More than half of firms fear that growth will be held back by skills shortages, according to this year’s CBI/Pearson Education and Skills survey published today.

The survey of 310 companies, which collectively employ over one million people, underlines the skills challenge facing the UK. It reveals that two in three businesses (68%) expect their need for staff with higher level skills to grow in the years ahead, but more than half of those surveyed (55%) fear they will not be able to access enough workers with the required skills. Demand for highly skilled workers is particularly strong in sectors critical to the rebalancing of the economy, areas include engineering, science and hi-tech (74%), construction (73%) and manufacturing (60%).

With an apprenticeship levy for larger employers set to be introduced following the Budget, the CBI is concerned that while it may fund more apprenticeships to meet the Government’s target of three million, it will not deliver the high-quality, business-relevant training needed, and will do little to help small or medium sized businesses.

Out of apprenticeship starts in 2013/14, just 2 percent were higher apprenticeships, which lead to qualifications at a level equivalent to higher education. Business is clear that the Government must accelerate reforms and ensure employers are in control when it comes to the design and delivery of apprenticeships to boost quality.

Katja Hall, CBI deputy director-general, says:

“The Government has set out its stall to create a high-skilled economy, but firms are facing a skills emergency now, threatening to starve economic growth. Worryingly, it’s those high-growth, high-value sectors with the most potential which are the ones under most pressure. That includes construction, manufacturing, science, engineering and technology.

“The new levy announced in the budget may guarantee funding for more apprenticeships, but it’s unlikely to equate to higher quality or deliver the skills that industry needs. Levies on training already exist in the construction sector where two-thirds of employers are already reporting skills shortages.

“Employers have a critical role in upskilling the workforce, but part of the deal must be for real business control of apprenticeships to meet their needs on the ground.

“The best way to plug the skills gaps and provide quality training is to speed up existing apprenticeships reforms already underway and encourage smaller firms to get involved.”

Apprenticeship opportunities have been growing but accelerated reforms are needed. Around two-thirds (66%) of respondents are involved in apprenticeship programmes, with provisional spending well beyond traditional sectors like manufacturing (76%) to new sectors such as professional services (42%), such as accounting and legal services.

62 percent of respondents are either intending to expand their apprenticeship programme or to start one in the next three years, the best result since the survey began in 2008. Recent government reforms have been welcomed by business (81%) but concerns include bureaucracy and red tape (29%) and delays in funding reform (25%). 38 percent of respondents also say matching qualifications better with business needs would get more companies involved in apprenticeships, as would putting more purchasing power in the hands of firms (34%).

Rod Bristow, president of Pearson’s UK business, says:

“Better skills are not only the lifeblood of the UK economy – as fundamental to British business as improving our infrastructure, technology and transport links – they are also critical to improving young people’s life chances, of enabling them to be a success in life and work.

“The government is right to be ambitious about apprenticeships. We need more high-level apprenticeships in high growth sectors like biotech, engineering, and technology, as well as traditional ones.

“But our further education sector, which provides the Higher National Diploma courses that deliver these technical skills, sits on the edge of a funding precipice and may suffer damage for years to come.  Proper funding of further education would provide a huge boost to British businesses and productivity. Without improving the supply of skills, the UK will find it hard to remain competitive in the global economy.”