The Chancellor must use the Budget to broaden the remit of the Apprenticeship Levy

Ahead of the Budget on 22 November, the Chief Executive of the City & Guilds Group, Chris Jones, has written an open letter to the Chancellor of the Exchequer.

In the letter Chris identifies three key areas where he believes the Chancellor must take action if Britain is to properly prepare for the future world of work in the face of challenges including automation, Brexit, and an increasingly multi-generational workforce.

Dear Chancellor of the Exchequer

I am writing to you ahead of the Budget Statement on 22 November, to express the views of the City & Guilds Group on what we believe would enable us as a nation to secure the needs of the workplace of tomorrow.

As the Taylor Review made clear, the world of work is changing fast. With automation and innovation inevitably altering the structure of employment, Brexit set to compound existing skills challenges, and a workforce that is becoming increasingly multi-generational, investment in skills development for the immediate and the long-term is absolutely critical.  

Investment in skills not only mitigates risk but creates opportunity. As Jurgen Maier has stated in the Made Smarter Review, the UK has the potential to create thousands of jobs in the manufacturing sector alone with the right investment in reskilling and upskilling workers.

I am focusing here on three areas we believe would bring the biggest return on investment to UK plc, supporting the future growth of Britain’s economy and addressing our ongoing low productivity levels:

1. Fully respond to Matthew Taylor’s review and set out an implementation plan before the end of 2017;
2. Create the right environment for employers to drive the skills agenda at both national level and locally through devolution deals;
3. Broaden the remit of the Apprenticeship Levy to cover funding for upskilling and reskilling existing workforces.

Fully respond to Matthew Taylor’s Review

The Government cannot afford to ignore the Taylor Review’s findings about the future of work. Creating good working conditions cannot be done without providing the right development opportunities at every stage of an employee’s career. This is particularly true as our workplaces are impacted by automation and as they become increasingly multi-generational. The Government has a crucial role to play in encouraging employers to invest in digital infrastructure to facilitate professional development

The Taylor Review made a number of recommendations, including access to training for those working flexibly and remotely and a new approach to learning accounts which initially focuses on those with long work records who need to retrain. These link to the bigger question of how to maintain and indeed increase productivity in a workforce that exists outside of a traditional 9-5 office environment. We hope the Government will respond to each of these in full before the end of 2017, as we cannot afford to delay. We also look forward to the results of the lifelong learning pilot studies announced at the last Budget and how these might be taken forward.

Creating the right environment for employers to drive the skills agenda

The Government has taken positive steps in putting skills development in the hands of employers and creating employer-led structures to oversee the content of both apprenticeships and the new T Level qualifications. However, neither the existing trailblazer groups or the Institute for Apprenticeships have a remit that allows them to think more broadly and strategically about the skills this country needs to develop now and in the next 10-15 years. The percentage of jobs that will exist in 2030 that have not been invented yet are estimated to be between 30-85% and employers need the support to be able to plan for this unknown future.

We recommend that the Government encourages existing employer collaboration, which often happens at a local level, by giving more power to the regions to design and fund skills solutions that meet their own skills needs. The right environment is also about providing incentives for employers to support the successful implementation of skills policy.

Broadening the Apprenticeship Levy

Studies estimate there will be a worldwide shortage of 38-40 million skilled workers by 2020. We must urgently look at how to attract and recruit the next generation into the key sectors of Britain’s economy which are currently under threat and take action to address future skills gaps now. Apprenticeships are an answer to this and we should continue to support them which is why the latest Government figures showing a 61% drop in apprenticeship starts compared with the same period last year are a huge concern.

Levy underspend might be good for the treasury but it does no favours for UK plc and if we want employers to properly invest in their workforces then they need to stop seeing the levy as a tax and start to recognise the benefits it brings. Turning the apprenticeship levy into a broad skills levy will provide the flexibility employers need to upskill and reskill existing workforces as well as support new entrants into the workplace. For example, T Level students will need quality work experience placements and allowing levy funds to help get this right will reap rewards in the form of better prepared people entering the workplace.

Encouraging employers to invest in their existing workforce must be matched with a focus on improving the transition from education to employment and we eagerly await a careers advice strategy that gives young people a real understand of the workplace and the best chance of successfully accessing it.

Skills are always a smart and essential investment in times of uncertainty. We hope that the Budget Statement will reflect this.

Yours sincerely

Chris Jones, Chief Executive of the City & Guilds Group

About the City & Guilds Group: The City & Guilds Group’s purpose is to help people, organisations and economies develop their skills for growth. Backed by a Royal Charter, the City & Guilds Group has more than 135 years’ experience in making sure that people are prepared to contribute to successful businesses and thriving economies. The City & Guilds Group partners with more than 200 companies to develop the skilled workforces that they need, and invests in learning technologies to help people learn whenever and wherever they can. Combined, the City & Guilds Group operates in over 100 countries, through 10,000 training centres, delivering qualifications in 26 different industries.

• City & Guilds develops programmes of vocational learning, learning technology, certification and assessment, to support colleges, training providers and governments.
• ILM helps individuals, education providers and businesses improve the standards of leadership and management through qualifications and accredited training. ILM awards qualifications to over 95,000 managers across the world every year.
• Kineo is a global workplace learning company. It offers a fresh approach to elearning management systems and managed learning services.
• The Oxford Group provides bespoke management training, leadership development and executive coaching to the world’s leading companies.
• Digitalme designs credentials, using open badges, to recognise individuals’ skills and talent. It works with employers, training providers and over 2,000 schools across the UK.
• e3Learning specialises in online workforce management and elearning.