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  • Writer's pictureLEI

LEI response to Autumn Statement 2023

The Lifelong Education Institute welcomes today’s Autumn Statement with a mixture of relief and frustration—both about the measures that were announced in it, and even more so about those that were not. The Statement reveals a Government that is desperate to boost growth across the country, but which has again failed to seize the opportunity to deliver genuinely transformative change by investing in skills and education in an appropriate, targeted way.

The most significant non-announcement was the eleventh-hour reprieve for level 6 and 7 apprenticeship standards, including the level 7 senior leader standard. Recent reporting suggested that these were being mooted for exclusion from the use of apprenticeship levy funds, as well as age caps and higher employer contributions, in order to steer more funding towards younger learners and standards at lower levels. This would have only reinforced the neglect of mid-career learners in favour of nebulous benefits for ‘club 16–25’, sacrificing upskilling for those who are in pole position to deliver growth right now. For now, degree apprenticeship funding remains unchanged, thanks in large part to several LEI members, including Newcastle University, who were instrumental in convincing the Government to change course.

Certainly, significant questions remain about the structure and allocation of the apprenticeship levy—which does little to help SMEs without the capacity to take on apprentice cohorts, or learners on less-than-annual contracts who fall below the course eligibility threshold. But providing a genuine solution to this requires the Government to embark on a far further-reaching programme of reform than tinkering at the edges of levy eligibility. In particular, it increases the pressure to develop a genuine joined-up approach to funding lifelong learning, which unites an employer levy with learner-focused grants and government funding pots in an equitable, transparent model of skills co-investment.

The extension of ‘full capital expensing’ until 2028–29 to allow businesses to deduct investment spending from taxable profits is also only a partway solution to encouraging employers to support their workers into lifelong learning. In our recent report Hungry to Learn: Lifelong Learning Pathways for the Agri-food Sector, supported by Harper Adams University, the LEI advocated a specific range of tax reforms that would incentivise employers to invest in lifelong learning. These include additional rates, credits, and multipliers for strategic innovation on top of existing R&D tax relief—which the Government has now pledged to streamline—and a ‘strategic skills tax credit’ at a rising rate proportional to the number of industry placements and proportion of employees undertaking ‘on the job’ training and upskilling.

By the same token, the Autumn Statement contained no measures that could offer dedicated support for individuals looking to upskill. The rise in the National Living Wage and the cut in National Insurance are certainly a way to leave more money in workers’ pockets, while the ‘Back To Work Plan’ will doubtless prove effective at dragooning welfare recipients into whichever jobs happen to be available. But the Government is pursuing a forlorn hope if it expects that the UK can simply consume its way out of a productivity crisis. And forcing the unemployed into jobs they may be poorly suited to is no way to solve the chronic mismatch between skills demand and skills supply.

Ultimately, the main problems with the Government’s announcements are an order of magnitude greater than simply streamlining the UK’s tax or welfare regime. The spectre haunting the Autumn Statement was a continued dearth of industrial strategy—despite announcements of targeted support for the creative sector, green industries, and life sciences, warm words around growing the numbers of UK apprentices, and a raft of new digital tech innovation centres and investment zones. There were no measures designed to support public service provision like health and social care that is struggling to meet recruitment needs, and the plans to alleviate pressures on the UK’s bedrock industries such as engineering, high-end manufacturing, and construction still remain far too piecemeal.

The Government’s new reforms are little more than yet another round of the same, tired formula: leave more money with businesses and workers, and the problems of political economy will solve themselves. Yet fixing the UK’s productivity crisis will require far more than this laissez-faire passivity. What the UK needs is a coherent plan for joined-up skills investment that reinforces the strengths and redresses the weaknesses of the whole UK workforce.


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