In his speech to conference, transport secretary Chris Grayling trumpeted Crossrail - “British skills on a world-beating project” - and rightly so. Shout-outs were also generously given to apprentices from Bombardier, Carillion and National Express. Meanwhile defence secretary Michael Fallon set out his plans to encourage ex-servicemen and women back into work via apprenticeships, and to create new in-school cadet units to help deliver 50,000 apprenticeships by 2020.
But before hot-footing it back to Westminster, Mr Grayling also took in the progress of the National College for High Speed Rail in Birmingham which, by this time next year will – together with its sister site in Doncaster – be open to students. It is estimated that businesses will need approximately 87,000 graduate level engineers every year for the next 10 years. And, with HS2 on the horizon, 30% of the current rail workforce will need further training to deliver the demands of high speed rail. The transport skills strategy already commits the government to create 30,000 apprenticeships across rail and road by 2020, but clearly much is needed at a pan-departmental level.
All this is politically sensible as the skills agenda helps to address a number of challenges the UK now faces as it recalibrates its economy for a post-EU future.
First, it is clear that the UK is too reliant on a (predominantly London-based) service sector. More focus is being put on the need for our exports to become internationally competitive; for goods to be produced which are wanted across the world. For the government, building a proper skills base is one way of bolstering our capacity to deliver the kind of advanced, innovation led goods and services needed to meet domestic and overseas demand.
Second, skills also play into the devolution agenda by giving the new generation of city region mayors the power to build the skills that will power growth in regional jobs and attract new investors in knowledge intensive, skills thirsty sectors. Analysis from the Centre for Cities shows us that the UK is highly dependent on its cities – they already play a proportionately bigger role in the national economy than our rivals in Europe. Yet there is so much potential that needs to be unlocked if the UK is to be truly competitive. We are laggards on productivity. Nine out of 10 of our cities are less productive than the European average and more than 50% are in the least productive quarter of cities Europe-wide. This is because skills in the UK are too often low quality. UK cities have the third largest concentration of low-skilled residents in Europe and three quarters have a lower proportion of high-skilled residents than the European average. If cities are already the powerhouses of our national economy, then city devolution has a major role to play in meeting this particular challenge.
The rail sector has known for some time that investing in skills is an absolute necessity if the multitude of major infrastructure projects like HS2, Crossrail and Northern Powerhouse Rail – not to mention the huge body of work to upgrade the existing infrastructure through electrification, signalling and so on in Network Rail Control Period 5 (2014-2019) and 6 (2019-2024) – are going to be progressed and delivered effectively.
When Prime Minister May made explicit reference to a new industrial strategy in her conference speech, this should be received as positive for the rail sector, a sector that should be at the vanguard of the new skills agenda. We will know more in this month’s autumn statement (23 November), but the signs are that there will be rebalancing of economic policy away from quantitative easing towards tax and spend, including freeing up money to flow into strategically important industrial sectors and fund infrastructure investment.
Despite enormous rhetorical commitment to infrastructure by governments over the past six years, and aside from the very high profile pieces of nationally significant infrastructure that are in various stages of planning and delivery, it is instructive that the proportion of GDP actually spent on infrastructure has remained low. Capital investment has been on a downward trend for most of the period since the coalition government came to power. And, while the majority of planned infrastructure pipeline investment will be privately funded, public investment totalled just £34.4bn in 2015/16, only 1.9% of GDP. This is from a recent peak of 2.8% (£36.7bn in 2014-15 prices) in 2010-11, the effect of Labour’s fiscal stimulus programme in the late 2000s.
The May government’s new industrial strategy bodes well but there is a danger of putting the cart before the horse. It can only succeed if skills policy is developed hand in glove with the infrastructure schemes themselves. Otherwise, we will simply be unable to provide the human capital needed to realise the scale of infrastructural investment.
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This article was originally published in Rail Professional, November 2016.