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Semta's Chief Executive Ann Watson shares her views on the latest news, policy, issues and events of interest to the engineering and advanced manufacturing sector. 

 

Wednesday, 23 November 2016 00:00

Focus on productivity in Autumn Statement the right one - now let's focus on skills

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It was very pleasing to hear the Chancellor focusing so heavily on boosting flagging UK productivity in his first Autumn Statement. We continue to lag behind international competitors like Germany and the effect of this is that UK workers have to work longer hours and for lower wages.

The Chancellor’s focus on infrastructure investment is correct, too, and the £23bn he announced is welcome. Compared with our rivals, Britain’s road network is crumbling, our trains are congested and slow, and our broadband is lethargic. A 21st century economy cannot continue to grow if the crucial infrastructure businesses and employees depend on was built in the last century (or in the case of the rail network, the century before that). Wrapped around this is a developing Industrial Strategy, previously a taboo phrase, which will target this infrastructure investment at the geographic areas where it can have the most impact.

 

Given that the Chancellor’s focus is on ways to increase productivity, given the high levels of economic productivity within our world class engineering sector, and given the skills challenge facing the sector, we surely need a concerted effort to meet its skills needs. Wages remain high in the engineering sector because productivity remains so high – an average gross value added per employee of £64,600 compares well with £45,200 per employee across the economy as a whole, and that explains why the sector has an average salary of £38,500 according to government data. A strong engineering sector with a strong technical skills system may well explain why German productivity remains so much higher than UK productivity.

We know there’s an engineering skills crisis on the horizon – we need 800,000 of them by 2020 – but the word ‘engineering’ doesn’t appear once in either the Statement or in the Chancellor’s speech to the Commons. The word ‘skills’ only crops up six times in the Statement and was spoken once in passing by the Chancellor. Although the government has had a strong focus on apprenticeships the Chancellor didn’t mention them at all, although there is at least an extra 10p an hour on the apprentice National Minimum Wage buried in the full Statement. We had the promise of £50m extra to expand grammar schools, but no announcement on investment in technical skills so that the financial investment matches the government’s emotional investment.

If the government is to have a place-based approach to investment and tackle regional inequalities in economic prosperity then local skills provision needs to be effectively matched with local development projects and goals. Area-based reviews of further education have been undertaken but as University Technical Colleges were outside of their scope, and with Institutes of Technology set to be introduced, there is a risk of duplication and wasted money in some areas while other areas do not have enough capacity.

The Industrial Strategy will soon be published, so let’s hope that there is a strong Skills Strategy built into it. The government has talked a very good game on the importance of technical skills and there are some really exciting proposals in the reforms currently being taken through Parliament, but Lord Sainsbury, author of the paper underpinning the reforms, has recently called for further money to be invested to ensure training is of the very highest quality. Can we afford not to heed his call?

If you would like to read the full Autumn Statement published by the Government it can be found here. A summary of the Statement from an engineering and skills perspective can be found here.

Read 1861 times Last modified on Wednesday, 23 November 2016 16:33