HR & Management

Boosting UK productivity: Raising the skills gap through apprenticeships and new institutions

5 min read

10 July 2015

After addressing Britain's poor productivity in the summer Budget, the government has unveiled an overhaul of the education system as part of a series of measures that will help the UK populace bridge the skills gap.

Since the Conservatives came into power alongside the Liberal Democrats in 2010, some two million apprenticeships have been created. The figure came off the back of a report written by Real Business’s Hunter Ruthven, who also unveiled that the new government has set out plans to create a further three million by 2020.

Announced by chancellor George Osborne during his summer budget, the apprenticeship levy is a “bold step” intended to help the Conservatives reach the above goal. The rationale behind the policy was further explained in a productivity plan recently set out by business secretary Sajid Javid. 

It was suggested that productivity growth has long gone hand-in-hand with rising human capital, as more people have become educated, and to a higher level. However, the UK faces a widening skills gap. Analysis from the OECD showed that England and Northern Ireland are in the bottom four countries for literacy and numeracy skills among 16-24 year olds. The UK also performs poorly on intermediate professional and technical skills, and is forecast to fall to 28th place among the 33 OECD countries for intermediate skills by 2020

Read more about the UK’s education system:

Aside from pupils starting year 7 in September 2015 being made to study the English Baccalaureate, as well as focusing on increasing the take-up of STEM subjects, the government has deemed that apprenticeships are a key part of creating skills and boosting education.

“The critical need for high numbers of new technical and professional skilled workers to enter the workforce in the coming years presents a strong case for a high quality apprenticeship system in the UK,” the report, “Fixing the Foundations“, read. “Analysis indicates that by 2022 there will be an additional 3.6 million jobs in medium-skilled occupations, including skilled trades and health care professions.”

Achieving this change will require a reversal in the trend of employer underinvestment in training, which, according to the report, has seen a decline in the amount and quality of training undertaken by employees over the last 20 years. This was explained to be the product of employer concerns that if they invest in training, competing firms would free-ride on their investment. 

In recognition of this, Osborne has introduced a levy on large UK employers to fund new apprenticeships. The government will put control of the funding in the hands of employers via a digital voucher scheme.

The government’s ambition also lies in simplifying the number of qualifications which allow for progression to high level skills. As part of his productivity plan, Javid claimed that the creation of National Colleges will provide sector-specific training. The government is set to “invite” colleges to become Institutes of Technology, which will be sponsored by employers, registered with professional bodies and aligned with apprenticeship standards. The government will empower National Colleges, Catapults, and elite professional institutions to design each route, alongside employers and professional bodies.

It was alleged that this would encourage collaboration between schools, colleges and employers in order to establish a skills system that is responsive to local economic priorities. 

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The UK performs above the OECD average in terms of higher level skills and is home to four out of the world’s top ten universities, second only to the US. This “represents an important competitive advantage”. The government has claimed that it is making it accessible to all who are qualified and wish to study, particularly students from disadvantaged backgrounds. Since 2010 student participation has increased, with a higher proportion of students from disadvantaged backgrounds applying to and entering higher education than ever before

To further the amount of Brits entering education, Javid announced that the government would be removing the cap on student numbers. He also explained that the government would consult later this year on how a Teaching Excellence Framework can be developed, including outcome-focussed criteria and metrics. 

The government will also be removing barriers preventing alternative providers from entering and growing in the market. As part of the review of validation arrangements, the government will explore options to allow the best providers to offer degrees independently of existing institutions before obtaining degree awarding powers. 


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