Autumn Statement falls short on pay, skills and productivity challenge

3rd December 2014

NIACE believes the plans for long-term economic growth, as detailed by the Chancellor, require significant improvements in our skills base. However, investment in and learning by adults over 25 is falling and today’s Autumn Statement has fallen short in addressing that challenge.

The Autumn Statement included the following measures:

  • The introduction of Government-backed loans of £10k for under-30s doing taught masters degrees.
  • An end to employer National Insurance contributions for apprentices under 25.
  • A £20 million investment to improve careers advice and support for young people.
  • £20 million in 2015-16 and 2016-17 to fund courses to help adults experiencing mild to moderate depression, anxiety and sleep disorders in England.
  • £5 million for the Behavioural Research Centre for Adult Skills and Knowledge (ASK) to conduct pilots using Children’s Centres to provide employment support and access to basic skills training.
  • The government will pilot career-change work experience and training opportunities for older benefit claimants to help them gain the experience and training they need to re-skill and get back to work.

David Hughes, NIACE Chief Executive, said:

“The Chancellor started today’s Autumn Statement promising a boost for skills, he made some encouraging announcements but fell short of what’s needed. There are very important investments to support older people who need to retrain, those with mental ill-health and those who need access to basic skills training. However, by making young people a priority there is a danger that the impending adult skills crisis – identified recently by NIACE, the CBI, OECD and UKCES – will continue to threaten future economic prospects and limit social mobility.

“The focus on training for young people is vital, but is only one part of the solution. Over the next 10 years there are anticipated to be almost twice as many job vacancies as there will be new labour market entrants to fill them. The Government must therefore support all ages if they are to achieve their central ambition of creating a ‘more highly-skilled labour market’ which enables the UK to succeed in the global race. The latest figures on Employer Ownership Pilots show that when employers are given the power to choose they focus training investment predominantly on those people over 25.

“Our Manifesto, published in June, called for more balance of investment across younger and older people. We are determined to show how skills investment can address the challenges of low productivity and low pay. By helping people build the skills and confidence they need to progress in their careers, will help employers improve productivity and therefore increase pay. This improvement in productivity is crucial for inclusive and sustainable economic growth which will contribute to the deficit reduction which the Government has set so much store by.

“If the Government is going to deliver flood-defences, the ambitious road-building programme and create a ‘northern powerhouse’, this requires people of all ages and stages to train, retrain and stay in work longer. What the Chancellor didn’t mention was the overall collapse in adult skills participation, particularly at the technical and professional levels – where employers are already saying they have the highest skills shortages – which has been a consequence of the introduction of 24+ adult learning loans. We all have a role to play to get this right, a partnership of Government, employers, providers and learners is essential. The adult skills and community learning budgets, alongside giving adults more control over their learning, need to be a much bigger priority if the Government is going to succeed with its long-term economic plan.”