NAO report highlights workforce skills training decline

The latest National Audit Office report into workforce skills warns that the country faces major skills challenges, and that it's unclear whether interventions will deliver the step-change required.

The Developing workforce skills for a strong economy report finds that employers’ spending on workforce training per employee has fallen, referencing a 2019 Department for Education (DfE) survey which found that 39 per cent of employers had provided no training in the previous 12 months. Employers and training providers told the NAO it was hard to navigate government’s growing, and sometimes disjointed, set of skills programmes.

Participation in government-funded further education and skills training has declined significantly, particularly in disadvantaged areas. The number of adult learners fell from 3.2 million in 2010/11 to 1.6 million in 2020/21, a decrease of 48 per cent. From 2015/16 to 2020/21, the number of participants aged 19 and over in England’s 20 per cent most disadvantaged areas dropped by 39 per cent, compared with a 29 per cent drop overall. Largely because of the drop in learners, there was a 46 per cent fall in the Skills Index – government’s measure of the impact of the further education system on productivity – from 2012/13 to 2020/21.

Economic and societal changes, including the UK’s exit from the EU, has reduced the supply of workers from member states and potentially increased the need for the country to train its own workers. The sectors most affected by skill-shortage vacancies were construction and manufacturing.

The NAO remarks that the Levelling Up White paper's aims go only some way towards addressing the decline in participation in skills training. By 2030, the government wants 200,000 more people in England to successfully complete high-quality skills training annually, including 80,000 more people in the lowest skilled areas. Achieving this would only partly reverse the fall of around 280,000 learners in the 20 per cent most disadvantaged areas since 2015/16.

DfE is taking steps to encourage and incentivise people to develop their skills. DfE’s National Skills Fund will provide £2.5 billion to support adults to develop skills, including through the Lifetime Skills Guarantee.4 It is also working to improve how it communicates with people about the skills programmes on offer. In January 2022, it launched two campaigns, one aimed at supporting adults to gain new skills, and another providing information on the education and training options available for 16- to 18-year-olds.

The NAO recommends that government, led by DfE, should develop a strategy and supporting implementation plan for achieving its objectives on workforce skills, building on the approach set out in last years Skills for Jobs white paper. Among other things, the plan should set out how employers and individuals will be incentivised to develop skills and engage with the skills system, and the metrics that government will use to monitor progress.

Gareth Davies, the head of the NAO, said:

“To help people achieve their potential in the workplace and drive economic growth, it is essential that government and employers support opportunities for learning and development. The government has taken sensible steps to address skills shortages in recent years, but the challenges it faces have increased. There is a risk that, despite government’s greater activity and good intent, its approach may be no more successful than previous attempts to provide the country with the skills it needs.”

Responding to the report, Cllr Kevin Bentley, Chairman of the Local Government Association’s People and Places Board, said:

“As this report highlights, there are a growing number of skills programmes which can be disjointed and hard for learners, employers and training providers to navigate.

“Our own analysis shows there are about 49 national employment and skills related programme or services costing £20 billion, managed by nine Whitehall departments and agencies, delivered by multiple providers and over different areas.

“This investment should be used more effectively to provide more joined up support to reduce unemployment and inactivity, boost skills and meet employer needs.

“Councils and combined authorities are working hard to do this, but could do more if they had greater influence over the system, which independent analysis shows could lead to the number of people improving their skills or finding work increase by 15 per cent across a place.

“Skills development must go hand-in-hand with employment support, wraparound services and infrastructure investment, if we are to make sure local people can benefit from local jobs.”