Collaboration is the key

There’s a lot of talk, understandably, around the introduction of the latest arms-length skills body, Skills England.

Back in November the CBI called in its business manifesto for the establishment of an Independent Skills Commission to advise the government on skills, training and further education policy. A body to promote collaboration between stakeholders, and better align employment, education and skills.

Collaboration is essential if we are to realise a long-term sustainable vision of what the UK could be. I am hearing from education and training providers and businesses alike a feeling of skills policy being something done to them rather than with them. Rather than involvement in co-design businesses feel they have been left with narrow, inflexible choices that fail to consider the capabilities and capacities of organisations to deliver them. The recent announcement by the Department for Education on restrictions on level 7 apprentices being a case in point.

There is a lack of focus on barriers to implementing policy, such as the urgent need to address retention and recruitment of the college teachers necessary to deliver courses. This only holds back change. Consider also the fact that, notwithstanding the recent announcements of a Growth & Skills Levy, we still currently have an Apprenticeship Levy that ignores, and seemingly will continue to ignore, the broad range of training firms need. The economy needs modular, flexible training made up of different types and duration. What we have instead is a skills system that appears to suggest that apprenticeships are still the only skills solution.

Challenging times

The latest annual CBI/Pertemps Employment Trends Survey outlines the challenges facing both Government and business in getting the economy growing again. The survey points to how stakeholders working together can address employment and skills by making simple changes to the Apprenticeship Levy as an interim step towards a Growth and Skills Levy, which would make it easier to invest in workers’ skills.

The CBI/Pertemps Survey shows that growth in skills investment is slowing compared to the last time data was gathered in 2022 (38%) and is down on pre-pandemic norms, with just 1 in 3 employers (34%) planning to make higher investments in the training and development of staff over the next year relative to investment over the past twelve months.

Meanwhile, three quarters of respondents (76%) rank access to skills as a threat to labour market competitiveness, and over two thirds of respondents (71%) believe it will continue to threaten competitiveness in five years’ time.

Investment is necessary, and 3% is quoted by economists as an absolute minimum for public investment for a country like Britain, but based on current plans public investment under the new government is projected to fall to just 1.7% in 2029-30.

So, what about private investment? Concerningly, the CBI survey also shows that fewer firms plan to increase their investment in training despite acute skills shortages. However, the forthcoming Budget provides an opportunity that will immediately boost business investment in training by making those funds available to businesses now through reform of the levy.

Immediate flex of the levy

When asked about policy changes that could help, the CBI/Pertemps survey found:

• 52% of respondents and 80% of businesses with 250+ employees believe that greater flexibility in the apprenticeship levy would incentivise them to invest more in training their workforce.
• Businesses support a broad approach to levy use. Six in ten respondents agree that the levy should fund any form of accredited training.

The budget can offer a direction of travel towards a broader, more flexible levy by announcing an immediate flex allowing firms to begin to invest on a broader range of accredited and modular training at the earliest point. Skills England will ultimately decide what is eligible, but why not allow the levy to be spent now on, say, Higher Technical Qualifications or certain apprenticeship modules?

Does our tax system incentivise or disincentivise?

Investment in skills is stagnant, and the tax system does not incentivise investment. The government needs to consider whether the current tax system including the operation of the apprenticeship levy is doing enough to incentivise businesses to invest in the right kinds of training.

Skills England will have a role in this, but the new skills body, and the government, needs to also demonstrate that this isn’t just something else that gets in the way. There’s a great opportunity here to problem-solve together. To bring all the parties together and explore where the Venn diagram crosses over.  To promote self-reflection, awareness and change.

We need to break the cycle of investment stagnation, and the only way to do it is if we all have skin in the game. Collaboration must therefore become the key word and action.

By Robert West Head of Education & Skills, CBI