Summer Budget 2015: George Osborne sees skills gap but not the big picture

Marc Zao-Sanders, Managing Director at, on why companies should invest in training

The first outright Conservative budget in two decades looked like it might be the most relevant to the training industry for at least that time. Much of the speech was a rallying cry from Chancellor George Osborne about productivity and training, “Productivity…means giving people the skills they need to secure a better job.”

He said:  “There are too many large companies who leave the training to others and take a free ride on the system. Our weak productivity shows we don’t train enough or build enough or invest enough.”

Comparisons with our G7 competitors show that we are on average 30 per cent less productive than Germany, France and the US, and the phrase ‘productivity puzzle’ has been coined by economists to describe the predicament we’re in.

This is relevant to our industry as skills and training are almost always cited as the solution (usually along with tax incentives and infrastructure).

The Government followed up the Summer Budget with an 88-page Productivity Plan listing 16 drivers of productivity with ideas for each on how to make headway. The relevant driver for our industry detailed in Section 3 titled: Skills. Literacy, numeracy and intermediate skills, is picked out to frame the problem.

The report reads: “England and Northern Ireland are in the bottom four countries for literacy and numeracy skills among 16-24 year olds…[and] the UK also performs poorly in intermediate professional and technical skills.”

It also suggests that the ways to solve the skills issue is by increasing the number of apprentices (up from 2.3 to 3 million) and streamlining college-level qualifications. However, these proposals are exclusively concerned with entry-level and relatively junior positions.

The Government’s plan should address a greater proportion of the workforce, motivate employers to provide the right training and make use of technology. Here are some ideas on each of those.

While apprentices are clearly important and the proposed measures will no doubt improve the UK’s productivity in the long term, there’s a much bigger target. The Government should first do something for the incumbent and apparently unproductive workforce of 30 million.

Rather than just point the finger at employers, the Government can and must encourage firms to train their staff better. Sadly, training in the UK is often seen as a nice-to-have when it’s a few weeks off and a pain-in-the-neck the day before. Time and again surveys from the training industry make the obvious point that time is the greatest inhibitor of training; not perceived to be important enough, it often just doesn’t get done.

Yet everyone – this Government included, is convinced that skills are a major part of the solution. This deadlock can only be broken by a nationwide culture shift and this must be addressed by the Government to persuade the employer. Employers will respond to fiscal incentives – as called for recently by Alistair Cox, Chief Executive of Hays, such as tax breaks for firms that enable their staff to conduct a certain amount of training.

Firms would then make time for it and training would less often lose out to the inevitable, relentless pressures of day-to-day work. Incentivising employees would then be mostly down to the employer. (And if the Government could see fit to add a clearer system of workplace qualifications and associated career pathways to their proposed national consolidation of qualifications for young people, which is so much the better.)

The training also needs to be fit for purpose. The Government’s Productivity Plan draws on research by Bosworth who concedes that skill levels are just part of the story; those skills need to be relevant to business too. Firms therefore need to ensure that their staff receive the training they need. For example, of the 20 million computer-based knowledge workers in the UK, time management and task prioritisation must be an essential part of the mix in a drive for productivity; there’s probably a 30 per cent gain to be had just there.

Unsurprisingly, technology (packaged together with science and innovation) is one of the 16 drivers discussed in the Productivity Plan, but technology is not an end, it’s an enabler, and a particularly effective enabler of skills. Rather than thinking about skills and technology separately, the Government would do well to better understand and utilise the fascinating, ground-breaking, and infinitely scalable developments in technology, such as algorithms, adaptive learning and applications of neuroscience, which are capable of upskilling millions of people in the UK quickly, cheaply and effectively.

Let’s make a plan which galvanises the unproductive 20 million, as well as signing up 700,000 more apprentices.


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