George Osborne announced the introduction of an apprenticeship levy during his Summer Budget. While many firms do an effective job at training up their workforces, he said, “there are too many large companies which leave the training to others and take a free ride on the system”.
The annual CBI/Pearson Education and Skills survey suggested the current skill shortage is “threatening to starve economic growth”. Its deputy director-general Katja Hall emphasised the urgency of the issue, saying that “firms are facing a skills emergency now”.
Since the Conservatives came to power with the creation of a coalition government in 2010, around two million apprenticeships have been created. The government has set out plans to create a further three million apprenticeships by 2020, and hopes the levy will help achieve this goal.
Analysis from the OECD has shown that England and Northern Ireland are in the bottom four countries for literacy and numeracy skills among 16-24 year-olds. Of the 310 firms surveyed, which employ 1.2m in the UK, the CBI found that more than two-thirds expect to need more high-skilled staff. However, more than half are worried HR departments won’t be able to find enough employees with the necessary skills.
Adding to the concern was that report finding suggesting “high-growth, high-value sectors with the most potential which are the ones under the most pressure”. Construction, manufacturing, science, engineering and technology were among those having difficulties.
Skills minister Nick Boles said the apprenticeship levy should have a significant impact as part of the government’s productivity plan. “By developing the skills of young people, businesses can boost their productivity, employees can harness their talent and we can reach our potential as world beaters,” he said.
Read more about training and skills:
- Boosting UK productivity: Raising the skills gap through apprenticeships and new institutions
- Summer Budget 2015: Apprenticeship levy so firms “get back more than they put in”
- Talent of college students and teaching staff often ignored by businesses
The CBI’s research, however, indicated that this new scheme is unlikely to deliver workers with the advanced skills needed to rebalance the economy towards those high-growth sectors.
Around two per cent of apprenticeships started in 2013-14 were at the advanced level, which leads to qualifications equivalent to higher education. Hall added that while the levy may “guarantee funding for more apprenticeships”, it was “unlikely” to deliver the skills that industry needs. “Levies on training already exist in the construction sector where two-thirds of employers are already reporting skills shortages.”
Another area of concern flagged up by employers in the survey was the lack of quality career advice for young people, so they can understand just what is likely to be available out there. More than three-quarters of companies aren’t happy with the advice for pupils provided in school, which led CBI’s director-general John Cridland to ask: “How can young people decide what type of work they want to do in the future when the careers advice they receive is simply not up to scratch?”
Employers have outlined areas they’d like changed in order to help address the skills problem, including putting more emphasis on vocational skills at A-level. Rob Bristow, the UK president of education company Pearson, said: “Better skills are not only the lifeblood of the UK economy – as fundamental to British businesses as improving our infrastructure, technology and transport links – they are also critical to improving young people’s life chances, of enabling them to be a success in life and work.”
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