Employers warn of ‘glaring gaps’ in chancellor’s skills investment plan

Experts question whether business needs will be met as Rishi Sunak pledges to increase skills spending by 42 per cent in his budget speech

Yesterday’s budget announcement has left “glaring gaps” in the UK’s future skills strategy, experts have warned, with business groups concerned over the focus on T-levels and the apprenticeship levy.

The CIPD is among a number of professional bodies to have criticised chancellor Rishi Sunak’s announcement yesterday for failing to properly address the needs of employers, many of whom are still struggling to access the staff and skills they need.

Peter Cheese, chief executive of the CIPD, said it was “unclear if [the chancellor’s] initiatives deliver on what employers need or if they are creating positive work opportunities”.

“Piecemeal interventions like those announced [yesterday] are unlikely to amount to a skills revolution, more an evolution of things that already aren’t hitting the mark for many employers or jobseekers,” he said, adding that there was a “glaring gap” between the government’s plans to create a high skilled, high wage economy and its investment priorities.

“There needs to be an economy-wide, joined-up strategy to encourage and enable more firms to adopt strategies where the workforce is recognised as something to be invested in and drives value, rather than a cost to be minimised.”

Yesterday, Sunak announced the government would be increasing its spending on skills by £3.8bn over the course of the parliament – up 42 per cent on 2019-2020.

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Of this spending, £1.6bn will be allocated to increasing the uptake of T-Level qualifications over the next three years.

The government said the new investment would be enough to fund additional classroom hours for 100,000 young people, and it would more than double the number of T-level qualifications available from 10 to 23, including new qualifications in legal services and animal care and management.

Sunak also said as part of their skills spending, a total of £2.7bn would be put towards apprenticeships by 2024-2025, while £900m a year would be spent on work coaches.

While Cheese welcomed the new T-level qualifications as “a step towards improving technical skills”, he warned that many employers “simply don’t know enough about them or fully understand them”. A CIPD survey earlier this year found that nearly half (46 per cent) of employers had never heard of T-Levels.

“Given current pressures on businesses, there’s also concern over whether enough employers will be able to offer the work experience element,” he added.

Kirstie Donnelly, CEO of City & Guilds Group, too questioned whether enough young people would choose to study T-levels to make the qualification succeed.

There needed to be “a significant amount of support from [the] government over the next few years to promote them to young people, their parents and teachers alike, and convince them of the life changing benefits they could bring”, she said.

The government’s doubling down on the apprenticeship levy scheme also came under criticism from employer groups.

Cheese said failure to reform the system would continue to hold back employer investment. “The levy in its current form has failed on every measure, coinciding with a reduction in apprenticeship starts overall, a fall in the proportion of apprenticeships going to young people and a reduction in employer investment in training,” he said.

Kate Shoesmith, deputy CEO of the Recruitment and Employment Confederation, added that the levy acted “as a brake on prospects for young people”. 

“It needs to be overhauled, so that it supports people at and into work properly,” she said.

Sunaks’s announcement also included a planned increase of 29 per cent in adult skills funding compared to 2019-20, which the chancellor said would allow a four-fold increase in the number of places on the government’s ‘skills boot camps’ for adults with no post-16 qualifications.

Additionally, £560m will be allocated to the Multiply scheme, which is aimed at improving the numeracy skills of half a million adults, and will be drawn from the UK Shared Prosperity Fund.

However, Donnelly said what was needed was more “short-term and modular” digital learning opportunities for UK workers “to help fill key roles and ensure that people of all ages and at all stages of their careers are able to upskill and reskill”.

“We still don’t have a skills system set up to meet the needs of adults who will need to constantly upskill and reskill over five-decade careers,” explained Donnelly.

“What we’re still not seeing is a comprehensive long-term strategy that connects the dots of careers advice, pre and post 16 education and employment to local labour market needs.”