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Productivity plan criticised for not going far enough on skills

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Chancellor George Osborne has been criticised for skimming over the UK’s skills shortage issue in his recently released productivity plan, ‘Fixing the Foundations’.

Described by the Treasury as the “second half of the budget”, the proposals include devolving more powers to cities outside London, a compulsory apprenticeship levy and reforms to Britain’s tax system. The government has also pledged to “simplify and streamline” the number of qualifications available in the professional and technical education system.

However, some industry bodies criticised the government for not sufficiently tackling the skills challenges faced by businesses.

CIPD head of public policy Ben Willmott said that while the proposals regarding new apprenticeship schemes are welcome, they only scratch the surface of the UK’s productivity problem.

“We have a high proportion of people in low-skilled and low-paid jobs by international standards and an equally high degree of over-qualification with too many employees unable to use the skills they have because of poor leadership and people management, inadequate work organisation and poor job design,” he said.

Willmott also warned that focusing on more employer investment in apprenticeships was “simplistic”.

He said: “We have a perfect storm of falling public and employer investment in further education and training. A simplistic focus on increasing employer investment in apprenticeships through a levy risks taking money away from broader investment in workforce development.”

City & Guilds' group chief executive Chris Jones welcomed the focus on apprenticeships as vital in fixing the "productivity puzzle”, citing recent research that shows the annual return on investment for training an apprentice is £10,280 in productivity gains.

But, he added: “The devil will be in the detail. We’ve had three decades of constant change in skills and employment policy. In order to boost productivity and strengthen the UK’s skills base we need stable, long-term planning that gives new policies a chance to mature.”

Secretary of state for business Sajid Javid said the plan shows the government is taking the decisions necessary to address issues of productivity.

“This is a bold and ambitious plan to achieve our vision of a more dynamic economy, with a business environment that fosters long-term investment, raising our living standards and becoming the best of all the major economies by 2030,” he said.