Business leaders call on the new Government to put education and skills at the heart of a renewed industrial strategy, as they say too much talent is being lost to other countries

Business leaders call on the new Government to put education and skills at the heart of a renewed industrial strategy, as they say too much talent is being lost to other countries

• With industrial policy at the heart of the new Government’s growth plans, eight in ten (81%) UK business leaders say an industrial strategy is essential for economic growth. 

• Seven in ten (68%) businesses say the UK lags behind competitor countries for how its skills system promotes growth, despite its globally-renowned Higher Education institutions.

• Over six in ten (65%) business leaders think the UK is losing too many talented people to other countries.

• With sluggish economic growth and slower productivity growth than most other G7 economies, the UK could add £650 billion to GVA by 2035 by addressing business leaders’ biggest enablers for growth. 

The UK is falling behind other nations when it comes to skills and education and is losing too many talented workers to other countries, say business leaders in their calls for an industrial strategy, according to new research by PwC.

Over six in ten (65%) business leaders think the UK is losing too many talented people to other countries, coupled with seven in ten (68%) businesses saying the UK lags behind competitor countries for how its skills, education and talent promotes growth, despite its globally-renowned education system.

The data comes from new, independent research conducted on behalf of PwC, including over 60 one-to-one interviews with senior business leaders, policy bodies, and trade associations. Additionally, the research included a quantitative survey of 1,200 businesses of all sizes, over half of which were SMEs, to explore business attitudes and priorities for achieving growth within their sectors. 

PwC’s Framework for Growth report comes as the new Labour government puts a renewed industrial strategy at the heart of its economic growth plans. The report identifies the components business leaders believe would be most effective in breaking down the barriers to growth and productivity, and includes new economic analysis that projects the potential impact that improving the UK’s performance across key areas could have on the economy. 

Skills, education and talent

More than half of businesses in the survey (53%) rank skills, education and talent in their top three most important components for growth in their sector, with over a quarter (27%) ranking it as their most important component.

Of those that prioritised skills, education and talent, almost eight in ten (79%) businesses think improving the UK’s skills system will require action and/or investment from government. However, similarly 73% think there is a lot that business can do to improve the level of available skills in their sector and that this will be more impactful than government policy.

Of the same group of businesses prioritising skills and education as their biggest enabler for growth, over a third (37%) predict that improved government policy and investment in skills, education and talent would allow them to increase their workforces - of which, seven in ten (70%) predict the size of their workforce would grow by over 10%, and nine in ten (91%) said it would increase by over 5%. When it came to this group predicting if they would increase the level of investment in their business if the UK government's policies and investments in skills, education and talent were improved, over a third (38%) of the businesses said they would up investment - with seven in ten (71%) thinking investment would increase by more than 10%. 

Rachel Taylor, government and health industries leader at PwC, said: 

“The new Government has a full intray but clearly for business leaders stability and certainty through an industrial strategy, which prioritises skills, is key. 

“Global markets for investment, skills, and supply chains have never been more competitive, and the UK increasingly finds itself competing with countries where governments take a more active role in supporting the private sector. Achieving long-term economic growth will ultimately require joined-up policy making and investment at both national and local levels.” 

Shaping a future industrial strategy

Whilst eight in ten (81%) UK businesses say an industrial strategy is essential for economic growth, they are looking to the government to set the overall framework for growth, rather than industry-specific policies. 

With a quarter (24%) of business leaders in our survey feeling that past governments have not listened to business when designing policies to promote economic growth, the report also highlights the need for building trust and engagement amongst businesses, particularly in achieving certainty and longevity of an industrial strategy.

Economic gains

Compared to other G7 economies, the UK’s economic growth has broadly flatlined since the pandemic and is struggling to return to its historical trend. Also amongst the G7 economies, the UK is lagging behind all but Germany, and this prolonged period of flattened growth is set against the backdrop of the UK’s long-term challenge to improve productivity.

PwC has calculated a potential £650 billion uplift to UK GVA by 2035 by improving the UK’s performance across three of the biggest enablers for growth identified by business leaders - skills and education, digital transformation and infrastructure and planning - to be inline with other G7 countries. Businesses’ highest priority of skills, education and talent would see a £230 billion uplift, along with digital transformation £65 billion and infrastructure and planning a £355 billion increase.