Following the 2010 election, former Treasury secretary Liam Byrne left a note for his successor stating “I’m afraid there is no money.” I doubt a similar letter will be written in 2024 – there’s no need.
Everyone knows that the public finances are under the greatest strain in generations. Politicians of all colours are still, however, planning to spend and also, in the case of the Conservative Party, cut taxes. Jeremy Hunt has pledged to maintain the pension triple lock at a whopping cost of £11 billion per year (and significantly more in the future) while still cutting taxes. Meanwhile Rachel Reeves is still planning a multi-billion pound spend on Labour’s Green Prosperity Plan, albeit at a reduced level from the party’s original intentions.
Find money through productivity
For both Hunt and Reeves the funding solution to their proposals is to increase productivity. Average output per worker for G7 nations (excluding the UK and Japan) was 16 per cent above the UK level in 2021. Various causes for low UK productivity can be identified – and an analysis of such causes and potential solutions should be at the top of any Chancellor’s in-tray.
Planning difficulties, particularly related to infrastructure projects, are frequently quoted. But covering the country with solar farms, wind turbines, pylons, and new roads and rail lines is not going to be universally popular – and as experience with HS2 shows, will be difficult to pull off.
Persuading older people to return to the workforce may be part of the answer. Providing more support for those on benefits to re-enter and stay in the workforce may also help tackle some skills shortages. In terms of raising productivity, the Westminster government also has a key policy role in ensuring that training programmes equip individuals of working age with the skills employers need.
This, of course, means an incoming government needs to have a skills policy focused on training programmes at all levels for individuals of all ages. Only by adopting such an approach will any government ensure that the UK workforce has the skills needed to increase productivity.
Out of the margins
Skills policy has for generations been a massive but under-valued and under-utilised productivity dynamo, housed in obscure parts of the Whitehall estate. Skills has been a Cinderella policy brief, yet it is a core solution to our central economic challenge of low productivity. One could add that effective skills policy is essential to recruiting and training the nurses and adult and social healthcare professionals our NHS needs, as well as new police constables, social workers and teachers.
Similarly, Labour will not get very far with their Green Prosperity Plan without a substantial emphasis on supporting individuals to acquire the skills needed for its delivery. Any new government should make clear that skills policy is a top priority.
Ministers and shadow spokespeople do understand the importance of skills. The consultation on the Advanced British Standard noted that “a third of our national productivity growth over the last two decades is explained by improvements in skills levels across the workforce.” This is an important statistic. It must, however, be understood in context. In March 2024 the New Economics Foundation reported that employers spending on employee training was a fifth less than a decade ago. So where would productivity be if employer spend on training had not declined but, rather, had increased?
From warm words to a proper plan
The other priority for a new government should be to determine what focus and action is needed to raise skills levels to increase productivity. Here the skills sector doesn’t make it easy for politicians. Some training providers and their representative bodies will argue for the focus to be on young people and lower levels of provision, often at the expense of other types of skills provision.
Everyone will agree that 18 and 19 year-olds need to be properly trained to enter the labour market. If, however, government wants to raise productivity, it needs a specific focus on the existing workforce. Put bluntly, a poorly skilled 30 year-old without training has a forty-year poorly skilled working life in front of them. If we want a high skill, high productivity and high income economy, skills policy must be about all ages and all levels of provision.
As such, skills programmes such as apprenticeship must be developed and delivered as all age and all level programmes. This means that providers of all types are central to skills policy, higher education institutions as well as further education colleges and independent training providers.
Which brings us back to money
We also need a serious discussion about money. UK employers need to spend more on training and yet, sometimes, policy does not reflect this fact. The consultation on the new Lifelong Learning Entitlement (LLE) focused on how learners would fund their post-18 learning through government-backed loans. There was much to be welcomed in the LLE proposals, such as its flexibility, focus on helping individuals to train, retrain and upskill, and combine credit from different programmes.
Oddly, however, while there was emphasis on using the LLE to ensure that training met employer need, there was little consideration as to whether and what financial contribution an employer could make. We need a national debate on who pays for what in post-18 learning – government, individuals and employers – and what, in return, each party can expect.
It remains to be seen whether we will see our new skills (and HE and FE) minister Luke Hall, and shadow skills minister Seema Malhotra, draw up detailed policies which will be a central feature in a post-election Chancellor’s economic and fiscal plans. But I very much hope so.
