Pressure is mounting on the government to accept the findings of two of its own studies, which call for a dramatic increase in the amount it spends on training.
A report by the CBI and TUC commissioned by the Chancellor in March outlines proposals for a range of tax credits for companies seeking to boost skill levels.Meanwhile a government-backed inquiry led by Sir John Cassels, recommends an expansion of the modern apprenticeship scheme to put the UK on a par with other European states.
Both come in advance of the pre-Budget report to be delivered by the Chancellor in the next few weeks. Many hope that Gordon Brown will signal his intention to increase funds for training as part of his declared war on the UK’s productivity gap with the US and Germany.
An open letter to the CBI signed this week by the Chancellor and DTI Secretary Patricia Hewitt puts US productivity at 42% higher than the UK, with France and Germany 14% and 7% higher respectively.
‘Given the emphasis the government has put on training and productivity it would be absolutely amazing if some of those measures were not included,’ said Stephen Radley, chief economist at the Engineering Employers Federation.
The EEF’s own survey of the skills shortage will be published next week. In making a link between the low number of skilled workers in the UK and the productivity gap, the EEF will call for an increase in funding to employers for those entering into advanced modern apprenticeships.
The proportion of employees in manufacturing with intermediate skills in the UK is about half of that in Germany, where state funding of apprenticeships is significantly higher.
The CBI and TUC propose three tax credits. The first would help employers provide basic skills training, while the second would be for intermediate qualifications, equivalent to five GCSE passes at A to C. A third would help small firms achieve their Investors in People status.
But some fear this is aiming too low and is indicative of the poor state of UK skills levels.
Sir John Cassels’s target of 35% of all those aged 16-21 to enter modern apprenticeships by 2010 is seen as a more important goal for UK manufacturing, as this represents a higher level of skills which is where the UK lags behind its EU partners.
Many manufacturers would like to see tax credits to support apprenticeship schemes. Stephen Horsfall, managing director of power transmissions company Motorvario welcomed the idea.
‘A tax credit might allow firms to pay their workers a bit more — which would help to make these training schemes more attractive – and allow us to keep trainees for longer.’
John Palmer, UK sales manager for Hepco, a linear motion company, said: ‘It’s getting harder to find the level of trainee that you want. You have to put more into training, which is expensive.’
While most agree that the training regime must be improved there are many problems with the existing system which also need addressing. Low pay for trainees means there are only small numbers of skilled people in the labour market.’Younger people are looking for money, and want it now. Apprenticeships cannot compete with that,’ said salesman Ian Henderson from engineering company, Heidenhain.
Some also believe that the Modern Apprenticeships are too shallow compared with the five-year apprenticeships that the likes of GEC, Lucas and Rover used to offer some years ago.
But Andy Smith, senior manager in manufacturing at tooling company Sandvik, said firms shouldn’t need incentives.
‘If you need government money to do this, then you have probably got your strategy the wrong way round. You should have training built into yourprogramme, whatever the incentives.’
A further problem is that companies are operating in a leaner environment, said John Palmer of Hepco. ‘If you have six people doing ten people’s work, do you have time to provide training on the job? Probably not.’