Hot on the heels of the Budget this week, the government has released its much-trailed “productivity plan” today.
The arguments on productivity are well rehearsed. UK productivity lags behind our international competitors by significant margins. Long-term growth potential suffers as a consequence.
Among the key drivers of this gap are skills. Out of 34 countries, the UK is 15th for literacy and 17th for numeracy; nearly one in five people lack these basic skills. One in five adults lack GCSE-equivalent qualifications. At higher levels, these issues persist: the UK is 24th for intermediate skills (level 3) and 11th for degree-equivalent skills. So what does the new plan do to help us address these weaknesses?
There are some measures to welcome in the plan. A new employer levy, to help deliver the government’s ambition for three million new apprenticeships, should help to rectify the long-term decline in employer contributions to training. Changing the funding model so that funding is not allocated per qualification is a good opportunity to move away from the obsession with qualifications, and towards delivering what employers really want. Further rationalisation of qualifications provides the backdrop for this, and the emphasis on localism and devolution is welcome.
But there are big gaps. In various areas the plan is silent, particularly on the perfect storm in adult skills provision and employment support. Unprotected departments such as the Department for Business, Innovation and Skills, the Department for Communities & Local Government and the Department for Work & Pensions, continue to take the biggest hit in terms of skills and employment support cuts in this Budget.
Adult provision matters because not all people who are not in employment, education or training (Neet) are young people. Over the course of the next decade, the UK will create 13.5m new jobs, but only seven million young people will enter the labour market over the period. Tackling adult skills gaps, particularly in deprived areas, is essential in addressing this challenge. Without it, the needs of working age adults will be missed and we will not close the productivity gap.
At the National Institute for Adult Continuing Education (NIACE) we are designing solutions to help. The central parts of our offer are a career advancement service to pilot in local enterprise partnership (LEP) areas, which develops informal steps back into learning and work using a new citizens’ curriculum approach, and improvements to the experience of and progression beyond apprenticeships into sustainable careers for adults.
The government’s emphasis on employer engagement and tackling youth unemployment are welcome but closing the adult skills gap is essential to sustainable recovery for working age populations across the UK. Ask any elected member or employer in a LEP and they will tell you they are as concerned about Neet working age adults as they are about young people.
Developing a reformed adult skills and employment support system represents a huge opportunity for closing the productivity gap. We need a productivity plan that goes further to bridge the divide and meet the needs of the whole working age labour market if we are to equip local areas to rise to the challenge.
Tom Stannard, deputy chief executive, NIACE