Three quarters (75%) of businesses expect to increase the number of high-skilled roles over the coming years, but 61% fear that there will be a lack of sufficiently skilled people to fill them, according to the 2017 CBI/Pearson Education and Skills Survey.

The survey of 344 companies highlighted that 62% see strong competition for candidates with appropriate qualifications as the most widespread cause of skills shortages, followed by a lack of candidates with appropriate qualifications (55%).

Asked about the impact of the introduction of the £2 billion apprenticeship levy, 58% of firms plan to increase apprentice programmes – but it is not clear how much of this is genuinely new provision, with 63% of respondents planning to reconfigure existing training to comply with the levy.

Careers advice and guidance given to young people was judged as overwhelmingly poor, with 84% of companies surveyed saying the quality and consistency of careers advice is inadequate. Businesses are actively engaging with schools to help support children and young people, with 81% of those surveyed having links to schools.

Josh Hardie, CBI Deputy Director-General, said:

“Skills have to be the beating heart of the UK’s Industrial Strategy - it’s the best growth strategy a country can have. More high-skilled opportunities are good news for our future – and a sign we can make progress on productivity - but this is tempered by the growing urgency around skills shortages.

“Too often political meddling and piecemeal reform have been the overriding feature of our skills system, and that’s why business has welcomed the Education Secretary’s recognition of the role they need to play. This partnership approach is vital for success of skills reforms.

“Growing our skills base needs a greater focus on what skills provision actually achieves for a person or business, instead of just the existence of training or apprenticeships being judged a success. At the beginning of the major technical education reforms, and with the survey showing challenges for the apprenticeship levy system, that shift in mindset by the Government is vital to growth.

“Across the country there are brilliant schools and colleges helping young people succeed, both academically and in terms of the attitudes and behaviours they need to succeed in later life. Business can and must do more to ensure that someone’s postcode or background does not define their life chances.”

Rod Bristow, Pearson’s President, UK and Core Markets, said:

"This year's report shows that now, more than ever, the UK needs a coherent education system that delivers high quality and flexible options for everyone to keep learning; that makes the most of our talent and bridges the gap from education into employment more efficiently.

"We welcome the Education Secretary's aim to create a technical education revolution, and welcome plans to inject much needed funding into the further education sector. We are in complete agreement about the need for collaboration among all stakeholders. We stand ready and committed. Let's not forget, we need career focused as well as job focused routes.”

1. New apprenticeships are being created but many are reconfigured, existing training programmes

Asked about the impact of the apprenticeship levy system in the months before it went live, many firms indicated they will use the levy to upskill their current workforce and replace other existing training, with 63% planning to reconfigure existing training into apprenticeships and 27% expecting to cut back on non-apprenticeship training activity to meet levy costs.

Survey responses show:

• Businesses are adapting their training approach to meet apprenticeship levy cost recovery rules, with two-thirds (63%) planning to reconfigure their existing training into apprenticeships
• Over half (58%) of respondents plan to create new apprenticeship programmes and close to half (46%) expect to increase apprenticeship places
• Some of this provision will be existing training reconfigured or in place of other schemes being cut, as around a quarter of companies expect to cut back on non-apprentice training (27%) or curb their graduate intake (23%)
• A third of businesses (33%) cited lack of clear guidance as the biggest challenge they face in the first year of the levy’s operation, while nearly as many (29%) highlight the inflexibility of the funding rules hampering their ability to take on more apprentices – supporting the CBI’s longstanding call for greater flexibility in the system
• Many businesses are struggling to fill apprenticeship places: almost half (49%) of respondents have experienced difficulty in recruiting apprentices or expect to do so in the next three years.

Josh Hardie, CBI Deputy Director-General, said: 

“Given the speed and scale of the introduction of the apprenticeship levy, companies have worked very hard to get ready against a tight timescale.
“The survey results give an early indication of employer behaviour, reinforcing business’ long-standing frustration that the levy’s narrow design pushes their focus onto cost recovery rather than good training that will drive staff progression and wider economic benefits.

“Increased flexibility will be vital so businesses can fund a wider range of training that better reflects employer and individual’s skills needs. Looking ahead to the introduction of the new technical education routes, we need to ensure we don’t employ the same rushed and politically-driven approach to system design.

