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Philip Hammond delivered a Budget that was quiet on many fronts. But on skills the chancellor delivered a breakthrough, confirming a £500m expansion in spending on technical training. At a time when addressing skills shortages and equipping young people for the future have never been more important, a shake-up of technical education is much needed.
This is the moment to create a world-class system that ensures parity of esteem between vocational and academic routes, and increases the number of teaching hours for technical subjects.
With the majority of people who will be working in 2030 already in the workforce, the proposed focus on adult skills provision puts this type of training on the right path to major and necessary improvement. This will be vital in the face of fast-changing economic and technological conditions.
A CBI report showed that educational attainment is crucial to raising productivity and wage levels across the UK. The report from the employers’ organisation suggests that by making progress in education and training, as well as other drivers of productivity such as infrastructure and innovation, a successful industrial strategy could boost the UK economy by £200bn over the next decade.
The next 10 years will see dramatic transformation, from advances in artificial intelligence to automation and a changing workforce. New technology has the potential to lift living standards for all. But being ready for tomorrow’s jobs means training young people today. In 2015, UK companies spent £45bn on training and skills. Business will continue to work with the government, helping firms acquire the skills they need.
Raising prosperity across the UK also means investing in roads, railways, as well as the country’s digital infrastructure. The chancellor’s £23bn national productivity investment fund, announced in the 2016 Autumn Statement, set the tone for this, so it is good to see more detail on how this money set aside for innovation, research and development will be spent.
But while we need to keep one eye fixed on the longer term, we should also be mindful of the pressures that businesses are feeling right now. Since Britain’s referendum on EU membership, the economy has been resilient. We should be proud that, in the past nine months, and despite the uncertainty, businesses across the UK have done what they do best — innovating and investing.
The CBI welcomes the simplification of the tax system in the Budget designed to reflect the modern economy. But the government must continue to offer incentives to entrepreneurs.
Yet in the coming months, inflationary pressures could damp business investment. This would come at a time when companies are still adjusting to increases in the national living wage, the introduction of the apprenticeship levy and other substantial costs, such as rising business rates.
Businesses will be looking to work with government as they try to make the apprenticeship levy work. But the limited relief announced in the Budget for companies hit hard by business rates falls short.
Brexit is never far from the minds of business people. The CBI has been working hard to build support across Europe for an ambitious deal. We have met political and business leaders from Belgium, France, Germany, the Netherlands and Malta. And we will keep working with business groups throughout the other 27 EU member states, cutting through the political noise to give the economics a voice.
Like Theresa May, the prime minister, we are confident that a satisfactory Brexit deal can be achieved. Yet we should be under no illusions about what leaving the EU without a deal, and trading through World Trade Organization rules, would really mean.
A “no deal” scenario would have far-reaching economic consequences for companies on both sides of the Channel. The UK would face tariffs on 90 per cent of its exports, by value, as well as a number of new regulatory hurdles. An ambitious, comprehensive deal covering every sector is best for Britain and for Europe, too.
The final Spring Budget contains welcome building blocks for long-term competitiveness, and has prioritised stability as an antidote to Brexit uncertainty. But the future that the UK is moving towards, driven by a modern industrial strategy at home and Brexit negotiations abroad, needs careful planning. A real partnership between business and the government is the way to ensure its success.
The writer is director-general of the CBI