The people agenda - what next?

The ongoing skills gap comes up repeatedly as the number one area of concern for North East businesses in all manner of sectors and regardless of their shape and size. Alastair Wilson, a tax partner at Tait Walker LLP, gives his view on how it can be addressed.

Over 99% of the UK’s businesses are small and medium-sized enterprise’s (SMEs), which make up a significant proportion of Tait Walker’s client base here in the region. These businesses are the lifeblood of the North East’s economy and to whom nurturing and retaining talent is now a key priority, so it’s not hard to understand why this particular issue keeps topping the list of business concerns.

In my role as tax partner at Tait Walker I’m lucky to work with some incredibly innovative and forward thinking businesses on a daily basis – a large number of which are in the manufacturing and engineering sector, which is bearing the brunt of the skills shortage.

In the manufacturing and engineering sector it is recognised there is a shortage of skilled workers in their 30s and 40’s, which will impact our region as workers in their 50’s and 60’s retire. For example, the North East has highly skilled engineers in the oil and gas sector, where the ‘time served’ know-how and experience is highly valued and will be very difficult to replace.

However there are a variety of different ways the skills shortage is expected to impact the North East. Even simple issues such as the number of houses we’ll be able to build due to a shortage of skilled bricklayers will start to come into play, meaning no sector is immune.

Statistics show the North East is a net exporter of graduates, in effect causing a long term “brain drain” in this region.  By exporting more skilled workers than we import, we risk seeing our future talent pipeline sucked into wealthier northern UK hotspots, such as Manchester and Aberdeen – and of course inevitably London.

A case in point is the emerging digital sector, which has seen all regions learning new ‘skills’ in technology. Without a strategy to keep our best talent, we risk losing out to cities which can offer bigger salaries and the promise of that next step on the ladder, which is something we are often unable to guarantee here in the North East. We are at serious risk of becoming a ‘feeder’ for these cities.

There are some signs of positive steps being taken, for example the Northern Futures University Technical College (UTC), which will focus on technology and healthcare and the South Durham UTC, which will have an emphasis on engineering.

The regional LEPs have also taken on board the skills issue and it currently forms one of the main strategic pillars. A key focus will also be around facilitating more and better apprenticeships, ensuring the apprenticeship programmes are easier to understand and implement for SMEs. 

At a recent manufacturing roundtable Tait Walker hosted, it was encouraging to hear how some of these businesses are now looking at their internal processes to account for their ageing workforces and explore ways their ‘knowledge’ can be shared with younger staff. In certain instances, some are even looking at ways to facilitate more flexible working hours for their older members of staff, not yet ready to retire. In-house training doesn’t always require big budgets, particularly when it’s focussed on simply sharing skills. Perhaps this approach needs to be adopted cross-sector?

Ultimately, we need to make sure our standards and quality of living make it easy and desirable for skilled people to stay and live here. We have a unique identity which sets us apart from any other UK city, and we need to exploit that.

In the wake of the General Election, the region needs to be bold in putting its unified case forward for making the North East the key element of the ‘Northern Powerhouse’ we know it has the potential to be.

Hopefully we can start to form a unified voice and achieve real clarity on what we need from Government to enable us to get to where we want to be.  We can’t do it all on our own, but by working together on a regional strategy we can give it a good try in the meantime.