New CBI Chair warns skills system is failing business and young people

In a keynote speech at the Cumbria Business Dinner (Thursday 30 April), new CBI Chair, Cressida Hogg, will warn that the widening gap between businesses’ needs and the current skills system is stifling UK growth. She will say: "right now, this system is failing too many businesses. And in doing so, it is failing too many young people."

Addressing business leaders in the North-West, Hogg will highlight a stark paradox: while nine out of ten businesses report significant skills gaps, nearly one million young people across the UK remain NEET (not in employment, education, or training). In Cumbria alone, the number of young people claiming Universal Credit continues to rise.

Hogg will acknowledge the government’s commitment to provide targeted support for those aged under-21 years, as well as the good work done by Charlie Mayfield’s review team, but will argue that “ambition is not enough when the sums do not add up.”

She will stress that firms want to hire and open doors for young people, “but when costs are this high, businesses focus first on protecting the people they already employ. That is their duty.”

She will go on to say that “for too many young people, the cost of doing business has become a bar on the door of opportunity.” For Hogg the reality is clear: “business needs skills. Young people need opportunity. But right now, the system is not joining those two things up.” This “leaves businesses facing hard choices – to expand or hold back, to recruit or wait, to offer that first chance or not.”

The speech will outline three key areas that business and government must come together to urgently address: worrying rates of youth unemployment, the impact of AI on the labour market, and increasing business frustration with the unfit Growth and Skills Levy.

On youth employment rates, Cressida Hogg, CBI Chair, will say: 

“We welcome that the government has listened to our feedback and said youth employment should be a higher priority.

“But the fact is, the government’s long-term ambition to abolish minimum wage youth rates would make it harder still for firms to offer a first chance to young people.

“Many businesses already choose to pay the headline rate for younger workers. Many others simply cannot afford to.

“Youth rates reflect a simple reality: investing in a young person often takes more time, more training and more resource.

“This is a policy with good intentions - but that will create worse outcomes and fewer jobs for young people.”

On the impact of AI on the labour market and the need for increased AI literacy, she will say:

“Think what AI has changed in the last four years. Think what it will change in the next four.

“Since the launch of ChatGPT in 2022, entry-level professional jobs have fallen by a third.

“We are asking young people to enter a labour market being reshaped at speed – and too many are not equipped to navigate it.

“That is why the CBI is calling for a UK AI Literacy Standard: giving employers, educators and young people a common baseline for using AI safely – and well.”

On the limiting impact of the Growth and Skills Levy, she will say: 

“Businesses welcomed the decision to fund shorter courses through the levy. That was a step forward.

“Yet too often, we know businesses still experience the levy not as a tool for investment…

…but just another tax. A pot they pay into but do not know if they can draw out of.

“Where they are penalised if their training doesn’t meet narrow government objectives.

“Over 95 per cent of businesses told us that is not how it should work.

“And this matters for young people too.

“When businesses lose confidence in the skills system, they train less, progression slows, and the entry-level opportunities young people rely on are hit.

“So our argument is simple: this cannot become a zero-sum choice between young people and adults already in work. The levy must work for both.

“The money raised for skills should be used for skills. The full proceeds of the levy should go to that purpose.

“And businesses, who know better than anyone the training they need, must be trusted to use the Levy as they see fit.”