Pulling the levers for growth

Geoff Russell, Chief Executive of the Skills Funding Agency debates how we can encourage industry to invest more in education and skills to increase the impact of these potent levers of growth

Spring is in the air, the season of optimism and the idea of growth is on my mind as I write this column. Daffodils and the like bloom apace as the Agency goes about its job of helping to make skills work for England.

When I say growth, what I really mean, of course, is the serious sort of growth. The sort that will make an economy lift its dead-head from the doldrums of a winter-weary recession and go into overdrive.

It’s no state secret that skills and education are critical to the economy and to society – and here I don’t just mean UK plc, it’s just as true of any country, home or abroad.  As news of more nations battling economic hardship hits the headlines, it is little surprise that the skills challenges facing us on the home front are also being confronted across the world. Globally, as well as nationally, skills and education are recognised as potent levers to boost growth. It’s a concept I concur with wholeheartedly.

Yet the reality, nonetheless, remains harsh.  Economies are struggling as Europe faces a period of austere re-trenching of public finance and re-balancing of public and private investment. Here at home, our public policy approach to education and skills has undergone a sea-change, shifting from ‘command and control’ to a direct and dynamic relationship between the provider and the consumer of skills.  He (or she) who benefits the most must pay the most.  It’s common and economic sense. For though the Agency spends £5bn a year of taxpayers’ money on funding skills, it can only ever be part of the picture and the big question remains: who should pick up the rest of the bill?

The bottom line is that we need to encourage industry to invest more in education and skills.  I appreciate that business already spends a tremendous amount on training. Many businesses recognise that a skilled workforce is pivotal to their competitiveness.  But research suggests that investment is often made to meet today’s skills challenges and not tomorrow’s skills opportunities. And compared to those of our OECD competitors, we are towards the bottom of the league table of corporate skills investment.

My own belief is that most money is spent on maintaining employee skills levels, rather than raising them or investing in future needs.

There is not enough awareness of – let alone buy-in to – the idea that skills are such a powerful engine for business growth. There is a vital connection between skills, productivity and business success, that the real benefit will accrue to businesses themselves.  Barack Obama in his first speech in Asia said that skills and innovation are the currency of international competition. Quite.

So somehow we need to convince more businesses they must rise to the challenge of preparing for their future skills needs. Because notwithstanding Government’s willingness to contribute where it makes sense to do so, the real responsibility for skilling employees has always belonged to employers.

In a world of scant resources the powers of engagement, influence and leverage become even more valuable. This is what I want you, colleagues in the sector, to consider.  First off is engagement, the challenge of making more businesses consider skills in the first place. Next up, influence, whereby we can seek to mould the outcomes we know are needed by putting funding and skills provision only where real outcomes are going to be forthcoming.

And finally leverage, which I sense is the most powerful of these. For, if I remember my physics correctly, under the miraculous equation of fulcrum, load and effort, a lever can lift, with the least amount of effort, an extraordinarily heavy load that under normal circumstances couldn’t be lifted at all. Think bicycle brakes, door handles and wheelbarrows, all levers in their own way.  Take your thinking one stage further and you will see my picture of employers at the levers of skills.  It’s down to us, the sector, to engage employers and influence their thinking.  And with 90 per cent of companies in England small and medium-sized enterprises – with no dedicated HR teams to help them engage with the skills system – it’s most definitely down to us to put the levers in their hands. And of course, we must not forget that entrepreneurs and the many self-employed must also upskill.

I had the opportunity to debate the issue of employer skills investment recently at the ‘Going Global’ education conference, hosted by the British Council. There were some shining examples of skills investment, such as BT and the Compass Group who, with thousands to re-skill every year on the latest IT developments and front line customer service skills, have no choice but to invest if they don’t want to fall behind. They are tremendous advocates of Apprenticeships who they believe bring innovation, new talent and skills: their potential leaders of the future. For them, talking to young people about how their learning can be tailored to the workforce of the future comes naturally; it’s just Corporate Social Responsibility with a £ sign at the end. Other employers told me that they know skills are key to staff retention and loyalty, but that there is an urgent need to raise awareness of how skills link to business performance.

Perhaps it’s as simple as accounting for the increase in skills of the workforce on the balance sheet of every company?  Whatever your view, without doubt it’s a shared problem which can only be solved by Government, education and skills players and employers all working together to lever the power of skills for growth.  Please let me know your thoughts on Twitter on the FE debate hash tag #FEDebate

Geoff Russell is chief executive of the Skills Funding Agency, a partner organisation of the Department for Business, Innovation and Skills