Policy Library

The Prime Minister is facing an in-tray stacked high with urgent challenges. Perhaps the most pressing issue is how to achieve economic growth and set our country on a path for sustainable finances.

Over the last decade, our nation’s economy has suffered from stuttering growth rates. Between 2000–2020, economic growth in the UK averaged around 1.8 per cent, almost a percentage point lower than the growth rate of the previous two decades. Low economic growth has meant that public services have been financed largely by an increasing tax burden.

Even the growth our economy has achieved has failed to improve the lot of ordinary working families. A focus on consumption, rather than investment in capital and skills, has left our productivity rate stagnant and generated almost no growth in average earnings. Poor growth in personal income has left families exposed to rising costs and facing the brutal realities of the cost-of-living crisis.

Learning and skills underpin our country’s growth trajectory. Without a stronger foundation of education for all and opportunities to retrain and develop the world-class skills needed for a competitive market, our economy will continue to be hostage to low growth rates.

Part of the reason for poor economic growth has been our inability to cultivate the skills needed by employers. While lots of attention has been given to the increased number of pupils going to university, hidden from sight, a long tail of low skills has been growing.

There is a huge deficit of basic skills. In 2018, nearly 1 in 5 young people left formal education without basic qualifications. Adults who wish to resit and retrain for GCSE and equivalent qualifications face a dearth of second chances.

By 2030, 7 million people (20 per cent of the current labour market) could be under-skilled for their job and up to two in three workers will be under-skilled in basic skills to some degree. The most widespread under-skilling is expected to be in basic digital skills, with around 5 million workers projected to be under-skilled.

While talent is everywhere, opportunity is not. There are massive gulfs between different parts of the country: higher skill levels among London’s workforce explains about two thirds of the productivity gap between the capital and the rest of the country. Britain faces a particularly persistent problem with low level skills: 1 in 5 of the lowest skilled cities in Europe come from Britain.

Work remains the best route out of poverty and yet many thousands of adults in the UK do not have the right skills to enter employment. The impact of low skills on an individual’s life chances are scarring.

This report sets out a blueprint for improved lifelong learning which fosters every individual’s talent and potential and engages adults on the very fringes of our labour market

A talented workforce is the best engine to drive economic growth. If we want to create a more resilient economy, we must examine our adult education system and focus on building a strong foundation of Adult Community Education.