A well-designed Growth and Skills Levy is crucial; it must benefit all employees across industries, writes Nichola Hay
Kickstarting economic growth is at the heart of the new Labour government’s agenda, with the Prime Minister promising to deliver much-needed stability across all areas of the economy. We are several weeks into Labour’s tenure, and it is highly encouraging to see legislation which will refine UK skills policy and our existing training system being put into place. For example, we have seen the announcement of Skills England, which will co-ordinate key stakeholders in the education space, as well as the announcement of a new Growth and Skills Levy, which may give greater flexibility to the way that employers fund training.
The government must prioritise consulting with employers across the country to ensure that the new levy successfully delivers opportunities for employees across their workforce
Aside from proposals already being actioned, it will be interesting to see how the Labour Party Youth Guarantee, which formed a key part of Labour’s manifesto, will come into play in the coming months. Its main aim is to prevent young people aged 18 to 21 from becoming excluded from work or training at a young age.
While initial skills announcements have certainly been positive, the government must capitalise on this vital opportunity to ensure our skills system caters for all ages and levels, and take this into account when making key decisions going forward.
Holistic approach to boosting productivity
The number of young people in the UK who are not in education, employment and training (NEET) was 900,000 in the first quarter of 2024, compared to 851,000 in the previous quarter.
By drawing together existing funding and entitlements, the government is looking to address this problem by establishing increased access to training and apprenticeships, or support to find work for all 18 to 21-year-olds.
Tackling youth unemployment is a key stepping stone to boosting economic growth, however increased access to training and apprenticeships for employees of all ages is also key if we are to improve the UK’s productivity levels and ultimately achieve economic stability in the long run.
All too often, it is assumed that apprenticeships are solely for school leavers, but this is not the case. Apprenticeships are for all ages and skill levels, and can be used for upskilling and retraining the current workforce, and attracting new and diverse talent.
While overall productivity in the UK has improved compared to pre-pandemic levels, there will be increased demand for new skills, especially in emerging sectors such as digital skills, artificial intelligence and sustainability, if the economy is to thrive in future.
Apprenticeships offer employers an excellent opportunity to retrain staff of all ages and levels, equipping them with the skills they need to meet these demands. A highly skilled and capable workforce will be a key factor when contributing towards our country’s economic growth.
A Growth and Skills Levy which works for everyone
The broadening of the existing Apprenticeship Levy into a launch of the Growth and Skills Levy will potentially give increased flexibility to the way employers fund training, allowing firms to use a percentage of their levy contributions to fund training.
When implementing this new reform, the entire apprenticeship brand must be protected, and the government must take care not to displace any current apprenticeship programmes under the existing levy in favour of this one.
Furthermore, the government must prioritise consulting with employers across the country to ensure that the new levy successfully delivers opportunities for employees across their workforce, regardless of skill level and age.
The business case for a carefully thought-out Growth and Skills Levy which delivers opportunities for all is clear. Employers having greater flexibility to train, upskill and retain employees across the workforce will mean that employees feel valued by their company, boosting retention levels across businesses as a result, and significantly contributing to the government’s plans for sustained economic growth.
This cohesive approach will be integral to the creation of a successful National Skills Strategy, which should be aligned with industrial strategy, which will ultimately ensure that skills needs are met on both a regional and national level.
Final thoughts
While much work must be done to tackle the UK’s economic challenges in the long term, it’s highly encouraging to see the government putting the right measures in place for a reformed skills system.
Apprenticeships should not be regarded as a magic bullet for the growth of our economy, however a national skills system which delivers the right opportunities for all ages and skills levels is certainly a step in the right direction.
A dynamic and resilient workforce will be integral to the creation of a National Skills Strategy, closely aligned to industrial strategy, which will support our government’s ambitious plans for economic growth throughout the UK.
Nichola Hay MBE, Director of Apprenticeship Strategy and Policy at BPP
