Ryan FowlerEmployers across the UK are urging the Government to deliver on its promise to prioritise workforce issues in the forthcoming industrial strategy, Invest 2035. The Recruitment and Employment Confederation (REC) survey highlights widespread concerns about skills shortages, taxation, and regulatory support, underscoring the critical role workforce development plays in driving economic growth.
Invest 2035 is the Government’s much-anticipated 10-year economic plan, currently in a consultation phase, with final recommendations expected in spring 2025. While the Government has positioned people and skills as central to this strategy, employers remain cautious, noting similar promises in past strategies that failed to yield substantial results.Neil Carberry, chief executive of REC, said: “If the new industrial strategy’s focus on people is just a list of skills programmes that Government will fund, then it will fail. Skills are part of a complex web of workforce practices that – if we can get things right – have the potential to transform UK productivity. But that requires serious engagement from business and public authorities alike. This issue was very much a ghost at the feast in the May-era industrial strategy. As our survey shows, there is a lot to do. But there is also a big prize. At a time when our domestic labour force is shrinking and skills needs are changing fast, we could unlock £39bn of growth every year by getting the people stuff right.”The survey, conducted by research specialists Whitestone Insight in November 2024, polled 233 employers across various sectors and regions. It found that 57% of employers believe upskilling the existing workforce should be a top priority. This sentiment was consistent across all regions and employer sizes, reflecting the fact that most of the workforce in 2035 is already employed today.Expanding vocational training routes was highlighted by 41% of respondents, who emphasised the importance of aligning further education with economic needs. Boosting digital training and skills development was prioritised by 40%, particularly in London and the South, where larger employers expressed strong support. Additionally, 36% of businesses stressed the need for fostering innovation and entrepreneurship, with London-based firms leading the call for a more open attitude to risk and reduced reliance on government backing.Investment in STEM education and training was flagged by 30% of respondents, with London (42%) and large employers (40%) being the strongest advocates. Meanwhile, 20% emphasised the importance of attracting international talent, a concern echoed predominantly by London employers.Employers also identified key recruitment challenges, with 60% citing skills shortages as their primary concern. This issue was particularly pronounced in the Midlands (69%) and across businesses of all sizes. An unstable business tax environment was the second most common challenge, noted by 41% of respondents, particularly in London, where over half expressed concern. Additionally, 36% pointed to insufficient support for SMEs and start-ups, especially in the Midlands and among smaller firms. Access to global talent was raised by 25%, with London businesses being the most affected.Neil Carberry added: “The survey shows that industrial strategies need to consider people and productivity alongside taxation and infrastructure policies. Governments must work together on a more business-responsive approach to skills and deliver on the new Growth and Skills Levy so that employers can use funding more flexibly. There are many vacancies that require shorter learning curves and that can be filled quickly by someone who is ready to learn if they have the right support. A stable, long-term approach will help businesses step up with confidence, ensuring public money crowds in private sector commitment.”REC, along with the National Enterprise Network and the Federation of Small Businesses, has welcomed the Government’s initial move towards greater workforce support through the forthcoming Business Growth Service, set to launch in 2025. However, employers remain focused on ensuring that the final industrial strategy addresses their concerns with actionable, consistent policies that foster long-term economic stability.
