The significant majority secured by the incoming Labour Government gives it a strong mandate to follow through on its manifesto commitments, as it seeks to transform the UK economy.

At the heart of its plans are its ‘missions’ to kickstart economic growth, take back the streets by tackling crime, make Britain a clean energy superpower, break down barriers to opportunity and build an NHS for the future. 

The success of these missions will rest on Labour achieving its stated ambition to deliver “good jobs and productivity growth in every part of the country making everyone, not just a few, better off.” It will also depend on how well it follows through on its intention to work in partnership with business and trade unions and other relevant stakeholders. 

Key to kickstarting economic growth are its plans for a new industrial strategy, to drive growth across all sectors and regions of the UK, and at the heart of this, a radical shake up of skills policy and apprenticeships.

New approach to skills and industrial strategy

One of the new government’s priorities will be to reform the Apprenticeship Levy into a more flexible ‘Growth and Skills Levy’. The CIPD has led calls for this reform which has the potential to help reverse the long-term decline in employer investment in training and the collapse in apprenticeships for young people since the introduction of the current levy in 2017.

On the latter point, Labour has also promised to introduce a ‘Youth Guarantee’ of an apprenticeship place, training or support to find work for all 21-year-olds. But much more action will be needed to create sufficient apprenticeship opportunities for young people to improve social mobility and address technical skills shortages. 

The CIPD has called for the introduction of an Apprenticeship Guarantee which would provide an apprenticeship place at level 2 or level 3 for all 16–24-year-olds with the necessary minimum qualifications. This could hugely boost the number of vocational pathways into employment and provide more choice for young people.

Other changes needed to transform apprenticeship provision include revamped pre-apprenticeship programmes and grants over and above the cost of training for SMEs, to incentivise them to invest in apprenticeships.

Joined-up policy-making

These reforms would support the new government’s plans to transform Further Education colleges into specialist Technical Excellence colleges. It’s hoped these colleges will work with business, trade unions, and local government to support the skilled workforce local employers need.

Another significant element of Labour’s proposals includes merging Jobcentre Plus and the National Careers Service, focusing on both employment assistance and career advancement.

This attempt to join up policy-making is also reflected in Labour’s plans to support more disabled people and those with health conditions into work by devolving funding so local areas can shape an integrated work, health, and skills offer for local people.

Skills key to net zero and adoption of AI and other technology

Underpinning skills policy and strategy under the new government will be Skills England, a new body that will bring together business, training providers and unions with national and local government.

This body will need to ensure the skills system can deliver the range of technical and transferable skills the economy needs. It will need to help boost employer capability in workforce planning so they can identify and develop the skills they need to adopt AI and other forms of technology and transition to net zero operations.

Partnership at the heart of new industrial strategy

It’s positive that skills strategy is seen as central to the development of Labour’s wider industrial strategy, which will be supported by a new Industrial Strategy Council (ISC), with representation from all nations and regions, business and trade unions. This reflects the intention for industrial strategy to have partnership at its core between the state and the private sector and between businesses and trade unions. 

The CIPD and Prospect have highlighted the importance of taking this a step further and building stronger sector institutions to support social partnership and collective employer action on skills and technology adoption at an industry level.

New deal for working people

The Labour Government also sees its plans to strengthen employment rights through its ‘New Deal for Working People’ proposals as an essential aspect of its industrial strategy. It regards its proposals to introduce day-one employment rights, bolster the National Living Wage, make work more family-friendly and improve labour market enforcement as central to raising employment standards and putting more money in people’s pockets. There is also a big focus on equality, with plans to enhance the effectiveness of gender pay reporting and introduce ethnicity and disability pay gap reporting for large firms. New Chancellor Rachel Reeves has made closing the gender pay gap one of her priorities, to improve labour market participation and opportunities for women at work. 

However, the successful implementation of the ‘New Deal’ proposals will again need partnership and in some instances compromise between employers and trade unions. To support this, the CIPD has called for the creation of a Workplace Commission to bring together representatives from government, employers and trade unions to collectively consider and seek consensus over potential changes to employment legislation or union recognition rules. 

It’s crucial that legislative changes are subject to thorough consultation and don’t undermine the benefits of the UK’s flexible labour market for either business or workers. How these proposals are consulted on and implemented will be an early test of Labour’s pledge to work in partnership with employers and develop a pro-business regulatory environment. 

It will also come at a crucial time for Northern Ireland, with new employment legislation being brought in there. Recent years have seen increasing divergence in employment law in Northern Ireland and while most companies are already used to this, any further significant differences could increase the costs and complexity for companies working across different parts of the UK.

About the author

Ben Willmott, Head of Public Policy

Ben leads the CIPD’s Public Policy team, which works to inform and shape debate, government policy and legislation in order to enable higher performance at work and better pathways into work for those seeking employment. His particular research and policy areas of interest include employment relations, employee engagement and wellbeing, absence and stress management, and leadership and management capability.

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