There was initial disappointment following the Chancellor’s Spring Budget announcement, which overlooked the UK’s ongoing skills gap, despite growing calls from business leaders to prioritise and incentivise investment in learning and development (L&D) initiatives to tackle labour shortages, says Nichola Hay.
However, while these announcements did not come during the Budget, the Prime Minister did later announce in March a £60 million investment for 20,000 fully funded apprenticeships for small businesses, as well as the removal of the 5 percent co-investment payments for SMEs that hire apprentices under the age of 22.
This package of support is a step in the right direction. It aims to help address the increase in the number of people aged 16-24 who were not in education, employment or training (NEETs) and will hopefully encourage SMEs to take on apprenticeships.
But creating piecemeal policy will not support our skills strategy in the long term.
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A holistic approach to skills policy
Many businesses were seeking a refreshed and more holistic approach to skills policy from the Chancellor in the Spring Budget and continue to feel the same way following the latest announcements in March.
There is now an even greater opportunity for the Government to further support business leaders in their efforts to build business resilience and create opportunities for growth. To do this, a national skills strategy is needed.
Empowering business and HR leaders at SMEs to build business resilience
Raising awareness of the benefits of L&D initiatives (such as apprenticeships) through a comprehensive national skills framework would help business and HR leaders create and, crucially, maintain a productive workforce that can support the organisation through economic uncertainties.
This is particularly relevant for SME’s, which account for over 99 percent of the UK business landscape.
Apprenticeships are for all ages and skill levels
Apprenticeships, for instance, are for all ages and skill levels. March’s announcement, which saw the Government trying to re-engage SMEs and encourage more to access apprenticeships is welcome. It means they will be able to explore more opportunities for professional development, upskilling the current workforce, and attracting new and diverse talent.
But the Government could have gone further still – by removing the co-investment payment for apprentices of all ages, rather than just young people. This would demonstrate the government’s commitment to upskilling people of all ages and backgrounds and ultimately support businesses and employers to boost productivity.
Although it was not addressed in the Spring Budget, it is encouraging to see that a renewed effort to re-engage SMEs and do more to encourage apprenticeships in the weeks since.
What more can be done to support SMEs?
More of the same is required for us to further support SMEs planning for growth, highlighting the current skills gaps within the workforce as well as providing a more in-depth understanding of longer-term skills gaps.
Unlocking the SME market will have a positive impact on young people, and possibly help to reduce the increase in the number of NEETs that we saw at the end of last year.
To do this, we must allow SMEs to access a simplified system to onboard apprentices, thereby creating clear pathways for new talent and those further away from the jobs market.
Training providers incur extra costs by working with the SME market, and seemingly simple tweaks such as increasing apprenticeship funding band for training providers working with SMEs and young people, may lead to the support they require.
If we look at the long-term cost of the NEETs numbers increasing, vs the effort it will require to tweak the current system, both will balance out in the long-term and create a much better system moving forward.
Harnessing regional talent
Finally, there would be a significant impact on our regional communities if the Government would embrace a national skills strategy.
For instance, there are a growing number of sector-specific hubs across the UK, which have a considerable impact on our economy. From the emerging tech and life sciences sector in Greater Manchester, to manufacturing specialists in the midlands, each region has become synonymous with a certain industry specialism.
A national skills strategy created by the Government could support these industries and our national skills development, if it supported a co-ordinated effort between businesses, metro mayors, local authorities, and the Government.
To guarantee the national skills strategy’s success, we would need to ensure that we build flexibility into it, allowing devolved regions to utilise funding and strategies in a way that is tailored to their individual need and truly delivers for their local employers.
What does the future look like?
Building a comprehensive national skills framework linked to industrial strategy will take time. However, it is high time that the Government sees this as a worthwhile investment.
It is encouraging to see the start of this with the 20,000 fully funded apprenticeships being announced this week, and more being done to re-engage SMEs across the country.
However, there is more to be done in this respect. If we are really serious about skills, then major changes to the skills system is needed. Yet, it is good to see we are taking small steps in the right direction.
Ultimately, prioritising a holistic approach to national skills framework would allow the Government to identify where the UK’s skills gaps are at present, and where they could appear in future.
Similarly, it would equip business leaders with the tools they need to build their organisation’s resilience and meet economic challenges head-on.
Entirely overlooking the UK’s skills shortage in this year’s Spring Budget was a hugely missed opportunity, but the government’s apprenticeship funding later in March was a positive step forward.
If we are to move the dial when it comes to boosting our productivity levels and further encouraging economic growth, we must continue to invest in our country’s skills and make addressing the national skills shortage a national priority
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Nichola Hay Director of Apprenticeship Strategy and Policy at BPP Education Group.
Recognised for her services to apprenticeships and skills in the Queen's 2021 New Year Honour List, Nichola Hay has worked in the further education sector for over 20 years, helping UK businesses to upskill and reskill employees across their entire organisation to help shape professional at every level.
Nichola is at the forefront of thought leadership and guidance on the challenges and opportunities within the UK's apprenticeship market - including how to maximise the value of the apprenticeship levy, whether a business pays into it or not.