Business is looking to progress the positive partnership with the Department for Education, in particular helping to improve the levy’s impact and evolve the system so that it works for everyone.”

Rod Bristow, Pearson’s President, UK and Core Markets, said:

“We need a system that delivers high standards in three key pathways: the kind of academic skills we see in A-Levels, broader career preparation that we see in BTECs and specific occupation and job skills that will be represented by the government's planned T-levels and more apprenticeships. These routes will all provide real opportunities for young people and help address the skills requirements of British business.”

2. Careers guidance overwhelmingly ‘not good enough’

84% of businesses surveyed do not feel the quality of careers advice young people receive in schools is good enough. The Careers and Enterprise Company (CEC), the recently created body tasked with improving business-school links, is known to 21% of firms and encouragingly 75% of those surveyed indicated a willingness to play a greater role by delivering careers advice directly in schools and colleges.

• More than a third (35%) of businesses say there is too little guidance and support on how to make work experience places worthwhile for young people
•  Firms believe there is a lack of awareness among young people of the education routes they need to take to enter particular careers (50%) and careers advice being poorly aligned to the sectors (49%), which leads to skill shortages
• Levels of awareness and understanding across business about the new GCSE grading system are growing, but 35% of respondents are wholly unaware of the reforms in England.

Firms value effective school and college partnerships due to the role they can play in supporting young people and their schools, with subject knowledge, careers inspiration or practical business expertise.

Survey responses show:

• Four out of five (81%) businesses have at least some links with schools and/or colleges, with connections most widespread between businesses and secondary schools (66%) and FE colleges (63%)
• 31% of employers with established links to primary schools have increased their engagement over the past year, while even more have increased their engagement with secondary schools (35%) and FE colleges (45%)
• Work placements for a week or two remain the most widespread work experience, offered by more than nine in ten of firms providing work experience (92%).

Josh Hardie, CBI Deputy Director-General, said:

“Quality of teaching, learning and careers inspiration defines the life chances of young people – it’s a shared challenge for us all. Businesses are committed to supporting schools, increasingly at primary level, to help bring lessons to life and open-up opportunities beyond the school gates.

“There is genuine alarm about the quality and consistency of careers advice available in many schools. Companies aren’t asking teachers to do more – schools need support to do this, from the long-awaited Careers Strategy, the CEC and businesses rolling up their sleeves and helping.”

Rod Bristow, Pearson’s President, UK and Core Markets, said:

“Recent changes in the UK examination system have aimed to raise educational standards, ensure our qualifications are sufficiently challenging the young people taking them and raising the bar for students moving into HE and the workplace.

“Awareness and understanding across British business about the new 9-1 grading system is growing with one in four businesses understanding the changes. This is an improvement on surveys of employers from earlier this year but there remains more work to do.”

Notes to editors:

The tenth CBI/Pearson Education and Skills Survey was conducted between February and April 2017, with responses received from 344 organisations. Participants ranged in size from firms with fewer than 50 employees to those with more than 5,000; SMEs accounted for nearly a third of respondents (30%). Respondents were drawn from all sectors of the economy, ranging from manufacturing (14%) to construction (10%) and professional services (11%).

About the CBI:

Across the UK, the CBI speaks on behalf of 190,000 businesses of all sizes and sectors. The CBI’s corporate members together employ nearly 7 million people, about one third of private sector-employees. With offices in the UK as well as representation in Brussels, Washington, Beijing and Delhi, the CBI communicates the British business voice around the world.

About Pearson:

Pearson is the world’s learning company, with expertise in educational courseware and assessment, and a range of teaching and learning services powered by technology.

Our mission is to help people make progress through access to better learning. We believe that learning opens up opportunities, creating fulfilling careers and better lives. For more visit Pearson.com/UK and follow Pearson @Pearson_UK.

Media Contacts:

CBI Press Office is available 24 hours a day on 0207 395 8239, or email: press.office@cbi.org.uk. Follow the CBI (@CBItweets) and CBI Economics (@CBI_Economics).

Pearson contacts – tom.steiner@pearson.com / tom.philpott@pearson.com 020 7010 2000.