Increases to the National Living Wage and pay increases for the public sector announced in the Budget are welcome, but are not going to be effective without investment in people management and skills, experts have argued.

Deputy CEO of the Recruitment and Employment Confederation, Kate Shoesmith, said:

"The Chancellor said today [27 October] was about preparing for a new economy. To really deliver on that, what we need to see from Government is a long-term, strategic vision for the whole UK workforce. Businesses up and down the country are battling labour and skills shortages. They need the right levers to enable the right type of investment in workforce development and growth - only that growth can make wage rises sustainable and improve the public finances long-term. That means ensuring businesses have the financial headroom and incentives to invest here in the UK, as well as the skills support that is needed.”

Shoesmith continues:

"Today’s pledge for more spending on skills is a step in the right direction - but what is long overdue is a revolution in how we deliver training and skills. The apprenticeship levy is acting as a brake on prospects for young people, and progression for many workers. It needs to be overhauled, so that it supports people at and into work properly. There is also still not enough focus on entry-level skills, where the most acute shortages are, so we hope to see more on that in the detail of the skills bootcamps announcement.

"In terms of encouraging business investment and improving productivity, funding for transport outside London, the Global Britain Investment Fund and the Annual Investment Allowance extension should help to boost local and regional economies and growing businesses. Struggling sectors will be pleased to see cuts to business rates, but this was a missed opportunity for more radical, long-term reform. We would like to see the departments for work and pensions, business and education work together in a joint forum with business on measures that will help to level up the entire country and produce the high pay, high skill economy that we are all aiming for."

Responding to the Chancellor’s Budget, Peter Cheese, Chief Executive of the CIPD said on skills investment:

“There is still a glaring gap between the Government’s ambition to transition the UK to a high-skill, high-wage economy and its current policies and investment priorities. Piecemeal interventions… are unlikely to amount to a skills revolution, more an evolution of things that already aren’t hitting the mark for many employers or jobseekers. There needs to be an economy-wide, joined-up strategy to encourage and enable more firms to adopt strategies where the workforce is recognised as something to be invested in and drives value, rather than a cost to be minimised.

“Today’s announcements focus heavily on the supply-side and giving money to existing programmes, but it’s unclear if these initiatives deliver on what employers need or if they are creating positive work opportunities. There was also little on how the Government will incentivise and encourage employers to invest more in skills themselves. After a decade of underinvestment in skills we need employers and Government to be looking not just at routes into work but in-role development too.”

Cheese continues:

“Increased investment in T-levels is a step towards improving technical skills but many employers simply don’t know enough about them or fully understand them. Given current pressures on businesses, there’s also concern over whether enough employers will be able to offer the work experience element.

“Equally, if the Government wants to work in partnership with business to create a high-skill, high-wage economy, it must listen to business and reform the Apprenticeship Levy into a more flexible training levy. The Levy in its current form has failed on every measure, coinciding with a reduction in apprenticeship starts overall, a fall in the proportion of apprenticeships going to young people and a reduction in employer investment in training. Failure to reform the Apprenticeship Levy continues to hold back employer investment in skills at a time when this has never been more important.”