CBI: Skills emergency could ‘starve growth’

Posted on 13 Jul 2015 by Callum Bentley

The demand for higher-level skills in British industry is set to grow in the years ahead, with sectors central to future growth, including manufacturing and construction, particularly hard-pressed.

That’s according to this year’s CBI/Pearson Education and Skills survey published today.

The survey of 310 companies, which together employ over one million people, underlines the skills challenge facing the UK.


It reveals:

  • two in three businesses (68%) expect their need for staff with higher level skills to grow in the years ahead, but more than half of those surveyed (55%) fear that they will not be able to access enough workers with the required skills
  • Demand for highly skilled workers is particularly strong in sectors critical to the rebalancing of the economy – engineering, science and hi-tech (74%), construction (73%) and manufacturing (69%).

With an apprenticeship levy for larger employers set to be introduced following the Budget, the CBI is concerned that while it may fund more apprenticeships to meet the Government’s target of 3m, it will not deliver the high-quality, business-relevant training needed, and do little to help small or medium sized businesses.

Of apprenticeships starts in 2013/14, just 2% were higher apprenticeships, which lead to qualifications at a level equivalent to higher education. Business is clear that the Government must accelerate reforms and ensure employers are in control when it comes to the design and delivery of apprenticeships to boost quality.

Katja Hall, Deputy Director General, CBI.
Katja Hall, Deputy Director General, CBI.

CBI deputy director-general, Katja Hall commented: “The Government has set out its stall to create a high-skilled economy, but firms are facing a skills emergency now, threatening to starve economic growth.

“Worryingly, it’s those high-growth, high-value sectors with the most potential which are the ones under most pressure. That includes construction, manufacturing, science, engineering and technology.

“The new levy announced in the Budget may guarantee funding for more apprenticeships, but it’s unlikely to equate to higher quality or deliver the skills that industry needs. Levies on training already exist in the construction sector where two-thirds of employers are already reporting skills shortages.

“Employers have a critical role in upskilling the workforce, but part of the deal must be for real business control of apprenticeships to meet their needs on the ground.

“The best way to plug the skills gaps and provide quality training is to speed up existing apprenticeships reforms already underway and encourage smaller firms to get involved.”

Apprenticeship opportunities growing but reforms must now accelerate:

  • Around two-thirds (66%) of respondents are involved in apprenticeship programmes, with provision spreading well beyond traditional sectors like manufacturing (76%) to new sectors such as professional services (42%), such as accounting and legal services
  • 62% of respondents are either intending to expand their apprenticeship programme or to start one in the next three years – the best result since the survey began in 2008.
  • Recent government reforms have been welcomed by business (81%) but concerns include bureaucracy and red tape (29%) and delays in funding reform (25%)
  • 38% of respondents say matching qualifications better with business needs would get more companies involved in apprenticeships, as would putting more purchasing power in the hands of firms (34%).

Rod Bristow, president of Pearson’s UK business, said: “Better skills are not only the lifeblood of the UK economy – as fundamental to British business as improving our infrastructure, technology and transport links – they are also critical to improving young people’s life chances, of enabling them to be a success in life and work.

“The government is right to be ambitious about apprenticeships. We need more higher-level apprenticeships in high growth sectors like biotech, engineering, and technology, as well as traditional ones.

“But our further education sector, which provides the Higher National Diploma courses that deliver these technical skills, sits on the edge of a funding precipice and may suffer damage for years to come.  Proper funding of further education would provide a huge boost to British businesses and productivity. Without improving the supply of skills, the UK will find it hard to remain competitive in the global economy.”

Firms report widespread difficulties in recruiting staff with the necessary science, technology, engineering and maths (STEM) skills, with half (52%) of firms experiencing (or expecting within three years) a shortfall of experienced staff. As a result STEM study carries a real premium with 2 in 5 employers (40%) preferring graduates to have STEM skills.

The survey also highlights the desire among businesses for schools to focus on developing rounded and grounded young people from primary age with the majority of firms arguing that aptitude and attitude rank ahead of academic qualifications:

  • Nearly three-quarters (73%) of firms want to see primary schools focus on developing pupils’ literacy and numeracy, as well as communications skills (46%) and other skills that will unlock their learning potential
  • In later years, the focus shifts to developing greater awareness of the world outside the school gates (50% of firms want this as a priority for the 14-18 age group)
  • Close to half of businesses (45%) recognise foreign language skills as beneficial to them with European languages heading the list of those in demand – French 53%, German 49%, Spanish 36%
  • Three-quarters of firms (77%) are not satisfied with the current performance of careers advice in schools and colleges across all parts of the UK.

While the performance of schools has been gently improving, businesses are still worried about a long tail of under-achievement. Over a third of firms report some concerns with school leavers’ literacy/use of English (37%), basic numeracy (37%) and nearly half on communication skills (49%). Close to a third (31%) of firms have had to organise remedial training in core skills for some school/college leavers.

The CBI has set out a comprehensive reform programme for schools in the UK through its First Steps campaign to help focus beyond academic ability alone. When employers recruit school and college leavers, this shines through.

Attitudes/character (85%) ranks well ahead of qualifications (39%) or academic results (31%) as the most important factors when recruiting. 39% are currently concerned by the attitudes of school and college leavers to work, with 61% not satisfied with self-management and resilience. The CBI has called for a series of reforms to our school systems, including curriculum and Ofsted reform.

Katja Hall, added: “We betray our young people if we fail to equip them with the knowledge, skills and attitudes needed to progress in work and life. We must better support schools and teachers from day one to develop the confidence, resilience and creativity that will help the next generation of talent to succeed.

“Employers consider attitudes and aptitudes more important than any specific qualification or skill, other than practical literacy and numeracy. They also want to see young people gaining a greater understanding of the world outside the school gates, by inspiring pupils about career opportunities from a much earlier age and by putting work experience back on the agenda for all young people.”

On business’ role in the education system, the survey highlighted that many firms are already engaged with schools:

  • Three-quarters (73%) of firms which responded have at least some links with schools or colleges, with over half (51%) increasing their engagement in the last year.
  • The two most common forms of support from firms are offering work experience placements to pupils (74%) and delivering careers advice and talks (71%); 60% report that they are willing to play a bigger role in supporting careers provision.
  • Businesses report that some of the biggest obstacles to greater involvement are a lack of interest among schools or pupils (25%) and fitting involvement with the school timetable (23%).

Bristow concluded: “It’s overwhelmingly clear from the research that employers are looking for education, above all else, to be a better preparation for the workplace. Skills such as communication, team-working, grit and leadership must be nurtured throughout our education system in order to enable young people to enter the work place with confidence and to realise their ambitions in a modern economy.”