When George Osborne spoke about UK PLC’s poor productivity during his Budget speech yesterday, my ears pricked up. In fact, I was more than a little surprised that finally a politician of any stripe was about to tackle the shameful fact that workers in other major economies routinely produce more in three or four days than UK workers produce in a week. This is a point which was missing in all the political parties’ General Election manifestos as I pointed out in this blog post on Training Zone in the run up to polling day: Time for an L&D Manifesto.
In that post I advocated a levy on firms who did not provide high quality training and so when Osborne went on to announce his plan for an apprenticeship levy on large companies, I assumed that perhaps George was an avid reader of the Training Zone blog pages.
Ah, such hope and such disappointment.
Osborne’s recipe to end the UK’s productivity malaise is to create more apprenticeships. Now this could be a good thing. I have spoken with major employers who have exceptional apprenticeship schemes, offering a long-term commitment to school leavers and others coupled with high quality training. Frank Clayton, Group Head of L&D for engineering and infrastructure company NG Bailey told me recently: “We see apprenticeships as the first step on our talent ladder.” In the scheme that NG Bailey run not only do apprentices get first rate qualifications, but they are exposed to a range of opportunities to develop communication and leadership skills which will see them advance as the next generation of managers in the organisation.
But not all apprenticeships have such a track record. In some reports as many as two-thirds of apprentices were previously employed by the company and apprenticeships have been used as a route to gain government money for training which would have happened in any event and to reduce pay rates to the levels allowed under apprenticeship pay rules. Even the Government’s Department of Business, Innovation and Skills (BIS) recognised this last year. (Apprentices paid too little and what the government isn't telling you about apprenticeships) As apprenticeship budgets are squeezed, the length of the apprenticeship is shortened and the quality of the courses offered similarly reduces.
The government has also launched an attack on FE Colleges. They are experiencing budget cuts of a quarter every year. As the Association of Colleges said in February this year: “This situation is now urgent. This could be the end of this essential education in every city, town and community in England and the consequences will be felt by individuals and the economy for years to come.” (See full ACO briefing on budget cuts here). Given these cuts, the chance of high quality training and skills qualifications being delivered via the apprenticeship levy remains at best questionable.
Some employers are even more shameful in their abuse of apprenticeship funding and low pay rates. In one TV expose, online retailer ASOS was identified as employing contract staff as apprentices – and paying them just £2.73 per hour – when the individuals employed didn’t even know they were employed as apprentices and couldn’t describe the training they received.
The fear is that the Chancellor will continue to play the number’s game with apprenticeships. He will focus on the absolute input numbers – the 3 million promised apprenticeships – rather than the outcome numbers. As everyone in the L&D world knows, counting the number of courses and course participants is meaningless when assessing impact. Only measures of quality and effectiveness will do.
Increasing apprenticeships could only ever be one part of a solution to the nation’s productivity gap. I am not a huge fan of the concept of employee engagement. However, I recognise that staff happiness and involvement in a collective enterprise is part of the route to increasing workplace effectiveness. Osborne’s planned increase in the minimum wage over the next five years will not compensate sufficiently those who will lose working or child tax credits. (To describe this is as a national living wage is political spin at its most crude – the living wage factors in the existing tax credit regime. After tax credits are removed, the living wage in London would need to be more than £11 an hour now – rather than the promised £9 an hour in five years’ time.)
It is difficult to see how employers will be able to engage their employees in any meaningful way if they are wasting valuable energy worrying about being able to pay for housing, food and their kids’ clothes.
Osborne’s focus on productivity gaps between the UK and other industrialised nations is welcome. The fact that he recognises that UK firms do not train enough is also a step in the right direction. But to play a real role in addressing the need for skills in the UK, this spin afflicted budget doesn’t go anywhere near far enough.
Robin Hoyle is a writer, trainer and consultant. He is the author of Complete training: from recruitment to retirement. His new book: Informal Learning in Organizations; how to create a continuous learning culture is published by Kogan Page on September 3rd. Robin will be speaking at Learning Live on September 10th and Chairing the World of Learning Conference at the NEC on 29th and 30th September, 2015.