London Business 1000 Year 2: Assessing the capital’s skills challenge

The London Business 1000 is an annual survey commissioned by LCCI and London Councils and conducted by ComRes of more than 1000 London businesses, representative of London’s business community. The survey informs our latest report entitled ‘London’s Local Business Survey: Assessing the Capital’s skills challenge’, which finds that the skills system is not providing what London businesses need, providing key insights for policy makers, in Westminster, City Hall and our boroughs on the need to reform the apprenticeship system and priorities for skills and training provision across the capital.

In terms of skills challenges faced by London businesses, the survey finds that the most common roles identified as facing skills challenges are skilled manual/technical roles (42%), followed by professional and managerial roles (30%). However, these results vary by size of business. For example, half of larger firms identified professional and managerial roles as facing skills challenges (51%) compared to only 28% of micro businesses.

The survey also found recruitment challenges to be common amongst London firms. For instance, three in five (59%) companies who tried to recruit encountered difficulties recruiting new staff over the past 12 months. Looking at the challenges they faced, businesses were most likely to experience difficulties when hiring for skilled/manual technical roles (59%), followed by professional/managerial (55%) and un/semi-skilled positions (53%).

The report argues that access to relevant technical skills, improving digital skills and better employability skills for job candidates should be a focus for London. The devolution of the Adult Education Budget to the Mayor of London is an important opportunity to ensure skills provision better meets the needs of business. But it is only a small part of the system. The government should move rapidly to progress devolution of 16-18 skills provision, vocational capital investments, careers information, advice and guidance, as well as the apprenticeship levy, starting with unspent levy funds. This would give London government the tools it needs to meet the considerable skills challenges identified.

In regard to training and apprenticeships, the survey found that upskilling employees digital skills is a ‘high’ or ‘medium’ priority for three quarters of London businesses (73%). Meanwhile, up-skilling employees in other areas is a high priority for a third of respondents (34%).

In the context of the Government’s ambitious target to create three million apprenticeships by 2020, apprenticeships have received renewed attention as a means of training current and new employees. One in six London businesses (17%) in the survey currently employ an apprentice, which is an increase of 9 percentage points on last year – however, this was primarily driven by companies who pay the Apprenticeship Levy.

With the introduction of the Apprenticeship Levy in April 2017, the percentage of firms that employ apprentices went up significantly for levy paying businesses: from 11% last year to 60% this year. Meanwhile, there has not been a significant change for non-levy payers (from 7% to 9%).

Measures that businesses identified to help increase the number of apprenticeships include more financial support for training and wages, if candidates were better prepared for work, more and better information about apprenticeships and simplifying the apprenticeship system.

Clearly, the government should look to reduce bureaucracy and make the apprenticeship system simpler. Additionally, businesses want apprenticeship candidates to be better prepared for the world of work. To help address this the report argues that unspent levy funds should be kept in London, rather than be returned to the national government and be used to support potential apprentices to prepare, including through pre-employment training.

Finally, the report argues that at the moment the levy is not working well for London businesses. The government and Mayor should review the apprenticeship levy in London and introduce more flexibility into the system. Four in ten (42%) levy paying businesses did not expect to use any of their funds, with an additional 40% expecting to spend just half or less (excluding those that don’t know).

Building on that, the report argues that the government should review the apprenticeship levy in London, working with London Councils, the Mayor, businesses and their representative organisations to consider what reforms could be made to the levy to maximise its use by employers.

For more information please find a copy of the report here.