Election skills
6 May 2015
Following tomorrow’s general election, key engineering issues such as skills shortages look set to play a central role over the next parliament.
This year’s general election campaign has been fought on many of the traditional battlegrounds – the economy, taxation, the NHS – but there have also been many other issues brought to the fore like never before.
Most prevalent, thanks largely to the UK Independence Party’s (Ukip) high poll rating, has been the issue of immigration and Britain’s EU membership.
While both of these topics clearly have an impact on companies working in the process industries, there have also been hot topics that are very much specifically about engineering companies and the work they do.
This is particularly the case when it comes to skills shortages.
“All the major political parties have committed to higher skills development in their manifestos, so we expect more growth [in terms of degree apprenticeships],” says University Alliance chief executive Maddalaine Ansell.
The degree apprenticeships programme, introduced during the final days of the Conservative-Liberal Democrat coalition government, looks likely to continue and grow under the next government – even if Labour and the Scottish National Party (SNP) rename them Technical Degrees (see box below).
EEF chief executive Terry Scuoler says that this enthusiasm for skills and apprenticeships could be only harmed if Labour tried to reinvent existing initiatives, saying they must “avoid the constant change that has previously left employers and learners bewildered”.
Assuming that any change under a potential Labour–SNP government is limited to the name of Degree Apprenticeships, EEF employment and skills policy adviser Verity O’Keefe anticipates the number of courses available – currently restricted to nine including, nuclear, power engineering, laboratory science and electronic systems engineering – will increase after this September’s first intake, with more apprenticeships focussed on manufacturing and engineering.
Another hot topic has been that of energy, with all parties with the exception of the Green Party and SNP supporting the development of shale gas reserves.
There is also tacit acknowledgement from all parties that the “rebalancing” of the UK economy away from services to manufacturing pledged by the last government has so far yet to materialise, with each one of their manifestos committing to some form of investment and incentives for industrial research and development.
As the process of forming a new government in the wake of the general election begins, key engineering issues such as skills shortages look set to play a central role over the next parliament.
Skills
Apprenticeships have been a vital part of the election campaign, but could immigration policy make matters worse for the process industries?
Increasing the number of highly-skilled industrial employees is a key proposal outlined in all of the major political parties’ manifestos.
But how do they intend to fulfil this promise?
The Conservative Party says it will create an additional 3 million apprenticeships by 2020, having already delivered 2.2 million apprenticeship starts since 2010.
Similarly, the Liberal Democrat Party says it will increase the number of high-quality apprenticeships.
It will also extend the period of time that international science, technology, engineering and maths (STEM) students have to find employment before their visas expire from four to six months.
However, the Conservative Party is unlikely to win an outright majority at this month’s general election, and the Liberal Democrat Party almost certainly won’t.
To stay in power, the two parties would need to form another coalition, while also turning towards one of the fringe parties for support.
The UK Independence Party (Ukip) might be able to offer the necessary sanctuary for the Conservative Party as its own apprenticeships policy could well be aligned with the Tory’s pledge, while also sitting alongside the Liberal Democrats’ call for more advanced apprenticeships.
However, the Labour Party may have the power to scupper this plan come election results day.
If it wins the general election, the Labour Party says it will introduce a number of new Technical Degrees – a pledge similar to the Degree Apprenticeships scheme launched by David Cameron in March.
Labour says it will also guarantee an apprenticeship for every school leaver that “gets the grades”, without spelling out exactly what those grades would be.
As with the Conservative Party, however, it is highly unlikely the Labour Party will win the general election outright.
Though Labour leader Ed Miliband has repeatedly said he will not form a coalition with the Scottish National Party (SNP), he may have to form some sort or alliance with the SNP, and possibly the Liberal Democrats, if he wants to become Prime Minister.
By supporting a Labour government, the SNP says it would use its position to deliver 30,000 Modern Apprenticeships for “young Scots”– but has ruled out ever forming an alliance with the Conservative Party to help realise this, or any of its other manifesto pledges.
Regardless of election results, however, there could still be a major sticking point – immigration.
The Conservative’s stance on capping the number of skilled immigrants allowed to work in the UK – which Labour plans to keep in place - could lead to an even bigger skills shortage than industry currently faces, experts suggest.
“Measures that focus on home-grown talent should be complemented by widening the talent pool to include skills from overseas,” said Terry Scuoler, chief executive of manufacturing body EEF.
“The decision to maintain the cap on skilled non-EU workers and, further reforms to the student visa route, goes against this and will cause great frustration amongst employers.”
Rate relief
Business rates and minimum wage levels are two key business issues likely to feature in the next parliament.
There are some general business issues that have been thrown up by this election that look likely to have an impact on those working in the process industries over the course of the next parliament
Most notably, there is broad consensus across the parties that something needs to be done to bring down business rates – the tax that councils levy on business premises.
The outgoing Conservative-Liberal Democrat coalition government initiated a review of business rates in England in March, and this is due to publish its findings in time for the 2016 Budget.
Both parties have pledged to see through the conclusions of this review should they remain in power.
Currently, only properties with a rateable value – i.e. the annual rent value – of less than £12,000 are eligible for discounts, or relief, on the level of business rates they pay.
Ukip would increase this level to £50,000, and entitle all properties under this value to a 20% relief rate.
Labour meanwhile would cut and freeze business rates themselves, and would pay for this by reversing the most recent cut to Corporation Tax, which in April fell from 21% to 20%.
