Edge convenes workshop to explore barriers to employer investment in training

The UK faces a significant challenge in encouraging more businesses to invest in skills straining. Employer investment in training has declined significantly with a 9.3% drop in total UK training expenditure between 2011 and 2022. UK businesses also spend considerably less on training than EU counterparts (although more recent data on this is needed). This is despite a rich set of training options available through the DfE, such as apprenticeships, higher technical qualifications, and skills bootcamps (employers can browse options on this Skills for Life website page)

So why do businesses in the UK not invest as much in skills training as our international counterparts? How can the skills system be improved to remove these barriers to investment? To address these questions, the Edge Foundation, in partnership with HM Treasury and the Department for Education, and with support from the Learning and Work Institute (L&W), convened a workshop with experts from the business and skills sectors. The aim of the workshop was to establish what the key barriers to investment in training are, especially for SMEs, and develop possible solutions to inform the longer-term planning across government departments. Here we summarise the key messages from the workshop.

We also need to make sure that we’re on the same page about the purpose of skills training – is this a social or productivity argument? While these are not necessarily in opposition, we need to ensure that the right arguments are being made to employers so that they understand how investing in training will materially benefit their company (in terms of productivity and filling skills gaps) as well as their employees. As part of this argument, the Government should lay out how it intends to support businesses towards this goal. We heard that policy interventions in the past haven’t really changed the dial when it comes to business investment, as shown in this slide from L&W (below). Though, the group agreed that it would be interesting to plot these interventions against GDP to see how business investment impacts overall productivity.

According to what was discussed, the main barriers for businesses tend to be:

1. Lack of awareness/complexity of the skills offer – a key barrier that came up often is that many employers aren’t aware of the types of skills training on offer (CBI’s latest education and skills survey found that 65% of employers had low or no awareness of T-Levels, for example) and are frustrated at the complexity of the qualifications landscape e.g. discrepancies between qualifications’ requirements of English and Maths.
2. Lack of time – inflexibility of current training offer means employees often need to dedicate a lot of time off-the-job to gain qualifications. Smaller businesses therefore tend to be more interested in micro-credentials and shorter courses (which are often also more attractive to younger people who don’t want to be tied to the company for too long).
3. Lack of funding – companies have other cost pressures/other places where they think funds could be better spent (e.g. supporting their workers with the cost of living or investing in expensive equipment for the business).
4. Lack of management capability – many businesses lack the awareness of what their skills development needs and a long-term skills strategy for the company as a whole. In smaller firms this is often due to the limited capacity of those in managerial roles.
5. There are alternatives to expensive/risky upskilling – employers can fill skills gap through recruitment or automation rather than through upskilling. This needs to be considered as part of any national skills strategy, taking into account immigration and AI.
6. Cultural attitudes towards training creates a vicious cycle - businesses may also be worried about training up an employee, only for them to move on. Unlike in some countries where there is a skilled workforce to fall back on, investment in training is seen as a risk because there isn’t a readily available pool of skilled talent to fill that position.
7. Lack of strong global trade relations - where companies invest well in other countries, the SME market has strong global trade relations and is well linked internationally. We don’t do that so well in UK.
8. Lack of HR representation at board level (in larger firms) – this means that other departments can more easily make the case for investment, leaving skills development underfunded.
9. Policy flux – the shifting landscape, both in education and economic policy, makes it difficult for businesses to navigate the system and make long-term decision. Fragmented policy across the constituent countries of the UK (and devolved regions) can also make it difficult for UK-wide firms to make national funding strategies.

While there are many barriers to investment, there are green shoots of hope. The group heard from a representative from Uber who shared information about their partnership with the Open University (OU) which enables employees and their families to access fully-funded courses on the OU’s free OpenLearn platform. They shared key benefits they’ve seen from this, such as increased productivity and having to spend less on recruitment.

As part of their presentation, L&W also shared some excellent examples of policy interventions being made by OECD countries that fit within the OECD’s framework of potential support interventions.

As the workshop brought to light, there is no silver bullet to the issue of skills investment in the UK. However, with clear, long-term thinking that takes into account up-to-date business needs as well as capabilities, we may just find a way to boost business investment and tackle our ever-increasing skills shortages.