Britain has struggled to produce economically valuable skills for over 130 years. In 1882, the Royal Commission on Technical Education (the Samuelson Report) diagnosed relatively poor technical skills development as a cause of the UK’s eroding competitiveness. Today, policymakers recognise the importance of skills for driving up the country’s competitiveness, but simultaneously bemoan the difficulties of producing a sufficiently large volume of the right skills. How can this be fixed? First, ensuring the publicly funded skills system is responsive to the needs of the labour market. Secondly, by boosting the skills needs of employers.
Heeding the skills needs of employers
In 2006 the Leitch Review complained that the UK’s skills system was not responsive enough to the skills needs of employers and individuals. A set of reforms were subsequently set in train that sought to tie the supply of skills much more closely to demand. Since then, public funding for training providers has been increasingly tied to the delivery of skills for which there is a demand in the labour market. And with the involvement of employers in the design of apprenticeship standards, the skills system has further shifted towards being demand led.
As well as ensuring skills supply is matched to demand there is also a desire to increase the demand for skills. It is by boosting the level of demand that a positive impact on productivity and competiveness will be realised. But to achieve this something extra in addition to the reforms mentioned above is needed.
Integrating skills within an industrial strategy
The introduction of the Apprenticeship Levy may well boost employer demand for skills. As might the reforms contained in the Report of the Independent Panel on Technical Education. These are important developments. But the biggest boost to skills demand is likely to come from UK employers capturing increasing shares of the market for hi-tech products and knowledge intensive services. A national industrial strategy is important in order to nudge employers into these markets.
A final word
If industrial strategy is able to boost the demand for skills then, arguably, the skills system is now better structured to meet that demand than in the recent past. Employers have been provided with a skills system that is sensitive to their skills needs, so now they need to make more use of it.
Read our Foresight evidence review The UK skills system: how well does policy help meet evolving demand? to learn more about how Britain can fix its skills problems.