Sitting on a Select Committee that gets to interview Ministers, trade groups, major companies and entrepreneurs on a regular basis allows me privileged insight into many of the problems facing British business at local, national and global levels. It also allows me to see some problems that overarch all quarters of business, regardless of size.
One of those problems is the current skills situation in this country. Businesses simply cannot find enough good people with the right skills – be they basic or highly technical, so serious questions must be asked.
The majority of businesses do of course invest in their own staff training but, to my mind, businesses should be able to expect basic levels of numeracy and literacy prior to employment. Instead what do they find? Almost half of all UK adults are not fully numerate and 5 million are not functionally literate. As a result, despite a thriving market, positions are hard to fill because of a lack of suitably skilled candidates. In 2007 vacancies due to skills shortages were estimated at 21%. A sizeable problem indeed.
And all this despite ‘Train to Gain,’ an initiative which has helped some 52,000 employers to train members of their staff. ‘Train to Gain’ is a national skills service to support employers and improve skills as a route to improving overall business performance and by all accounts it is one of those rare projects which emanate from Government which is successful.
Why are skills important? We now face a global challenge from the rapidly growing economies of China, India, Brazil, Mexico and the other ‘tiger’ economies. India and China alone will be responsible for 60% of world trade by 2050. Indeed the expansion of China in particular poses a major threat to our own manufacturing base and urgent action is needed to ensure the UK remains competitive.
There has been a marginal improvement in general skills in recent years but it is still the case that the UK skills base has a high mountain to climb. The Leitch Review of Skills described the skills profile of the country as ‘unimpressive’ in comparison to others and noted that the UK is ‘consistently out-ranked by countries such as Sweden, the USA and Germany.’
Take higher education as an example. In the UK the proportion of first degrees taken in STEM subjects - science, technology, engineering and Maths - is 25%. In China that figure is 50%. And given that the population is sizeably bigger than our own that figure represents a massive advantage. A Council for Industry and Higher Education report concluded that whilst the number of STEM graduates increased in the last five years, the number of those taking STEM A Levels – the next generation of graduates – fell, by 15% in Mathematics, 14% in Physics and 47% in Computer Science.
Such falls are inevitably blamed on funding shortages, which cause a decline in skilled teachers, a lack of up-to-date laboratory facilities and more worryingly the closure of some University departments. Such closures have included the Physics department at Reading University in November 2006, and the Chemistry departments at Lancaster and Exeter Universities. Indeed the Government’s current science budget left the Science and Technology Facilities Council (STFC) with a funding shortfall of £80 million.
As the STFC subsequently announced a series of cuts, the reaction of the physics community has forced the Government to launch a hasty ‘review’ of its science budget allocation.
But it is not just funding that is responsible for this sorry state of affairs. Fewer than one in three pupils in state schools has the option of taking three sciences, compared with more than two thirds of pupils in independent schools. Surely that cannot be right. Every pupil should have the ‘right’ to study biology, chemistry and physics, if they so choose.
For every success – such as Train to Gain – there are always proposals in the pipeline that will be potentially damaging and I will take one current proposal to demonstrate this.
In September last year the Secretary of State for Innovation, Universities and Skills, John Denham, announced that the Government intended to cease funding the study of Equivalent Level Qualifications. An ELQ is a qualification that is equivalent to, or lower than, a qualification that a student has already achieved. The intention is to divert some £100 million to help more people enter higher education rather than support those that need to retrain.
I recognise the financial pressures on Government, which incidentally they mostly brought upon themselves, but surely the need to retrain is equally as important as getting more people into university. The Select Committee has recognised this and condemned the proposals.
When it first came to power the Government set itself the target of getting 50% of school leavers into university. Such arbitrary targets are harmful to the need for improved skills in the country. Yet that thinking remains unchanged.
For example, the Higher Education Funding Council for England has suggested that 25% of Open University students in England will become under-funded from 2008/09.
In a dynamic and rapidly shifting economy, where new industries emerge all the time, the need for people to retrain and to do so quickly is vital. Government is often likened to a huge tanker that turns only very slowly, but it is vital that provision is made to allow some industries to move much faster.
That flexibility is imperative for our future wellbeing. I have mentioned the threat from emerging economies but we face our own personal challenges in the UK. More than 70% of the UK’s projected working population in 2020 are already at the age of 16 or over. In other words we haven’t got much time. Further, whilst there are 3.2 million unskilled jobs in Britain today, that figure will have reduced to just 600,000 by 2020. The need for real progress is therefore immediate and vital.
Apprenticeships are another area of concern. Apprenticeships were re-launched in 1994 as Modern Apprenticeships with a National Vocational Qualification as its aim. Apprentices were normally employees and it was expected that they would be afforded some time away from work for off-the-job learning. Costs of assisting the apprentice to gain the expected NVQ and costs of assessment were met out of public funds, while the employer paid wage and all other costs. Apprenticeship schemes are available in 80 different sectors of industry.
While statistics show increased participation in the apprenticeship system since 1997, the inclusion of lower level qualifications labelled ‘apprenticeship’ has disguised the fact that the UK is actually training fewer people at level 3 than we were ten years ago. In 2004/05 59 per cent of 16 to 18-year-olds failed to complete their apprenticeship.
Britain needs a highly-skilled workforce and a dynamic education system which encourages both social mobility and an open society. If we are to achieve that objective the Government must bring forward its review of funding for higher education so that we might better understand the effect that the new variable fees regime is having on access to universities, on part-time and mature students, on improving skills and on the financial health of our higher education institutions.
Only if the Government really gets down to helping small and medium-size businesses train their staff and fully think through damaging proposals recently enacted can we begin to grow our skills base and compete in the modern world. We need to equip all of our workforce with the relevant skills to ensure success for the UK in a rapidly growing world economy. To fail will be to condemn our children and grand-children to third world status.