UK gov's digital skills failure costing £6bn in lost GDP per year

Tech execs demand public subsidies to encourage investment, while the skills minister expresses ‘surprise’ at the widening crisis

The UK isn't currently set up to meet the challenge of broadening the population's skills base, with long-term failures exacerbating a gap in the demand and supply of digital skills that has, in turn, damaged the wider economy.

The way in which reskilling and retraining opportunities are provided remains fragmented, and is of a small scale, while business investment in reskilling remains very low, according to a report produced by a special cross-industry task force established by lobby group techUK. 

The consequences of this lack of investment have especially manifested for small and medium-sized businesses (SMBs), with the tech industry suffering the second-highest number of job vacancies in the UK, behind healthcare. As a result, the widening number of unfilled vacancies, set to be 100,000 per month by the middle of 2021, is already costing the economy £6.3 billion in lost GDP each year.

The broader solution, according to the special task force, is for the public sector and government to support learners, support employers and deliver new schemes and policies - at scale - to meet the challenge. These comprise seven specific measures, which involve tax incentives and public subsidies, as well as structural changes to how people can learn.

Groundhog Day for digital skills

"Digital skills are much more important now than ever, and although 82% of all job openings online request digital skills, only 52% of the workforce still, well, apparently, don't have essential digital skills for work," said the minister for skills and apprenticeships, Gillian Keegan. 

"These sound like quite high numbers for me, so it's surprising, but it's certain to say there is a high number of the workforce who do not have essential digital skills. 

"Let's be clear, these skills shortages long predate the pandemic, COVID has simply exacerbated these problems and shone a light on the need for digital skills. So we need to do something about it, and we need to do something about it now - not down the road."

She added the government, which has been in power for 11 years, will work to introduce new laws in the coming months to create a skills system that's "fit for the future". These proposals will form a key part of the COVID-19 recovery strategy, and will aim to grant people the opportunity to learn and retrain at every stage of their lives.

The so-called skills crisis has, however, been a point of discussion in the UK for several years, with techUK and other organisations routinely producing research pointing to a widening gap, and burgeoning crisis. 

For example, techUK produced a very similar piece of research in July 2015 that put forward 11 recommendations to the then prime minister David Cameron to address the 'crisis', as it was described then. 

Parliament's own cross-party Joint Committee on the National Security Strategy, in 2018, too, published a report that exposed the UK's chronic lack of digital skills, even within some of the UK's own security agencies.

The lack of meaningful solutions, and investment, over the course of the last few years has given rise to a situation now where the UK is on track to lose out on billions of pounds in GDP, according to the findings of the latest report. This research highlights, in clear terms, the consequences of the government's continued failure to address the skills crisis. 

The fact that many businesses have been forced to pivot digitally due to COVID-19 and adopt new systems and technologies, meanwhile, has only accelerated the demand for digital competency across the workforce.

Seven steps to skilling-up Britain

The task force was set up to explore how the UK can open up training and qualifications to a much wider base of potential employees. It comprises nine leading figures, including executives from AWS, BT, and Cisco, alongside Microsoft's UK CEO Clare Barclay, Google's VP and MD for Ireland, Ronan Harris, and techUK president Jacqueline do Rojas. 

The task force has recommended seven measures the government must pursue in partnership with the industry to skill, reskill and retrain people across the UK, and guide them to fulfil future roles as the economy evolves. These range from running campaigns, to subsidising businesses for investing in skills, and restructuring learning.

The first measure is effectively a marketing campaign demonstrating how people have successfully reskilled in digital technology, and benefit from new avenues such as T-Levels and apprenticeships. The organisation recommends that people who've been less confident or aware of their abilities should be targeted as a priority.

Flexible learning should also be on the agenda, with techUK asking the government and industry to work together to champion and expand short modular online courses, including boot camps. This is so that people with other commitments can also access learning.

The group is also urging the government to put more funding into learning in the form of the Lifelong Loan Entitlement and Lifetime Skills Guarantee. This subsidy comes alongside calls for a digital skills tax credit for SMBs to incentivise smaller companies to invest in digital reskilling. This, the task force claims, can be modelled on other tax credits such as the existing relief for R&D investment. 

The final aspect of the proposals involves creating a new version of the skills toolkit created by the Department for Education during the COVID-19 pandemic, which would be far more comprehensive. Although there was considerable uptake, the toolkit was a rudimentary resource and included no self-assessment functionality or explanation of what digital jobs might become more accessible after people completed their courses. Establishing a more advanced, and sophisticated, version of this toolkit that can outlast the pandemic would be a key plank in the mission to drive up digital skills and translate learning to employment, the report claimed.

Ultimately, the task force claims that the seven measures can improve the situation, so long as there's close collaboration between the government and the tech industry. 

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