Chancellor Jeremy Hunt set out his vision of the UK as an innovation hub to rival Silicon Valley on Friday (27 January). Think tanks have warned, however, that more action will be needed to reach his goals.
In the speech, Hunt struck out against perceived economic negativity, saying his vision would require “optimism” to be achieved.
He elaborated: “Declinism about Britain is just wrong. It has always been wrong in the past, and it is wrong today.”
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Hunt set out the ‘Four Es’ of economic growth – enterprise, education, employment and everywhere – through which he pledged action to deregulate business, upskill workers and young people and entice people out of economic inactivity.
Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said that Hunt was right to be optimistic.
He said: “Jeremy Hunt is right to say we should be optimistic about the potential of the UK economy. There is a lot we can achieve; and we need to remember that only growth can drive prosperity and properly fund public services.
“The Four Es the chancellor set out are an important contribution to the debate, but firms will be looking to government for more than words. Actions that support long-term, sustainable growth matter.”
Shazia Ejaz, the confederation’s director of campaigns told HR magazine the REC was specifically looking for action to help businesses source the talent they need to grow.
According to the REC’s Overcoming Shortages report, released in July 2022, not meeting a conceivable 10% in growth in demand would cost the UK economy up to £39 billion.
Pointing to the figures, Ejaz said: “It shows the direct link between having a well-skilled, healthy, active population in the labour market, and being able to achieve economic growth.”
To fulfil the chancellor’s economic growth plans, however, the UK will need to see a number of reforms, she said. One key reform would be the apprenticeship levy.
“Essentially, what we’re looking for is a more flexible levy so that people can access high-quality, early career apprenticeships and good retraining opportunities that are modular, and that you can build up. At the moment, temporary workers, for example, cannot access that pot of funding.”
By easing the requirements to access funding, she said, many thousands more people could access training and take up those job vacancies that are inhibiting the UK economy’s growth.
Another key reform from the government would involve devolving skills and education planning, she said.
“Local businesses, employers, further education colleges all need to be talking together to understand what the demands of the labour market are, so that they can make sure they are providing the sort of training and skills needed in that area.”
One reform put forward by the Institute for Public Policy Research (IPPR) was to connect re-skilling to an industrial strategy by introducing personal training credits, which would provide low-paid workers and unemployed adults with up to £700 a year to invest in their own skills.
George Gibb, head of the Centre for Economic Justice at the IPPR, however, was less optimistic about the chancellor’s speech.
He told HR magazine: “Hunt’s speech shows a concerning lack of seriousness about the state of the British economy. The chancellor claimed that there are massive queues of people ready to invest in the UK whilst our private sector investment as a percentage of GDP falls to the bottom of the G7 and among the worst in the OECD.
“Deregulation is not the secret to unlocking growth. To foster the industries of tomorrow and increase technology adoption we need a serious long-term industrial strategy building on our strengths.”
