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Managing the future skills transformation in the UK

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With rising requirements for upskilling and reskilling, there are questions about whether our skills infrastructure can train the future workforce. In the last few years, pressure on businesses to upskill and reskill has escalated. The Learning for Life report from 2020 by CBI suggested that 90% of UK employees would need to reskill by 2030 to meet the rise of new technologies and the continued shifts in the UK economy. A further study by McKinsey suggested that focusing on upskilling and retraining would drive national productivity up by nearly 12%.

Last year, the New Economics Foundation (NEF) explained that one of the key Government objectives should be creating a resilient workforce that can lead the economy through decarbonisation and toward a net-zero future. The NEF warned, however, that the existing UK skills policy was inadequate to meet the demands of this challenge. Looking closer at the carbon challenge, the PwC report “The Energy Transition and Jobs” of 2022 explained that upskilling and reskilling were critical to avoid the potential of a resource crisis. PwC highlighted that the UK requires nearly 400,000 net-zero-focused employees to reach the decarbonisation targets, but there are only 270,000 professionals within our entire oil and gas industry, and about 20% are due to retire by 2030.

The Confederation of British Industry has suggested that the Government expand the Apprenticeship Levy into flexible skills and training Levy, driving further investment into high-quality, accredited training schemes. The Confederation also called for the introduction of Training tax credits for SMEs. NEF has also proposed the Future Skills Scheme, a national plan to prepare workers for the future economy.

Despite these positive proposals, none have materialised into decisive action. Paul Warner, Director of Strategy and BD at the Association of Employment and Learning Providers (AELP), believes it is a complex and volatile situation to make the UK skills environment more connected. For example, rising inflation has impacted funding for Post-16, and technical training and much of the funding for apprenticeships hasn’t changed since the reforms of 2017. To secure better pay, many trainers have moved from their positions to the jobs they’ve been training others to do. Learning providers require trainers to operate, but trainers are moving to apply their skills and knowledge in other areas.

Warner believes that apprenticeships remain a priority for the national skills strategy and that more work is needed to motivate people to pursue apprenticeships and to ensure employers engage with them. One challenge is that the Apprenticeship Levey scheme has encouraged businesses to focus on upskilling and reskilling their current workforce. This allows leaders to claim levy money back without hiring recruits. Studies show that existing staff generate a higher return on investment after taking new apprenticeships than recruits. The problem with this is that these people take on higher-level apprenticeships that take out more of the levy resulting in fewer opportunities, meaning limited opportunities for our future workforce. 

Aligning new opportunities with the net zero requires clarity on what green skills and jobs represent. Determining what makes a green job is critical to ensure the credibility of the green agenda remains intact. Appreciating the necessary skills for these jobs requires understanding specifically what a green job looks like.

Simon Grey, the Head of Business at ICAEW, explains that their members consistently cite the availability of skills and the challenges concerning retention and recruitment as the main issues facing the UK business community. The connection between education and business needs, including the importance of career development, improving productivity and attracting new talent, must be considered a top priority for all stakeholders.

There are several challenges associated with skills availability and the related impact on a business’s capability to meet demand. The development of green skills is a significant opportunity, something that could shift regional imbalances and generate further opportunities and prosperity nationwide. The main challenge facing our nation is that developing these required skills takes time, but these skills are urgently needed now.

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