Employers to step up skills investment as Covid transforms work – CBI/Birkbeck Education & Skills Survey

The Skills & Post-16 Education Bill can be a spur to £130bn training investment needed by 2030 from business & Government - CBI

41% of employers plan on increasing investment in training compared with pre-COVID levels in response to accelerating changes to work, according to the 2021 CBI/Birkbeck, University of London Education and Skills Survey.

The April 2021 survey, completed by 252 respondents, revealed that over the next 3-5 years:

• Companies expect to have greater need for people with skills at entry level (balance of +31%), intermediate level (+38%) and higher level (+39%).
• Employers most expect the need for other workplace skills unattached to qualifications – such as communication and teamwork - to increase (+41%). But compared with other skills, respondents are the least confident about meeting these skills needs (+34%).
• Developing workforce industry-specific technical knowledge (60%), leadership & management (58%) and advanced digital skills (44%) are priorities for firms.
• 81% of employers are confident they will be able to support young people over the next year, for example, through training and engagement with education.

The CBI Education & Skills Survey is published against a backdrop of many companies struggling to fill vacancies, as the economy reopens rapidly from the pandemic. The latest Bank of England Agents’ Summary of Business Conditions noted that a mix of structural and Covid-related issues were presenting recruitment challenges in some sectors. This contrasts with the longer-term outlook in this survey, where firms are more confident in their ability to access the skills they need in five years’ time. In April 2021, before shortages began to bite, nearly 4 in 5 CBI/Birkbeck survey respondents were confident in their ability to meet entry level skill needs over the next 3-5 years through recruitment or training, but around 1 in 5 were not.

Matthew Fell, CBI Chief UK Policy Director, said:

“While four in ten firms are stepping up to the plate and boosting investment in skills already, there is still a long way to go to reach the levels of investment needed to reskill the nation.

“CBI/McKinsey research shows that pre-pandemic the world of work was changing, with nine in ten employees needing to gain new skills by 2030 to the tune of £13 billion a year. COVID has only accelerated this trend further.

“Firms are currently facing a perfect storm of staff shortages worsened by rising levels of self-isolation. They’re taking immediate steps to resolve this, investing in skills and automation and strengthening inclusion. But the Government needs to play its part too on skills and immigration.

“Longer-term, the Skills & Post-16 Education Bill is an opportunity to deliver on the confidence of most firms that they can meet skills needs in 3-5 years’ time.

“To support individuals to gain new skills, the Government should make flexible, bitesize training more accessible before the Lifelong Learning Entitlement is introduced in 2025.

“Building closer local links between employers and education providers will also be key to supporting every UK region and nation to thrive and ensuring our economy can fire on all cylinders.”

Professor David Latchman, Vice-Chancellor, Birkbeck University of London said:

“As the economy emerges from the events of the last 18 months, it is important that there is a renewed focus on ensuring that the workforce have the skills needed by employers not only to aid economic recovery but also to sustain future growth. Both higher and further education providers have an important role to play in play in meeting these needs.”

Adult education & lifelong learning are key priorities for business

Adult education and lifelong learning will be vital to support the 9 in 10 employees needing to gain new skills by 2030. 50% of firms surveyed reported increasing their investment in adult education and lifelong learning over the last five years. This number is set to rise to 61% in the next five years.

Despite this, employers face obstacles in meeting skills needs through adult education beyond the practical challenges posed by Covid-19 (33%), such as lack of funds (25%) and difficulty finding time for employees to train (22%).

Professor David Latchman, Vice-Chancellor, Birkbeck University of London said:

“It will not be enough to ensure that young people develop the skills needed by employers to fuel economic recovery, we must also ensure that there are opportunities for mature learners to reskill and upskill so that they are not left behind in the post-COVID economy. This requires both proper support from the Government and close working between employers and the education sector so that education and training are flexible and address business needs.”

Apprenticeships are highly valued, but the Levy remains a barrier

Around two thirds of respondents (67%) offer apprenticeship programmes, down from 85% in 2019. Looking ahead, 45% of firms expect to expand their apprenticeship provision in the next 12 months relative to the last three to five years.

Among companies which pay the Apprenticeship Levy, 36% of respondents say their spending on training has increased. But half of respondents (50%) say their spending on training has stayed the same.

Matthew Fell, CBI Chief UK Policy Director, said:

“Continued employer commitment to delivering apprenticeships is hugely welcome. But the Levy system remains in urgent need of reform. Right now, it’s trying to fund SME apprenticeships and boost larger firms’ skills investment – but failing on both counts.

“While it’s vital SMEs continue to be supported to deliver apprenticeships, this should be funded through general taxation. Meanwhile, introducing a Lifelong Learning Levy would incentivise every business to invest more in the different types of training needed to support our economy. We need two separate policies to meet two very different objectives.”

Firms are ready to step up their support for young people

33% of respondents said they intend to apply or have already applied to Kickstart. 28% said they have already delivered T Level placements and 50% said they would consider doing so in future. Given the difficulties facilitating in-person placements caused by the pandemic, these figures are a promising start.

Most employers believe the T Level programme should become more flexible. One in five (19%) firms indicated that all placements should be allowed to be delivered partially online, four in ten (39%) responded that hybrid delivery should be allowed where the job in question is hybrid in nature, and just over a quarter (26%) stated that the balance should be determined by employers.

Matthew Fell, CBI Chief UK Policy Director, said:

“The pandemic has had a profound impact on our young people, reducing class time and interaction with peers. Firms have provided support wherever possible. And they intend to do more over the next 12 months.

“Many businesses are currently supporting T Levels. But a good number of firms want to see greater flexibility in the system so they can deliver hybrid placements. And the Government should extend the Kickstart deadline by six months to allow time to turn approved placements into real opportunities for young people.”

15 July 2021

The 13th CBI Education and Skills Survey 2021 was conducted between 15 and 30 April 2021, with 252 responses from businesses and trade associations. The report was written in partnership with Birkbeck, University of London.

Balances are indicated with a + or – next to the figure. In the headline statistics, the balances represent the following:

• Bullet 1 – The balances equal the percentage of respondents reporting an ‘increase’ minus those reporting a ‘decrease’, excluding N/As.
• Bullet 2 - The balances equal the percentage of respondents that stated "very confident or somewhat confident" minus those that stated “somewhat unconfident or very unconfident", including don't knows and excluding N/As.
• Bullet 4 – “Confident” refers to those that stated “very confident or somewhat confident”, including “don't knows”.
• Over half of firms who responded to the survey have fewer than 199 employees (56%), 13% have between 200 and 499 employees and 31% have over 500 employees.
• Respondents were drawn from all sectors of the economy, with the most represented sectors being manufacturing (19%), other service activities (16%), construction (13%) and education (10%).

Pre-pandemic CBI/McKinsey research (October 2020) forecasted 9 in 10 employees will need to gain new skills by 2030 at the additional cost of £130 billion.

The latest Bank of England Agents’ Summary of Business Conditions (2021 Q2) can be found here: https://www.bankofengland.co.uk/agents-summary/2021/2021-q2.