Britain’s poor education standards will become a massive threat to it’s economy
EU warns UK school standards threaten economy
Britain’s poor educational standards pose one of the biggest threats to the long-term success of the economy, a key report from the European Commission has warned.
By Philip Aldrick, Economics Editor
12:00PM BST 30 May 2012
Too many people in the UK are leaving school “functionally illiterate and innumerate, with no qualifications” when the economy increasingly needs “medium and high skilled” workers. Policy is not helping, the report added, by focusing on basic skills training rather than addressing the chronic problem of early school leavers.
“The UK continues to have too many people with low skills, resulting in inequality and skills mismatches. The economic costs of this problem are likely to increase over time if it is not effectively addressed,” the report said. It added that Britain has “higher levels of early school leavers than the EU average for all subgroups except for migrants”, and that the proportion had increased by 3.3 percentage points since 2005 to 14.9pc.
According to the European Centre for the Development of Vocational Training, low-skilled jobs will decline by approximately 51pc this decade, while medium and high-skilled jobs will increase by 16pc and 21pc respectively. The report argued that better quality education was the best way out of the problem, but the Government was focusing its resources on the wrong area.
“The main focus in vocational education and training policy is on basic skills and level 2 qualifications, while the economy increasingly demands more advanced vocational education and training qualifications,” it said. “The UK has not established a national target for reducing early school leaving, but has taken steps to improve education and training systems.”
It added that vocational training can be lost on the functionally illiterate and innumerate because they don’t have the skills to benefit. The withdrawal of the Educational Maintenance Allowance has also threatened to increase the number of early school leavers.
“The UK has an oversupply of low-skilled workers, for whom demand is falling, and a shortage of workers with high-quality vocational and technical skills,” the report said. “There is a persistently large number of functionally illiterate and innumerate adults in the UK, usually with no qualifications. The country could gain significant economic and social benefits from doing more to address the needs of this group.”
The report also warned that the housing market remained a long-term threat to economic stability. Household debt is too high and can only be rectified if house prices fall relative to disposable incomes, the EC warned.
It said planning restrictions and the undersupply of new homes had allowed the market to overheat, creating a dangerous “internal imbalance” in the UK that is a “source of macroeconomic instability”.
The shortage of supply has “contributed to high house prices and a lack of affordability”, and deters people from moving, which hurts the economy.
“High house prices also mean that large numbers of households are reliant on housing benefit, which both reduces work incentives and living standards for younger and poorer households,” the report said.
“In this context, relevant policy responses include increasing housing supply, improving the functioning of the housing market and discouraging excessive and risky lending.
“Further simplifying the planning system or altering the property taxation system could improve the functioning of the housing market and provide better incentives for labour mobility.”