The Government’s apprenticeship reforms must accelerate a skills revolution

The UK faces a skills shortage, and while new apprenticeship funding is welcome, it’s not enough. Employers must invest more in training, focusing on long-term needs. Management skills are crucial for productivity. The government and businesses must work together to expand high-quality, work-based training across all ages and sectors.

New Funding for Young Apprentices

The Prime Minister’s announcement of new funding for young apprentices in small businesses is welcome news and comes at a critical time for the many organisations scrambling to upskill their staff and plug labour shortages.

Data from my organisation—the Chartered Management Institute—shows that 7 in 10 managers are struggling to recruit staff with the skills they need, a finding echoed by the Federation of Small Businesses, which finds that 78% of small businesses have been facing the same issue.

Apprenticeships as a Solution

Facing an uphill battle of plugging skills gaps, many of the organisations I speak with, in my role as the CMI’s Director of Policy, tell me they are turning to apprenticeships as a way to invest in their future growth and productivity. Indeed, our research backs this up, with only 5% of UK managers saying they’d prefer someone with a university degree over an apprentice.

It’s clear that high-quality, work-based learning is critical right across our economy. Apprenticeship levy funding is an essential component of that investment, and we should be looking at how we extend investment even further.

The Skills Shortage Problem

But that alone cannot solve our skills shortage problem in the UK. Leaders and managers need all the possible tools at their disposal to develop the workforce of the future, and while these announcements contribute to that, the best economies prioritise building a highly skilled workforce across all ages and sectors. In the UK, we’re still falling short of that ambition.

Low Employer Investment in Training

The central problem is that employer investment in training remains far too low across the country. Recent data from the UK suggests spending on training has not proportionately increased since 2015, and this is despite the evidence that increasing human capital accounts for around one-third of productivity growth.

Indeed, where employers do invest in training, they usually focus on the immediate needs of their business, not on longer-term strategic requirements, or broader economic needs. While logical as businesses look at the short-term challenges in front of them, the problem is that this approach doesn’t address the bigger challenge: how does the UK expand the long-term supply of highly skilled workers so that it can address its productivity challenge? This conundrum cannot be answered just by focusing on certain qualifications, funding streams and particular groups. It’s a challenge across the board.

Apprenticeships are Only One Part of the Solution

We shouldn’t forget that apprenticeships are only one part of the UK education and training system, and while they bring excellent benefits, they tend to be very intensive and long-term, and as such, they will not meet all upskilling and reskilling needs.

The Importance of Management Training

Take management training as an example. In a report published last year, CMI shared data that showed that 82% of employees become managers without any formal training. Every single dataset you will look at says it’s a priority. Our recently published Management and UK 2030 report shows how management capability—and a shortage of highly skilled managers—accounts for somewhere in the region of half of our productivity gap with leading industrial economies.

Indeed, in her Mais lecture earlier this week, Labour’s Rachel Reeves diagnosed this UK-shaped problem, citing our “low levels of basic skills, gaps in technical and vocational education, and comparatively poor management capability.”

The Need for Ambition and Systematic Action

We need to raise our game across the board. Given the centrality of management and leadership skills for improving productivity, skills and performance across sectors, that will mean embedding better management capability in any future industrial policy, green transition policy and future public sector workforce development strategies. Levy flexibility should be designed in a way that supports all these strategies.

For those to whom an apprenticeship is not available, further support is needed to enable them to get on the ladder of career opportunities. 

By Anthony Painter, director of Policy and External Affairs at the Chartered Management Institute (CMI)