Nichola Hay MBE, director of Apprenticeship Strategy and Policy at BPP, discusses the importance of a national strategy with a regional approach.

The UK’s productivity challenge is a widely discussed problem. Figures show that GDP per hour worked in the UK is 15% lower than the G7 average and up to 25% lower than the USA, Germany and France.

Skills development of our workers plays an intrinsic role in our productivity, so much so that improvement in skills were estimated to have accounted for 20% of the UK’s productivity growth before the financial crisis.

The UK Government has introduced many policies in a bid to support the development of skills and boost productivity – from the re-introduction of returnerships in last year’s budget and the £34m boost of Skills Bootcamp, to the apprenticeship levy.

A big motivation behind the Government’s devolution plans is also to support skill development on a local level. In fact, a Government report from 2019 stated that ‘Devolution in England aims to provide local areas with the levers they need to boost productivity in local economies’.

The importance of a regional skills focus

Ensuring any skills policy supports both national and regional skills development is critical to guarantee its success.

One of the feathers in the UK’s economic cap is how different regions across our nation have become globally recognised hubs for certain sectors. The Midlands, for instance, has long been our manufacturing heartland, while the South West has become known for its aerospace innovation. More recently, we’re seeing the Liverpool region growing to become an emerging gaming sector.

Devolution means we now have Metro Mayors and local authorities who understand their regional skills needs better than anyone. To support that, the Government launched its local skills improvement plans (LSIPs) initiative last year, to ensure training provision better meets the local needs of businesses and regional sectors.

LSIP’s are a positive step forward to tackling skills shortages across regions, however more effort is required to attract people to these opportunities. Training providers cannot train and upskill people if no one is willing to enter into the skills gaps in the first place.

A national strategy with a regional approach

If the UK is to improve its productivity and support long-term skills development, we must rethink our approach to skills policy to take into consideration regional nuances and ensure we’re developing people with the right skills in the right places.

So, what’s stopping this from happening currently? The lack of a national skills strategy.

It’s hard to think of another Government policy area which has the potential to drastically improve our economic performance, which doesn’t have a national strategy to support it.

This Government, or any Government that comes into power following the election, must prioritise producing a national skills strategy that supports skills development on both a national and regional level. For greater success, this integrated national skills strategy should be linked to an industrial strategy, to ensure we’re producing the talent our sectors as well as regions need while retraining and upskilling the existing workforce.

Whilst this strategy should of course have a national focus and framework, it’s important the strategy has flexibility at its core to ensure devolved regions can shape policies to ensure they deliver for their regions.

Flexibility in action

We’ve witnessed such flexibility with the apprenticeship levy.

Last year, around £3bn of apprenticeship funding was handed back to the Treasury by the Department for Education, following the launch of the apprenticeship levy in 2017.

In the Liverpool City Region, this underspend amounted to tens of millions of pounds, leading Mayor Steve Rotherham to urge big firms such as Liverpool Football Club to help fund apprenticeships at smaller businesses as part of the Young Person’s Guarantee (YPG) scheme.

To date, the Mayor and the Combined Authority have already helped to transfer £2.4m of unallocated apprenticeship levy to smaller firms, creating more than 560 new training roles.

As well as this, the Greater London Authority has upheld the Mayor’s Apprenticeship Programme since 2021, pledging an annual sum of £1.2m to support apprenticeships projects.

Final thoughts

If the Government is serious about skills development and boosting our productivity, we need a cross department national skills strategy that aligns to an industrial strategy.

An employer and learner-led strategy, which is flexible and accessible, while meeting both local and national needs, will be key to fixing our ongoing productivity puzzle.