2021 Budget: Unpacking the Chancellor’s “skills revolution”

Striking an optimistic tone, the Chancellor located investment in skills at the heart of government efforts to drive regional productivity, level up opportunity and create a high wage economy. But the Budget was a missed opportunity to unlock complementary business investment to address current shortages and develop the skills for new markets that can galvanise growth.

Lifelong learning for opportunity and growth

The budget recognised the importance of helping people of all ages develop their skills with the following announcements:

• Meeting the commitment to the National Skills Fund, with £550m in 2022/23
• Expand the Lifetime Skills Guarantee so more adults can access funding for in-demand Level 3 courses
• Quadruple places available on Skills Bootcamps
• Multiply programme, providing opportunities for adults to develop their numeracy skills.

Backing for Skills Bootcamps offers the chance to help businesses confront skills shortages more rapidly. Aligning training with roles on the Shortage Occupation List will be important to help people to retrain for jobs that are most needed. We await further detail on how more adults will be supported to benefit from the Lifetime Skills Guarantee.

With people needing to update and build their skills over working lives, ramping up short, flexible and modular training can make the skills system more flexible and investible for firms. This should be a key focus of future allocations under the National Skills Fund.

Funding for apprenticeships and technical education

The Chancellor offered backing for new T Level qualifications and maintained the commitment upgrade FE colleges.

• Continuing £1.5bn capital investment to raise the condition of the FE college estate
• Providing additional classroom hours for up to 100,000 T Level students
• Creating 24,000 traineeships
• Increasing apprenticeship funding to £2.7bn

Businesses of all sizes recognise the importance of apprenticeships in accessing and developing the skills they need. Continuing to fund 95% of apprenticeship training costs for employers who do not pay the levy is therefore a welcome step. Nevertheless, the levy system requires fundamental reform to unlock investment in the range of skills and training businesses need to be successful.

There are positive signs that providers will have the funding, equipment and technology they need to deliver new T Level qualifications. But employers are also key to delivery. Ensuring the qualification supports progression to apprenticeships, higher education and skilled employment can help give firms the confidence to invest in this route as part of their talent pipeline. Giving firms more flexibility to deliver industry placements can also allow every student to benefit from a high-quality experience with an employer. 

Government response to the Augar Review expected shortly

Nearly two and a half years after it was published, the Budget confirmed that the government response to the Augar report will be published “in the coming weeks”, alongside further details of the higher education settlement. Our universities are mission critical to building a more inclusive, innovation rich and regionally prosperous economy, and providing a highly skilled diverse talent pipeline that firms prize. The government response must give universities the financial security they need to make a full economic contribution and strengthen partnership with business.

What happens next?

The CBI will be responding to the upcoming consultation on the Lifelong Loan Entitlement to ensure people of all ages can build and update their skills throughout working lives. The government response to the National Skills Fund consultation also offers an opportunity to remove current barriers to adult retraining and ensure training addresses the shortages employers face.

The government must also turn its attention to catalysing business investment in the skills for a future focused economy. Unlocking business investment in skills will be a fundamental enabler to sustained economic growth and firms’ ability to decarbonise. With nine in ten people needing to reskill over the next decade, at an additional cost of £13bn, we need the partnership of the century between business, education and government. 

To get involved in this area of work, or to find out more, please contact, Aaron Revel.