Summary of the report
Skills England, a newly established government body charged with delivering on the country’s skills needs, released its first report yesterday outlining its view on skills shortages and the challenges facing the skills system. Among its findings was that England’s skills system is too “fragmented and confusing,” and that there has been a worrying decline in employer investment over the last decade.
Operationally, Skills England will take over powers from the Institute for Apprenticeships and Technical Education (IfATE).
In announcing the paper, Interim Skills England Chair Richard Pennycook emphasised the need for collaboration among businesses, training providers, unions and government bodies to build a skilled workforce and drive economic growth.
Education Secretary Bridget Phillipson stated that Skills England will play a crucial role in shaping skills policy and guiding funding.
Key takeaways:
- Critical skills demand: Nearly 1 in 10 roles, or over 2.5 million jobs, across the UK are in critical demand, with more than 90% requiring training or education.
- Growth priority: The government recognises skills shortages as a significant barrier to economic growth. Addressing these shortages is essential to Labour’s growth strategy.
- Regional disparities: Skills challenges vary by region, with higher unemployment and fewer opportunities outside London. Localised solutions are needed to balance economic outcomes.
- Skills shortages: In 2022, over a third of UK vacancies were due to skills shortages, a sharp rise from around 22% between 2013-2017.
- Employer challenges: Employers face difficulties with the qualifications landscape, mismatched skills supply and a lack of mechanisms to invest in skills.
- Learner barriers: Pathways to skilled careers are unclear, and the current system does not adequately equip learners with essential skills like literacy, numeracy and digital capabilities.
- Declining employer investment: Employer investment in training has dropped by 19% per employee over the past decade, due to resource limitations and a shift in responsibility for upskilling.
- Future skills needs: Demographic, technological and green transitions will shape future skills demands, with expected growth in areas like AI, healthcare, green jobs and education.
- Sector-specific impacts: Industries like construction and hydrogen will need new qualifications and an expansion of green-skilled workforces to meet future demand.
- Technology and skills: The adoption of new technologies, including AI, will increase demand for skills across sectors, particularly in areas like cybersecurity.
- Social value of apprenticeships: Apprenticeships can generate significant social value, particularly for disadvantaged groups. The report notes that apprentices from such backgrounds see larger wage premiums than their peers.
- High-demand sectors: Critical industries such as digital, green technologies and construction face severe skills shortages. Upskilling in these areas is crucial to meet future demand.
- Modern Methods of Construction (MMC): MMC could reduce reliance on traditional skilled labour in construction and improve productivity in the sector.
- Employer investment decline: Employer spending on skills training has dropped by 19% over the past decade, exacerbating the skills gap. The report urges businesses to reinvest, with support from the Growth and Skills Levy.
- Next steps for Skills England: Future actions include stakeholder engagement and sector-specific analysis to align training with national skills needs.
Analysis
The report clearly indicates that the new government sees skills as a vital component in driving economic growth. This recognition is particularly welcome, as it has not always been the case.
While the report serves as a useful starting point for discussion on reform, it offers more of a broad overview than a detailed roadmap. Skills bodies and industry stakeholders are likely already familiar with the issues raised and may have answers to many of the questions it poses. Interim Chair Richard Pennycook acknowledged this, stating that the report is “setting the scene and nothing more”. However, the report does kick off a period of engagement that is much needed, so it is good news we are arriving at that part. NSAR has received assurances during a recent meeting with the shadow Skills England team that we, as skills bodies, will be consulted throughout this process.
Prime Minister’s apprenticeship announcement
At the Labour Party Conference, Prime Minister Sir Keir Starmer, announced reforms to apprenticeships in England through a new Growth and Skills Levy, as pledged in the Labour Party Manifesto. This new levy will replace the current apprenticeship levy. The scope of non-apprenticeship training to be included is still under review, and implementation of the policy is not expected imminently.
The Prime Minister also announced further reforms, stating that the new levy will allow funding for shorter apprenticeships, giving learners and employers greater flexibility over their training compared to the existing system, which mandates a minimum duration of 12 months. However, as always in politics, there will be a trade-off. Consequently, some Level 7 apprenticeships, equivalent to master’s degrees and typically pursued by older or more qualified individuals, will be moved outside the levy’s scope.
If you are an NSAR member, and would like to discuss this further, or feed into our engagement with Skills England, please do not hesitate to get in touch: Edward.Hughes@nsar.co.uk