The government and business lobby groups need to get their act together when it comes to both immigration and skills, says the Confederation of British Industry’s former head of education and skills, John Cope
Given the importance of improving the way in which the UK does business, it’s unedifying to see government and business trapped in what seems a perennial scuffle over immigration.
As Brexit Day approaches, the government is fleshing out plans for how migration will work once it comes under the UK’s control – and especially once the transition period ends at the end of 2020. Briefings in various newspapers suggest that the new system may not have a salary threshold as originally proposed, and we know from the announcement this week that the visa regime for the most highly skilled mathematicians and scientists will be loosened. Against that, the government is making clear to bodies like the CBI that it will not accede to their demands for a more open post-Brexit immigration system, with a frustrated No10 firing back that business ought to spend more time investing in its own workers that bleating to government about easier hiring from abroad.
To fix the Levy, there needs to be a top up from government
Both are right. Both are wrong. And both are missing the real issue.
Both sides are right that this issue needs looking at. When it comes to investing in talent and people, the UK needs to wise up and realise the pace of change that’s happening around us. Careers are getting longer with the majority likely to work into their 70, and many kids born today likely to live to 100. The march of artificial intelligence, driverless cars, automation – the most visible sign of which is the death of the checkout in shops – and algorithms that can understand what drives our buying habits, relationships, and motivations better than we can ourselves. Our lethargy on this shows – the productivity of UK workers is lower than that of Germany by a quarter, and lower than the G7 by a sixth.
No10 are right to be frustrated. The level of investment by business in training is not good enough. Despite the world of work changing, investing in training and development is stagnant (despite the huge rise in the number of people in work since 2010) – with training investment barely moving from £43.8 billion in 2011 to £44.2 billion in 2017. Add in research from the Learning and Work Institute showing the number of adults in education is at a two-decade low, and you can see why No10 are touchy.
Business is right though that Brexit is absolutely not about pulling up the drawbridge to immigrants or just letting in ‘the brightest and the best’, whatever that means in reality. The immense strength of the UK, and every free society around the world, is openness to people, trade, and free market capitalism. Importantly, most British people get this. Focus group after focus group finds what most people want on immigration is not arbitrary quotas or a shameful hostile environment, they want to know criminals are stopped at the border, the system is under control, and immigrants are contributing rather than being a burden on public services. Otherwise, the door is open for people work in the UK.
But they’re both wrong, because this isn’t mutually exclusive. We desperately need employers to spend more on training as well as continuing to be a free and open country. And it also misses the point – which is how we do get this?
Having spent several years at the CBI leading their work on education and skills, a major barrier to getting employers to invest more in training is the apprenticeship levy.
When the levy was introduced, its purpose was clear: getting more money into apprenticeships, making sure apprenticeships are core part of our education system, and holding big employers’ feet to the fire on how much they should be investing in training.
Several years on, the impact has been mixed. Apprenticeship starts are subdued, with young people and lower level apprenticeships affected most. The levy has also become overspent, with funds now having to be rationed, especially to smaller firms. Anecdotally I’ve spoken to CEOs who admit that to pay the apprenticeship levy, they’ve reduced, or replaced entirely, other training. One of the consequences of this has been an explosion in ‘MBA apprenticeships’ where employers, with plenty of justification, are trying to use levy funds to pay for training they used to do.
To fix the levy, there needs to be a top up from government to the £3 billion employers contribute to fix an impending overspend; greater flexibilities for employers on what they use the levy for to support in work training that isn’t an apprenticeships; and much more support for smaller employers who struggle the most to offer training and take on apprentices. Just as importantly, we need to look at how to adapt apprenticeships to also act as ‘retrainerships’, for people wanting to change jobs later in their career.
So, let’s end the dither and delay. It’s time to fix the apprenticeship levy so younger people get a great start to their career, older people can do a retrainership to brush up on new skills, and employers invest more than ever so the workforce can make the most of new technologies.