In its Ambition 2020 report, the UK Commission for Employment and Skills argues that 10 million people need to improve abilities if Britain is to be in the top eight countries for skills, jobs and productivity by 2020. It warns that current policies suggest only half that number will raise levels. Encouraging UK employers to be the standard bearer in upskilling staff is often a thankless task. With reduced government funding available, training is one of the first budgets to be cut, and staff development and CPD frequently disappears. .

To understand why skills are so critical, the first step is to understand how the UK economy has fundamentally altered. The past ten years has seen an increase in knowledge-based industries and jobs and the current recession is simply accelerating this change. Whilst all industries have been affected, it seems that fewer jobs have been lost in knowledge industries, attributed in part to the presence of identifiable key skill components namely -  hard (qualifications) and soft skills (teamworking, communication). There appears to be substantial returns for the individual, business and the economy who invest in skills.

For the individual, the more educated an individual is, the more employable they are: ‘85% of employers who recruited higher education leavers into their first job found them to be well or very well prepared for work, compared to 66% of employers that had recruited a young person who had completed only compulsory education. Increasing the training rate by 5 percentage points is associated with a 4 percentage point increase in productivity and subsequent £40 billion on GDP.

For business, developing and launching new technologies and products requires intellectual and knowledge assets. Across all sectors - manufacturing and services, high tech and low tech, domestic and international, public and private, large corporation and small enterprise - the businesses that have prospered have highly skilled individuals who can rapidly create tailored products for increasingly sophisticated customers.

For the economy, the growth of knowledge-intensive services drove the UK out of the recessions in the 1980s and 1990s; and we expect the same to happen in the 2010s. Public

knowledge-intensive industries are less likely to contribute to economic growth in the

years ahead, given the scale of the deficit, and this means that private knowledge intensive services will be increasingly important. It is expected that the most significant drivers of growth will be: creative industries, low carbon sectors, business services and "manu-services".

Driving these industries and sectors forward will require a fit-for-purpose skills system. Too often skills shortages, gaps and cpdu@herts.ac.uk [1] Tel 01707 285407 www.herts.ac.uk [2]