Key Skills Sector Priorities for the Labour Government from Leading UK Business Organisations

The Institute of Directors (IoD) Education Group recently hosted a webinar discussing skills policy priorities for the new Labour government. Business organisations highlighted the need for addressing skills shortages, reforming the apprenticeship levy, and aligning skills policy with industrial strategy and economic growth.

Hosted by Gareth John, Director of accountancy apprenticeship provider First Intuition, we heard from an expert panel formed from major business organisations, including the IoD, Make UK, the British Chamber of Commerce (BCC), the Federation of Small Businesses (FSB), the Confederation of British Industry (CBI) and the Association of Employment and Learning Providers (AELP).

Gareth started the discussion by highlighting the link made in the Labour manifesto between skills policy and a new industrial strategy, and also to immigration policy. “This is sensible joined-up thinking and gives hope of a longer-term plan that will see the skills sector seen as a critical building block in achieving the government’s major mission of economic growth.”

Between them, the speakers work with a number of members, emphasising the importance their organisations hold in representing not only the skills sector, but the wider national economy.

• The IoD represents 20,000 Directors and senior business leaders.
• The CBI gives voice to around 170,000 business of all sizes, covering all parts of the UK and a whole range of sectors.
• BCC represents 52 Chambers of Commerce who in turn represent tens of thousands of businesses
• The FSB aims to provide a voice for 5.5 million small business and self-employer people who employ 16.5 million people
• Make UK represent 20,000 manufacturers of all sizes
• AELP have 800 members, predominantly Independent Training Providers, but also a number of colleges, Universities and employers. Their members work with around 300,000 employers.

Each speaker raised key points that they want to see from national skills policy, including opportunities for the government, questions that still need to be answered and areas of priority for the coming months.

Alex Hall-Chen, lead on Skills Policy at the IoD, highlighted the scale of the problem from an employer perspective, quoting a recent member poll:

“In May, 45% of members cited skills and labour shortages as having a negative impact on their organisations” and presenting significant barriers in their business. “This was only behind UK macroeconomic conditions and has been consistently high for a long time now”.

She emphasised that these are “structural issues that really need to be central to the UK’s industrial strategy” and that the IoD are pushing for skills to be at the heart of that. Furthermore, the “skills strategy needs to be laser focused on tackling those skills shortages” which “will need an understanding of what is inhibiting employer investment in skills and unblocking that.”

Robert West, Head of Education and Skills from CBI, spoke about how the changing world of work is being driven by technology adoption and the transition to net zero, with “3 million people needing to reskill for new occupation by 2030”.

“Upskilling and retraining are the biggest games in town!” he emphasised.

He called for greater collaboration and confidence in the skills system, saying that Skills England is a step towards this, but it could go even further to a UK independent skills commission.

Robert questioned

“How does Skills England become wide enough to have a genuine impact in relation to industrial strategy? How independent will Skills England be, or will we continue to see this top-down approach which I think has held us back?”.

Robert was however pleased to see some reform of the apprenticeship levy mentioned in the King’s Speech but questions “what will meaningful flexibility into a growth and skills levy look like?”. He feels that it will be a great opportunity to address lifelong learning in terms of upskilling, however noted that there was no mention of lifelong learning in the King’s speech.

Jane Gratton, Deputy Director of Policy at BCC, pointed out that three-quarters of their member organisations, mostly SMEs, struggle to recruit people with the necessary skills they need.

“There’s a skills mismatch” she stated.

She advocated for

“better planning of skills: planning nationally, planning locally within the combined authority areas, and also planning better at an individual firm level.”

With the experience from Chambers running 32 of the 38 LSIPs, Jane wants to see government introduce and integrate long-term funding for building local skills plans into the skills system at both government and business levels. “We’ve got to plan better to help businesses invest.”

Paul Wilson, Policy Director at FSB, focused on the significant role small businesses play in the economy and the need to incorporate them into skills planning. He also stressed that the government should not forget the self-employed in the skills debate.

“There are 4 million self-employed individuals. How can we make sure skills policy works for them?”

He stressed the importance of boosting apprenticeships among non-levy payers.

“We are particularly interested in how we can boost the number of apprenticeships in non-levy paying employers. How can we get more of them to take on apprenticeships, and those that do take on apprenticeships to take on more”.

He emphasised that this is an opportunity for the government to marry up skills policy with labour market and immigration policy.

Faye Skelton, Make UK’s Head of Policy, reiterated the call for reforming the skills levy and addressing chronic underfunding, especially at the provider level.

“Hearing that the government is going to reform the apprenticeship levy is music to our ears.  This has been something they have been really pushing for”.

However, Faye says that although it is great there is commitment to change,

“really, they need to be having a wholesale look at the skills landscape, look at really what works and what doesn’t work. How are we supporting employer investment in skills at all levels”.

She also made the point that there is a chronic underfunding in skills particularly at provider level, which means many providers choose to not deliver expensive apprenticeships which often fall within certain industries such as manufacturing. She summed up that “there are lots of opportunities, but lots of details that still needs to come.”

Simon Ashworth, Deputy Chief Executive and Director of Policy at AELP, highlighted the challenge facing the new government who have “no time to waste but no money to spend.

”He reiterated that “pace is really important” and that “reforming the levy and creating Skills England are two priorities labour want to move quickly on”.

His key message for the government “is that the system isn’t broken. The apprenticeship levy has been transformative for skills, it has doubled the amount of investment. We need to build on the foundations we have got.”

However, there are some improvements needed, referring to operational challenges around rules, flexibility, as well as functional skills, off the job training, and the need to get more young people involved in apprenticeships.

Simon believes that the government need to think about principles of sustainability, commonality, simplicity and deliverability for providers.

Host Gareth was reassured by the level of consistency of the points raised by the panel, and the way the often agreed with and supported what each other were saying.

“It seems clear that there are some common themes for the government to address in skills policy. Let’s hope they have the sense to listen to insight from well-placed experts such as our speakers, and the courage to put actions in place to respond to them.”