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  1. Spotlight on Policy
17 February 2022

The skills shortage is stunting our economic growth

Ministers speak of the importance of a skilled workforce but operate in ways that undermine that aim.

By Toby Perkins

As someone who worked in the recruitment industry for eight years prior to entering parliament, I am acutely aware that there has never been a time when employers felt that their appetite for skilled, work-ready applicants was being satisfied.

However, it is clear that these pressures are growing, stunting our economy’s growth, affecting our international competitiveness and failing a generation of young learners and workers.

Even prior to Covid, there were almost 800,000 young people in the UK classified as Neet (Not in Education, Employment or Training). The UK must emerge from the pandemic with a focus on skills if our economy is to prosper.

The government consistently speaks of the importance of a skilled workforce but it is operating in ways that undermine that aim. It lacks an overarching strategy that recognises the power of a partnership between government, education providers and employers.

Ministers’ numerous new initiatives often contradict existing ones, don’t deliver what’s promised and create confusion among learners and providers. And ultimately, ministers don’t prioritise or understand the needs of students, staff or employers when it comes to further education (FE).

The Apprenticeship Levy, introduced in 2017, illustrates these failings. This tax on larger employers accompanied the scrapping of central government funding for apprenticeships. The levy has led to a massive reduction in the number of entry-level apprenticeship opportunities for young people and a reduction in the number of small to medium-sized enterprises (SMEs) employing apprentices.

Government data shows the total number of apprenticeships in England fell by almost a quarter from 2011 to 2019, with nearly 130,000 opportunities being lost even before Covid hit. Since then, this has only worsened, with opportunities for 16-18-year-olds falling by a third.

The closure of Connexions – the government-led careers service providing information, advice and guidance – was a short-sighted move, indicative of the government’s short-term approach, which has left a generation of young people without careers advice. Even now, provision is inconsistent, school rather than careers-led, and without effective oversight.

The government’s reintroduction of the so-calledLifetime Skills Guarantee, which it abolished in 2013, shuts out the vast majority of adults who need to retrain, and excludes nine million jobs in England in sectors not covered by the “guarantee”.

Similarly, initiatives such as Kickstart, Bootcamps and the National Careers Service have failed in their objectives, with the government’s desire for a quick headline creating a muddled landscape that is letting down learners and employers alike.

Facing widespread criticism, the government has now sought to outsource responsibility for the strategic direction of local skills policy to chambers of commerce, with FE colleges and metro mayors relegated to an advisory role.

More broadly, ministers have demonstrated they don’t understand the motivations and barriers facing learners from deprived communities, nor will they allocate the resources required to help this crucial sector thrive.

While Labour has welcomed the introduction of T levels as an expansion of technical qualifications, their operation – alongside the abolition of the Education Maintenance Allowance – makes it harder for learners to afford to study, with longer courses and limited potential for other paid work.

At the Labour Conference last autumn, Keir Starmer set out the party’s commitment to tackle these failures. Labour is building a vision for the future and a skills system designed around the needs of learners, employers and providers, ensuring that every young person leaves education ready for work and ready for life, equipped with the skills they and our economy need to prosper.

By removing tax breaks from private schools, Labour would fund access to a specialist careers advisor for every school alongside reintroducing two-weeks’ work experience, supporting young people to make informed decisions about future study and career options.

This comes alongside a commitment to focus on re-engaging young people who are NEET. Working with local authorities and metro mayors across the country, Labour would provide targeted funding for local programmes such as Talent Match, which deliver tailored support to young people not in education or employment, recapturing and igniting their interest in learning.

Labour has also proposed using unspent Apprenticeship Levy funds to create a wage subsidy, delivering 100,000 new apprenticeship opportunities for 16-24-year-olds this year. This would support the ambition to deliver more level 2 and 3 apprenticeships, giving young people a foot on the ladder.

In expanding apprenticeship opportunities, especially through SMEs, Labour would also ensure apprenticeships are available in towns and cities across England.

Contrary to their rhetoric, the Conservatives have failed to make skills or FE a priority, andcore FE funding has faced bigger cuts than almost any arm of government. Successive Tory-led governments have slashed FE budgets by a third and adult education by 50 per cent in real terms.

Britain now has the lowest levels of participation in adult and workplace education in 30 years, with employers unable to get the skilled workforce they need to secure our economy post-pandemic.

This has led to widespread redundancies and pay freezes across the FE sector, which has seen a whole generation of teaching talent lost.

We have also seen other damaging developments like the move to clawback adult education funding from colleges that delivered fewer courses during the pandemic. The likes of Derby College saw £1.8m clawed back, leading to dozens of redundancies.

The time for urgent action is now. Labour’s plans would deliver the skills that businesses across England need to prosper after the pandemic and as we look to the challenges of the future. Instead, the Tories are wasting individual talents and failing to deliver a secure economy. Working with businesses, Labour would see our economy firing on all cylinders, in every part of the country and every sector of the economy.

Toby Perkins MP is the shadow minister for skills and lifelong learning.

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