Facing up to long-term challenges

On my travels around the South East talking to local businesses I sense a renewed optimism.

The economy is on firm ground but the financial crisis and the slow recovery have hit people’s finances hard. Although living standards will gradually improve as the economy does, growth on its own will not be the miracle cure.

There’s a deep seated problem that stems back even before the recession – the income of a child’s parents determines too many of their future life chances.

That means a 16-year-old child from a disadvantaged background has a 48% chance of achieving at least five GCSEs A*-C, including English and maths. That compares with a 77% chance for a child from a better-off background. And aged 25, these young adults are still behind, earning around £71 less a week.

Girls have outperformed boys in the latest school league tables
Girls have outperformed boys in the latest school league tables

So we need to face up to some long-term challenges. Changing skills needs, global competition and low social mobility mean for many the pathway to a better life is tough and far from clear.

But the answers doesn’t lie in sticking plaster fixes, like intervening in pay or attacking our flexible labour market. Instead, we need to invest in productivity, skills and education to make the best of Britain’s talents.

In our new report A Better Off Britain we’re calling on the Government to help ease the pressure on families and people on low incomes now by cutting employee National Insurance and making childcare more affordable.

Education is the best long-term tool to boost living standards and social mobility: the higher your skills, the higher your pay. The good news is that our economy is creating more highly-skilled jobs. It used to be the case that getting A-levels was enough to get a middle-skilled job. Now to get an equivalent role, you need to have a level four qualification, like a certificate of higher education.

But we also need to do better at the very start of education, in schools, at helping all young people find the right path for them – whether that’s academic or vocational. That’s why we’re calling on the Government to introduce a new vocational A-level.

The education system must support every single young person with their individual needs, not just to pass exams, but to become rounded and grounded people who can get on outside the school gates.

So schools should provide work-related learning again and introduce a national network of local brokers to support schools to deliver it. Firms can and must do more to help their staff progress, develop their skills and increase their earnings – we want to see all businesses making this a board level priority.

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