Building for the future
Bridging the skills gap is imperative to keep jobs and prosperity growing.
Construction workers, engineers, healthcare staff, maths teachers – the list of areas in which Britain is suffering skills shortages is long – and growing. The ‘skills gap’, as it has been dubbed, can be measured in a variety of ways: the Confederation of British Industry (CBI) says that more than half of businesses are concerned they will not be able to recruit enough people to fill their high-skilled jobs; EngineeringUK says Britain is short of 55,000 engineers a year; and official statistics show that the number of vacancies has risen 70% since the 2009 low and stands at 735,000 across all sectors in the UK1. What everyone agrees on, however, is that a lack of suitably qualified employees is already damaging British business.
Adam Marshall, Executive Director of Policy and External Affairs at the British Chambers of Commerce, calls it the ‘number one challenge’ facing the country and says that, without urgent action, ‘the challenge of delivering future jobs, prosperity and success could falter’. EngineeringUK says that bridging the skills gap could generate an additional £27 billion a year for the economy from 2022, enough to build 1,800 schools or 110 hospitals. Katja Hall, Deputy Director-General of the CBI, says: ‘If we want jobs and prosperity to keep on growing, we cannot afford to let the shortcomings of our education and skills systems drag us down.’
The government is taking action. It plans to create three million new apprenticeships by 2020 and is consulting on the implementation of an apprenticeship levy on larger companies to pay for this, which is planned to take effect in 2017. That would mark a 30% increase on the number of apprenticeships created by the coalition government. The government’s skills strategy, announced at the start of the last parliament in 2010, made improving the quality of apprenticeships a priority, as well as boosting the standard of education in schools.
But there is still concern over whether these initiatives will be enough to make a significant difference to skills levels. ‘Successive governments have announced initiative after initiative and things change so often that businesses can’t get used to them,’ says Marshall. His rule of thumb is that it takes a year for companies to learn what a new initiative means, five years to engage with it and 10 years to feel confident about implementing it. Yet consistency has been an issue: City & Guilds points out that responsibility for skills and employment has switched between government departments 10 times since the 1980s and there have been 13 major Acts of Parliament and more than 60 Secretaries of State in this period.
It is not just apprentice numbers that have been rising; general levels of education have also gone up. Around 43% of the population now goes into higher education, compared with just 10% in the mid-1970s2. Yet, while many businesses are complaining of skills shortages, new graduates are finding it difficult to secure appropriate jobs.
“The government plans to create three million new apprenticeships by 2020”
The Chartered Institute of Personnel and Development estimates that more than 58% of graduates were employed in jobs that did not actually require a degree in 2010 – one of the highest levels in Europe and a significant increase since 2004. While it says that may reflect earlier skills shortages, which is now being rectified by the greater availability of graduates, it adds: ‘There may be cost-effective ways (for both government and individuals) of preparing many of our young people for entry into the labour market.
Policymakers need to scrutinise the range of courses offered by the higher education sector and seriously consider the social and private returns to them. We believe that they will conclude that, in many cases, public funds could more usefully be deployed elsewhere in the education and training system.’
However, despite an increase in the number of both graduates and apprenticeships, businesses still complain about the calibre of staff available. The CBI’s 2014 education and skills survey found that up to half of all businesses had concerns about the literacy, numeracy or IT skills of recruits, and that 40% of those surveyed had provided remedial training in these areas for some of their employees. ‘Equipping young people with the skills and attitudes to make a smooth transition into the workplace, and to continue learning in the years ahead, is an essential response to the changing pattern of demand for skills,’ the CBI’s report says.
‘Almost half of all employment is set to be in managerial, professional or associate professional roles by 2022. And the growth in caring and personal service jobs calls for different and better levels of skills – such as communications skills – from those required by many traditional jobs.’
Marshall identifies three key areas of skills mismatch: in good basic skills of employment – staff who show up on time and with the right tools for the job; technical skills, such as in construction and building; and engineers and scientists. He believes that solving the problem requires a four-pronged approach: schools ‘need to be measured more on whether they are delivering candidates who are employable’; colleges need to focus on providing courses in areas where skills are in short supply; universities should concentrate on the areas where skills are needed, particularly in the STEM – science, technology, engineering and maths – subjects, which he says is increasingly happening; and the aim should be to boost the quality of apprenticeships available.
‘There is a huge focus by the government on the quantity of apprenticeships – that is the wrong way round. We should be concentrating on quality first and, if we get that right, the quantity will come later,’ he says.
St. James's Place Schemes
Finding the right staff and developing their skills further are crucial to the long-term prosperity of a business, and wealth management is no exception. St. James’s Place has built its own successful programmes of talent acquisition and skills development. These programmes operate at all levels, helping young people to take their first steps in business, through to attracting high-calibre university graduates and growing its own advisory talent through the St. James’s Place Academy.
The programmes start with six-week, paid summer internships, taken up mainly by A-level students and university undergraduates, predominantly at its Cirencester head office. The internship programme is now in its 10th year and in that time the number of interns has risen steadily each year, with 30 young people working in the business this summer. Nicki Williams, Development Consultant at St. James’s Place, says that interns work across all areas of the business, from IT to investment management, with the dual objective of encouraging young people to consider the financial sector as a career and supporting the company’s contribution to the local community.
Many of the younger interns go on to apply for an apprenticeship with the company, working across the business on a one-year programme, with the hope that most will take up full-time posts with the company. The fourth intake of apprentices took place in September with 12 recruits, bringing the total employed through the scheme to 42.
At every level in the company, there is a large programme of skills development. Rob Hawkins, Head of Client Development at St. James’s Place, believes that its MSc in Wealth Management, available to both Partners and staff, is at the peak of this programme and is breaking new ground for the industry.
Developed exclusively for St. James’s Place by Loughborough University, the course requires three years of part-time study to earn the qualification. ‘The aim is to add a new level of professional qualification and help individuals [within the firm] broaden their skills and knowledge,’ he says.
The recruitment and development of advisers is crucial to the business. Regulatory changes and increasing professional standards have dramatically reduced the pool of talent. Adrian Batchelor, Director of the St. James’s Place Academy, points out that, since St. James’s Place was founded in 1991, the number of authorised financial advisers in the UK has reduced significantly; recruiting solely from within the industry is, therefore, no longer a viable option.
The St. James’s Place Academy opened in 2007 and operates across four national centres, with the aim of producing 100 academy graduates each year. Batchelor says that the decline in the number of people working in wealth management, and the ageing nature of the profession, means that ‘if we want to attract the quality of people we need, we have to grow our own talent’.
Recruits have an average age of 38 and come from a wide range of professional backgrounds, although about half have financial services experience. The first six months is spent in the classroom, acquiring the qualifications needed to give financial advice. They then work with one of the firm’s experienced Partners, who mentors them for 12 to 18 months, and an Academy Development Manager, who supervises them during this period. They then graduate and join one of the St. James’s Place offices.
1 ONS, The UK Labour Market, Aug 2015
2 CIPD, Over Qualification and Skills, Aug 2015