Industrial Strategy Boosting Technical Skills

Industrial Strategy Boosting Technical Skills Theresa May has announced that the UK is going to counteract the effects of Brexit by launching an industrial strategy. This strategy is to contain a ‘shake up’ of technical education.

Oh dear! It’s just about 40 years too late. We’ve already off-shored. If we re-shore, we simply don’t have the tech skills and knowledge. We’re now a service economy, substantially serving ourselves, and too used to buying Chinese goods.

As a case in point, UK led the world in mobile communications, launching Vodafone in 1985. The UK along with Sweden and Germany perhaps led the World in mobile network infrastructure expertise, network hardware and operating software. Today Chinese-firm Huawei provides our mobile phone networks. Our own skills and knowledge have substantially gone.

Neil Carmichael, the Commons Education Committee chairman said that the ‘shake up’ was welcome. He mentioned that UK had an 82,000-strong skills gap. This surely must be a gross underestimate based on some very favourable assumptions. Mr Carmichael should try recruiting software engineers. Then he’ll learn what a skills shortage is.

Even a simple straw pole will suggest that one third of those in high skill jobs are non-EU, non-UK nationals. A further third are EU nationals. And that leaves a final third as British. If it’s a ‘hard Brexit’, we’ll loose the services of many EU and non-EU, non-UK nationals – even if only by making the UK a less favourable place to live and work. And it will likely take a couple of generations to re-skill those Brits left.

Back in 1985, the UK had a two-track further education system – with those more academically minded heading for university and those more practical heading for vocational training. Arguably it worked.

Progressively as our manufacturing declined and we moved to a service economy, our vocational track withered. The last nail was the enthusiasm of the Blair government in the early naughties for 50% of young people to go to university. This then saw the creation of a large number of new universities. Then it didn’t seem to matter if there were no jobs to go to afterwards. It didn’t matter whether the courses were useful or not. What mattered was to educate all equally.

In hindsight, this policy was flawed. Today we have a high proportion of university-educated young people in jobs requiring vocational training. Their expectations are dashed and their prospects bleak.

So now the UK must find its niche again.

The law of comparative advantage says that considering trade, we must specialise in one thing and export that. Others, even China, must specialise in what they are good at and we’ll import from them. If we actually exploit comparative advantage, all countries win and the present race to the bottom is avoided.

This is a generalisation, but the idea is sound. If we build mobile communications networks well and another country grows rice well, we build and they grow. If that’s applied across all sectors, global trade is a good thing and all benefit.

The problem we have is that we’ve ignored comparative advantage. We’ve tried to do what others do and then got upset when they can do it cheaper. Indeed when they did it cheaper, we just gave up and bought it from them anyway. We’ve never tried to do it cheaper. We’ve never tried to do it better. Then we blame Globalisation. We say that jobs have been lost overseas. It’s not Globalisation that caused the race to the bottom. It’s the fact that our industrial strategy has been flawed for 40 years.

Announcement of a new industrial strategy, therefore, is hugely welcome.

But what is Britain to be good at? If we are to launch a new industrial strategy, what technical education do we need? If we’re to make the strategy work, we’d better put due effort into that education now.

As a start, we’d argue that all students today should focus on STEM – science, technology, English and maths for those are the roots of all industrial activity. And, oh, please, teach students how to reason and argue, not just copy and do.

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