Employer investment in training in England

Over decades, a problematic trend in the UK has emerged – employers are failing to invest in training the workforce, despite technological change and the need to address climate change.

Employer investment has flat lined since 2015

Data from the Employer Skills Survey shows that overall investment in training by employers in England, Northern Ireland and Wales was flat in real terms between 2015 and 2019 (see Table 1). That was pre-pandemic – so it’s likely that worse news is to follow in the next survey.

Table 1: Employer investment in training

Source: Employer Skills Survey 2019, Research Report, November 2020
Note: Scotland is covered by the separate Scottish Employer Skills Survey; NESS 2019

In England, investment in training increased very modestly from £38.9bn in the 2015 survey to £39.2bn in the 2019 survey. But, whilst investment per trainee also remained remarkably stable between 2015 and 2019 at £2.6K, the spend on training per employee in England declined by £200 in real terms. In addition, the average number of training days per trainee in England fell from 6.8 in 2015 to 6.0 in 2019.

Perhaps a factor that helps explains these trends in England – a flatlining in spend per trainee, a modest declining trend in spend per employee and a fall in the number of training days per trainee – concerns the forms of training that are recorded by ESS. Analysis by IES finds that “training is often geared towards induction and health and safety”.

Training spend per employee by employers has plummeted

Over a longer time scale, a recent report by the Learning and Work Institute estimates that training spend per employee by employers “plummeted by 28 per cent” between 2005 and 2019. The authors note that this level of investment lags substantially behind employers in Europe who invest twice as much per worker than in the UK.

Declining participation in work-related training

Another study by CIPD tracks a significant decline in participation in work-related training, drawing on the Labour Force Survey (LFS). It shows that the rate of training in the first quarter of 2018 was about the same as it was in the same period in 1996 – around 14% of all employees aged 16 to 64. The latest LFS data shows this figure increased to 17% in the same quarter of 2021 and was stable at 17% in 2022 (see Figure 1). However, before congratulating employers on changing tack, it is worth considering that in this timeseries (since 1995) this rate has not been exceeded in any quarter-year.

Figure 1 also shows the rate of this training by age between 1995 and 2022 based on first- quarter data. While younger employees remain the most likely to receive training, the gap between them and middle-aged and older workers has narrowed substantially over time.

It is a positive sign that older employers are being invested in, albeit they experience the basic level of training necessary to work. However, the downturn for those aged between 35 and 49 should be a cause for concern, given the policy drive that this group should work to a minimum of 67 years of age.

Figure 1: Participation in work-related training in the past four weeks by age

Source: Labour Force Survey (EMP15)

A more positive view would be presented by a narrowing of the gaps, but with each age group seeing an increasing trend for occupational training – which is far from the case. Younger workers are seeing a return to the levels of training they saw before the great recession, but there appears a risk that training among middle-aged and older workers is stagnating.

A change is needed

It is unarguable that change is needed. In parallel to encouraging and supporting people to enter the labour market, which requires making work more accessible, there is a need to consider the role for government investment to drive employer investment in rates of work-related training.

The picture is not great. Over many years, governments have sought to influence employers’ investment, putting the funding into areas which hold individuals back from effective performance such as fundamental basic skill levels.

The key directions have been to:

• Remediate so that employers do not have to invest in the basics that compulsory education should provide;
• Raise achievement in education and encourage progression to higher levels of study to improve the pipeline of skills employers have access to, and
• Redefine so that employers define occupational training standards to meet their needs

There is little to argue with, though it could be said that these policy endeavours have led to a continual process of remodelling – new initiatives are implemented to respond to the failures of past ones. While aiming to raise the ‘water table’ of skills, evidence of increasing employer engagement in training is hard to find and instead, displacement emerges.

A classic example of this was when Train to Gain closed and apprenticeship numbers soared as the new funded provision, although they were not necessarily focused on those needing new skills to perform their jobs. Similarly, the introduction of the Apprenticeship Levy led employers to take up degree apprenticeships for higher education qualifications that they previously funded.

