problems remain. In a government-commissioned report on apprenticeships delivered last month, the entrepreneur Jason Holt noted a lack of awareness about the benefits of taking on apprentices, and how to recruit and train them, particularly among smaller companies.

On publication of his report, Mr Holt said: “While apprenticeships offer undoubted growth opportunities for businesses, not enough small and medium-sized enterprises are taking advantage. This is because they have an outdated view of apprenticeships, are often in the dark and frequently do not receive the specific training provision their apprentices need.”

Semta, the sector skills council, estimates industry needs to recruit some 140,000 scientists, engineers and technologists by 2016 to take advantage of growth opportunities, and to replace people retiring.

“As global competition drives a need for higher-level skills, there is a huge need to skill up the workforce,” says Lynn Tomkins, Semta’s UK operations director. “We estimate that around 550,000 of the current technical workforce are qualified below world-class standards.”

In response the organisation is running a series of initiatives, working with small and medium-sized firms to persuade them of the advantages of training their own apprentices, as well as developing high-level apprenticeships, which can lead to the opportunity to study at degree level.

One problem facing manufacturing in trying to attract new talent is the way in which it is perceived, as Verity O’Keefe, employment and skills policy adviser at the employers’ organisation EEF, points out. “We have to get rid of the image of manufacturing as wearing dirty overalls and working with big machines,” she says. “It’s a lot more than that.”

In the longer term, as Engineering UK pointed out recently, that means attracting more school students to study maths and science subjects, and for employers in general to provide more training for their employees. It estimates that, at 315 hours, UK firms provide less training over an employee’s working life than countries such as Denmark, France, the United States and Germany.

Nor is that the only area where the UK lags. We have the lowest proportion of female engineers in Europe. Semta is among those trying to address the imbalance through its career and progression programme, but as the EEF’s Ms O’Keefe puts it: “We need to get more girls into manufacturing.”