The other business issue with broad consensus is support of the minimum wage, although the proposed increases vary widely from party to party.
The Conservatives and Ukip will stick to current plans to increase the minimum wage to £6.70 this autumn, with the aim it of reaching £8 per hour by the end of the decade.
Labour would aim to get to the £8 mark a year earlier, while the Liberal Democrats would not only look to raise the minimum wage, but also introduce legislation requiring all companies with more than 250 employees to publish details of different pay levels among men and women in their organisation.
This would include publishing the number of people being paid less than the Living Wage, which is currently £7.85 per hour (£9.15 per hour in London).
Energy
Shale gas and nuclear power enjoy support from most, while coal proves divisive.
This general election has proven good news for the shale gas industry.
Only the SNP is opposed, pledging to continue its moratorium on hydraulic fracturing (fracking) activities in Scotland.
However, all of the others have used their manifestos to support the development of shale gas, from the enthusiastic Conservatives and Ukip declaring it is “time to get fracking”, to the slightly more resigned language of Liberal Democrats and Labour, both talking up the importance of a “robust environmental and regulatory regime”.
Both Conservatives and Ukip also support the idea of a sovereign wealth fund, the Conservatives proposing a fund for the north of England to allow shale revenues to be reinvested in the region, Ukip a national fund taken from the 50% Petroleum Revenue Tax.
Likewise, Labour, Liberal Democrats, Conservatives and Ukip have accepted the need for new nuclear power plants as part of the future energy mix.
There is also broad consensus on the need to support North Sea oil & gas, with all parties.
Indeed, the only energy sources where there is any real divergence is on renewables and coal.
Most manifestos talk about the need for renewable electricity to be financially viable, but both Conservatives and Ukip pledge to scrap subsidies for onshore wind and hand planning decisions over wind farms to local communities.
When it comes to coal, Labour backs “clean coal” as part of the energy mix, while the Conservatives and SNP manifestos make no mention of it.
Ukip, meanwhile, has pledged to scrap the Climate Change Act and Large Combustion Plant Directive (LCPD), the latter being responsible for the closure of 6.1GW of coal-fired plants as it requires plants to reduce sulphur dioxide, nitrogen oxide, and particulate matter emissions.
Plant owners that chose not to invest in the technology required to comply were all required to shut down by 2015.
Ukip says repealing this EU legislation will allow what it calls “secure, reliable and economical electricity generation” from coal to continue.
The party also pledges to support coal mining in the UK, investing in the country’s three remaining deep coal mines, which are all due to close next year.
By contrast, the Lib Dems have pledged to introduce a Zero Carbon Britain manifesto to bring net CO2 emissions to zero by 2050.
Within this pledge, the Liberal Democrats close down all unabated coal plants – even those that are LCPD compliant – by 2025, and would set a legally binding decarbonisation target range for 2030 for the power sector of 50–100g of CO2 per kWh.
In terms of the energy infrastructure that needs to be built, the two big policies likely to have an impact both come from Labour: the party’s manifesto sticks by leader Ed Milliband’s promise to freeze domestic energy prices until 2017 – many power generation firms have warned this will lead to them putting investment plans for new plants on hold; it also proposes the creation of an Energy Security Board to plan and deliver the energy mix needed.
Industrial evolution
Boosting investment in research and innovation is a real priority for most of the major political parties.
Innovate UK, formerly the Technology Strategy Board, is a government-funded body that provides support and investment for innovative small and medium-sized enterprises (SMEs) with high-growth potential.
It helps develop ‘Catapult Centres’ to boost innovation in areas such as energy, technology and scientific research. The Liberal Democrat Party used its 2015 manifesto to back the development of more Catapult Centres across the UK, saying it will double innovation spend over the next five years.
The pledge has been welcomed by industry, with experts suggesting a bold increase in the innovation budget is of vital importance if the UK is to join the ranks of Europe’s innovation elite.
It is a pledge echoed by several of the major political parties.
The Labour Party has outlined innovation spend as a key driver for economic advancement in its 2015 manifesto.
Labour says it will introduce a long-term funding policy framework for “science and innovation” – a framework that will provide the “stability and continuity” UK companies and research institutions need to succeed.
The Scottish National Party (SNP), meanwhile, says in its 2015 manifesto that it will work to “foster a culture of innovation”.
The SNP says it will establish a network of innovation centres, ensuring effective knowledge and innovation transfer from the academic research base to the wider business community.
It will help achieve this via a £1 million ‘Innovation Challenge Fund’ designed to address major industrial challenges.
Elsewhere, the Conservative Party says it will make Britain the “technology centre of Europe” by continuing to invest in science and backing the country’s industrial strategy.
Having already “ring-fenced the science budget”, the Party says it will now invest £6.9 billion in the UK’s research infrastructure up until 2021 – which will mean “new equipment, new laboratories and new research institutes”.
Like the Liberal Democrat Party, the Conservative Party has also said it will create more Catapult Centres to ensure the UK has a “bold and comprehensive” offer in place for the country’s researchers and innovators.
It is only Ukip’s 76-page manifesto that fails to make any explicit mention of innovation spend.
Ukip is somewhat isolated in its lack of narrative regarding innovation, as increasing innovation expenditure seems to be one of the few areas where all other political parties agree, or have actively voiced an opinion.
But as no Party is likely to gain an overall majority in the general election, boosting innovation could be the glue that holds not only a two, but possibly a three-party coalition together