As greater value is placed on “problem solving/decision making, critical thinking/analysis, communication, collaboration, creativity and innovation” as the transferable skills most needed over the next 15 years (NFER, 2022), lifelong work-related learning becomes ever more important.

With the plethora of funding schemes and training initiatives, new support to improve navigation of the system is needed, as well as provision suitable for adult re/upskilling.

Recommendation 1

Levy and non-levy payers should have greater flexibility over use the Apprenticeship Levy, so that unused funds support wider forms of training rather than just apprenticeships; and employers can deploy the levy to fund the provision that best suits their employees’ needs.

Recommendation 2

The Government should develop short courses or modular formats that offer employers the chance to fill skills gaps within their workforce. More must be done to encourage employers to directly place their employees on Skills Bootcamps but provision should be at Level 2 (beyond construction and green skills) as well as elements from Level 3 and up to Level 7 where the latter meets employer needs.

Recommendation 3

The Government should introduce a new place-based employment and skills brand to connect employers, employees and labour market entrants to the best training options for their needs.

By Becci Newton, Director, Public Policy Research, Institute of Employment Studies

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This article is part of Campaign for Learning’s series: ‘Driving-up employer investment in training – pressing the right buttons’.

Part One: Employer investment in context

1. Louise Murphy, Economist, Resolution Foundation: Investment in the round
2. Dr Vicki Belt, Deputy Director, Enterprise Research Centre, Warwick Business School: UK enterprises and investment in capital and training
3. Becci Newton, Director, Public Policy Research, Institute of Employment Studies: Employer investment in training in England

Part Two: Drivers of employer investment in training

4. Neil Carberry, Chief Executive, Recruitment and Employment Confederation: Derived demand, British management and employer investment in training
5. Ewart Keep, Professor Emeritus, Education Department, University of Oxford: Strategies to drive-up employer investment in training
6. Sam Alvis, Head of Economy, Green Alliance: Transitioning to net zero, green skills and employer investment in training
7. Dan Lucy, Director of HR, Institute of Employment Studies: Job quality, job design and driving-up employer investment in training
8. Natasha Waller, Policy Manager, LEP Network: Local inward investment, business support and employer demand for training
9. Jovan Luzajic, Acting Assistant Director of Policy, Universities UK: Universities, R&D, business innovation and meeting employer skills needs
10. David Hughes, Chief Executive, Association of Colleges: FE colleges, business innovation and meeting employer skills needs

Part Three: Increasing employer investment in training

11. Paul Bivand, Labour Market Consultant: Why should employers invest in training in a flexible labour market?
12. Aidan Relf, Skills Consultant: Why should employers invest in training with large net worker migration into the UK?
13. Stephen Evans, Chief Executive, Learning and Work Institute: Raising employer investment in training
14. Robert West, Head of Education and Skills, CBI: Increasing employer investment in training
15. Lizzie Crowley, Skills Policy Adviser, CIPD: Encouraging employer demand for training
16. Anthony Painter, Director and Daisy Hooper, Head of Policy and Innovation Chartered Management Institute: Increasing employer demand for management training

Part Four: Raising employer demand for publicly funded post-16 education and skills

17. Jane Hickie, Chief Executive, AELP: Increasing employer demand for post-16 apprenticeships in England
18. Mandy Crawford-Lee, Chief Executive, UVAC: Increasing employer demand for level 4-5 technical education in England
19. Ian Pryce, Principal, The Bedford College Group: Increasing employer demand for higher technical education in England

Part Five: Raising employer demand for work placements

20. John Widdowson, Board Member, NCG: Increasing employer demand for work placements for level 3-5 vocational courses in England
21. Stephen Isherwood, Joint Chief Executive, Institute of Student Employers: Increasing employer demand for undergraduate work placements in England