Interserve-backed report calls for government training support

The government could invest as much as £2,000 in training a low paid unskilled employee and still recoup the costs within the course of one parliament, a Social Market Foundation report sponsored by construction group Interserve is claiming.

The Making Progress report suggests a Skills for Progress Scheme under which private and public sector employers – or local enterprise partnerships acting on behalf of small firms in their area – could apply for funding to train up anyone aged over 24 who has been paid below the low pay threshold (currently £7.62 an hour) for more than a year.

The SMF estimates that this would currently cover 2.93 million workers.
This money would be used to improve their skills and get them in to a better paid job where they would be contributing more to the government’s tax income – although the government would also have the ability to claw back the funding if there had been no obvious improvement within two years.

The SMF says a programme is essential because one in five workers in the UK is currently on low pay – a ratio which is high compared with equivalent economies elsewhere in the world. And it says a quarter of these remain in low pay for more than a decade – a figure it says is “worryingly large”.

The result, it says, is a huge burden on the taxpayer – with £21bn being spent each year just on tax credits for those already in work – and a large gap in productivity between the UK and similar countries. It says UK productivity was 16 percentage points below the average for major industrialised economies in 2012, and 24 points behind France and Germany.

The report says the scheme it is proposing is similar to the government’s Youth Contract, but says too much emphasis in the past has been put on schools and colleges, which do not cover the 80% of the UK’s 2020 workforce who are already of working age.

The report has been endorsed by Interserve chief executive Adrian Ringrose, who said skills “must be a core part of any solution that aims to address the prevalence and persistence of low pay and the lack of progression within the UK working population”.

He added: “We believe that a real partnership between Government and business is the best solution to support economic growth through structuring real opportunities for the UK’s lowest paid workers.”

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