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Reports & Research

Securing the Skills Pipeline

Jun 7, 2017

New plans, old problems

Every few years, the Government publishes a new strategy to boost a combination of growth, productivity, innovation and investment. In 2011, which already feels like ancient history in policy terms, the Plan for Growth aimed 'to equip the UK to compete in the global race'. The 2013 Industrial Strategy was a 'long-term, whole of government approach to support economic growth'. In 2015, there was a major new Productivity Plan (Fixing the Foundations) to encourage long-term investment and promote 'a dynamic economy'.

The narrative changes according to the wider context – whether we are battling the headwinds of economic crisis, or emerging confidently to secure recovery – but the diagnosis and policy prescription is often quite similar. And it almost always includes a priority focus on the skills of the UK workforce. This makes sense. Following the construction analogies that often pepper these strategies – our human capital is an important building block for growth.

Industrial Strategy: The comeback

And so, once again, skills is a ‘pillar’ of the latest national plan. The Green Paper published in January 2017 – Building our Industrial Strategy – is explicitly framed as a post-Brexit strategy. This certainly provides a new context, but has the policy prescription actually changed? It is too early to say definitively, as consultation on the Green Paper closed in April.

The Parliamentary Select Committee Inquiry on Industrial Strategy reported that the rhetoric of the Green Paper ‘strikes a significant departure from that of recent years, even decades’ . Ideas related to re-distribution and a potentially more interventionist approach to sector support (‘moving away from the power of the markets’ in the words of the Select Committee) could mark a step change. But the report questioned whether the Green Paper might be too incremental to really tackle the four long-term weaknesses it, and pretty much every preceding strategy over the last 15 years, has identified in relation to the UK economy: skills deficiencies; relatively low productivity; low investment in infrastructure; and low spend on R&D.

A long-term programme of reform

There are undoubtedly structural issues that underpin the UK skills challenge. Around one in five UK job vacancies across the UK are difficult to fill because employers struggle to find applicants with the right skills – a figure that rises and falls a little over time, but a problem that remains fairly constant. While the UK thrives on many measures relating to higher-level skills, we perform less strongly in terms of technical and vocational skills, as well as literacy and numeracy. There is also the question of having the right kinds of skills. Weaknesses in the STEM pipeline have been highlighted for many years; the transformative changes that technology is having on jobs – and therefore the skills required – is an issue of global proportions.

Brexit certainly provides an opportunity to re-think how we plan and develop the skills required for the UK economy. It may be, though, that the major policy shift has already happened. By introducing a new apprenticeship levy from April 2017, the rationale for larger employers to actively invest in the skills they need could mark a genuine paradigm shift compared to previous, more indirect approaches to encouraging employers to shape training – and to align training with what the labour market actually needs.

The Government has set out plans to substantially reform technical education in England. This includes simplifying progression routes, making learning more stretching and centred on a rigorous ‘common core’ of training for 16-18 year olds, introducing extended work placements, and massively rationalising the qualifications market. These plans provide an opportunity to tackle a problem that has hampered previous similar reforms: how to boost the status, reputation and parity of technical education as an alternative to academic study in eyes of young people, parents and employers.

This is no quick fix. The Industrial Strategy Green Paper describes technical education as a ‘neglected’ area, and it is difficult to predict what the apprenticeship market will look like in three years’ time. While Brexit provides new impetus for having a long-term programme of transformation, it may take a decade for these reforms to take root and for the UK economy to feel the benefits. So, the most important prescription of all could be a dose of patience and stable policy implementation. This might itself be quite an achievement during a period of major political change, and given that economic and industrial strategies seem to have a usual life expectancy of just a couple of years.

By Colin Howat