View from the House: A more efficient skills system is needed


- Credit: Archant

We face an enormous challenge providing people with the skills we need in order to operate our economy.

The centralised skills system needs to be looked at again and while problems exist across the country, the issue is particularly acute in London. With Brexit on the horizon, a new approach is needed.

Since 2010 further education colleges have seen their funding cut by 50 per cent, while despite recent economic growth that has led to substantial reductions in the numbers of people on jobseeker’s allowance, an estimated 628,000 Londoners are not in work but would like to be and youth unemployment remains high. In 2016, 9.4pc of 16 to 24-year-olds in London were unemployed, compared with 3.6pc of 25 to 64-year-olds. For both adults and young people, that represents a huge waste of human potential.

Almost a quarter of all vacancies in London - 23pc - are due to a lack of applicants with the right skills. In addition, almost half of firms - 42pc - are not confident they will be able to recruit people with the higher-level skills that their organisation needs over the next five years. In the London borough of Haringey, where my constituency is located, 35pc of 19-year-olds do not have a level 3 qualification, yet London is an increasingly highly skilled economy. There is a clear skills mismatch.​

As London’s population rapidly grows, rising by 1.3 million since 2005, the demand for skills provision grows alongside it. Meanwhile, with Brexit ahead of us, cities in the UK need to grow their own talent and encourage businesses to invest more in skills. Devolution of skills provision would result in a more flexible system that responds effectively to the needs of London, as well as other cities.

Meanwhile, businesses have hit out at the government’s apprenticeship levy, with chief executive of Balfour Beatty Leo Quinn, labelling the system akin to an episode of “Yes Minister”. Just last week news broke that there was a 27pc fall in the number taking up trainee posts in the last quarter of 2017 as employers are deterred from creating posts because of the costs and complexity of the scheme. It seems likely that the government will now miss its aim of three million apprenticeship starts by 2020 and is another example of the skills system falling short of the current and future needs of our economy.

These challenges can no longer be ignored. To avoid lower economic growth, unemployment and scant productivity, the government must consider new options.

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As it stands, London has few tools at its disposal to cope with London-specific issues, while other regions and cities face similar problems.

This is not a party political matter: A rising population; underinvestment in education and training; skills gaps in many sectors; low numbers of apprenticeships. These problems deserve urgent attention.

Fortunately, the forthcoming devolution of the adult education budget is a vital first step in creating a more efficient skills system. But the government needs to go further on devolution if we are truly to solve existing problems.