Industry urges Government to step up pace of skills reforms

The report looks at the current landscape for British manufacturers and, what will determine the sector’s future over the next decade. It shows a sector dominated by the need for access to increasingly higher level skills and, one that whose competitive position will be focused on investing in digitalisation and AI to bring a step change in productivity.

However, the report also contains warnings for Government that the success of its Industrial Strategy will be hampered not just by an inability to find the right skills but, the ability of the current education system to develop them. Access to skills is also seen as the biggest factor in hampering the ability of SMEs to scale up in to globally competitive firms, a longstanding achilles heel of the UK economy compared to competitors.

To begin addressing this critical task, Make UK is calling on the Treasury to release the more than £1 billion of revenue raised from businesses for skills which is not being used to support employer investment in training, which Make UK is describing as effectively an ‘extra tax on business’ (1). According to Make UK, ringfencing the funding for the Growth and Skills Levy and Immigration Skills Charge would help provide two hundred and thirty five thousand new Apprentice starts. According to Make UK this would be critical in Industry helping Government address the number of young people not in Employment, Education or Training.

Rt Hon Robert Halfon, executive director of Make UK said: “Manufacturing is the engine room of the UK economy, but that engine cannot run on empty. Locking away £1 billion in unspent levy funds while businesses cry out for talent—and thousands of young people remain out of work or training—is a massive missed opportunity. It’s time to unleash this funding, turbocharge apprenticeships, and give our manufacturers the skilled workforce to lead a skills transformation.

“The future of manufacturers’ success will be won or lost on skills supply. For decades we have seen a slow-burn skills crisis in manufacturing. Now, with a shameful number of young people not in employment or education, fierce global competition for scarce skills, and tens of thousands of workers set to retire, this is a time-critical risk.

“Industry is committed to investing in the talent pipeline and helping Government solve the crisis affecting young people but, we need the right policy levers. We must end the constant cycle of reviews telling us what we already know and instead see genuine, radical action. Releasing the £1bn of unused levy and immigration funds for immediate investment in skills and training is the vital first step.”

According to the report, 99% of companies say access to skills will be key to future growth plans (almost two thirds saying it will be critical) while half of companies say that finding the right skills is currently their main challenge to growth. For almost a quarter of companies (22%), enhancing skills and training prospects will be the most important measure Government can take to impact their ability to invest and grow.

Looking towards the next decade, almost six in ten (59%) companies say a highly skilled workforce should be the vision for UK manufacturing, while a similar number (53%) say workforce development and skills will be their biggest investment for growth in the next decade.  

However, the report shows that while a majority of manufacturers (53%) believe the education system is capable of delivering the right skills, a significant number, almost four in ten (39%) believe it isn’t capable which, according to Make UK, should be a warning signal to Government.

Furthermore, while almost two thirds of companies (64%) said they wanted to scale up in the next decade, access to the right skills is seen as the biggest barrier to SMEs scaling up by almost a third (30%) of companies. Leadership and management skills are seen as critical to this and are a top priority for upskilling existing staff and using revenue already raised from businesses to boost the skills budget would avoid the need for any counterproductive decisions on limiting apprenticeship funding for training.

The report also shows that the future landscape of manufacturing will dominated by increased investments in digital transformation and AI with almost two thirds of companies (65%) planning to make significant investments in this area in the next five years. More than four in ten (42%) say this will critical for their growth prospects and for almost two thirds (65%) their ability to improve productivity.

The survey of 148 companies was carried out between 8 and 26 January.

www.makeuk.org