“Much to welcome, but a big opportunity missed”: CMI’s analysis of the 2018 Budget

01 November 2018 -

Chancellor halves SME contribution to apprenticeships but fails to reap the ‘diversity dividend’

CMI Insights

The Chartered Management Institute (CMI) broadly welcomed Chancellor Philip Hammond’s 2018 Budget delivered this week, but said that important opportunities have been missed when it comes to reaping the ‘diversity dividend’ and accelerating the progress of women and people from ethnic minorities in the workforce.

A boost to SME apprenticeships

By announcing that the contribution that small and medium-sized companies (SMEs) must make to apprenticeships (from 10% to 5%), the chancellor made a step in the right direction. As CMI’s chief executive Ann Francke said: “If we are to solve the productivity puzzle then we need more SMEs to upskill their managers and leaders with quality programmes.”

Hammond said that, alongside other recent changes to the Apprenticeship Levy system, this would be “a £695 million package to support apprenticeships.”

In its Budget submission, CMI had called for “stability and certainty in the skills system so that employers and providers have the confidence to invest in apprenticeships.” CMI has also insisted that “Now is not the time to review or reduce apprenticeship funding bands.”

Mental health needs recognised

In his Budget, the chancellor announced an annual £2bn boost to mental health services, a move that was welcomed by CMI. “It’s great to hear increased investment for mental health services,” said CMI’s head of policy Rob Wall. “We know that that’s a key challenge in the workplace so anything that can help managers support their staff at work is welcome.”

Schools need ‘systemic reform’

In a notable phrase, the chancellor announced that schools would receive a £400m boost to “buy the little extras that they need.” While CMI approved of the gesture, head of policy Rob Wall said: “We would like to see more systemic reform in the education system so that we have a system that not only delivers academic and technical excellence but also develops enterprise, leadership and management in young people.”

The root causes of productivity problems

In its Budget submission, CMI had encouraged the government to “use this budget to boost productivity and accelerate growth.” The UK must focus on the key drivers of productivity, particularly management skills and management practice.

And in broad terms, the chancellor appeared to have got the message in this Budget: “It’s good to hear the Chancellor commit to continued investment in the drivers of productivity – we know that management is a key driver, so we look forward to seeing the detail around how the Budget will support investment in management skills,” said Rob Wall.

The missed opportunity

The area where the chancellor missed an opportunity is in ‘reaping the diversity dividend’. CMI has consistently pointed to the potential economic and productivity uplift that would come with a more diverse workforce and greater opportunities for women and ethnic minorities. It is estimated that true workplace equality would add £150bn to the UK economy by 2025.

“We think the Chancellor’s missed an opportunity to reap that diversity dividend by accelerating the work to close the gender pay gap and do more to help women and members of ethnic minorities into senior management positions," said CMI’s head of policy Rob Wall.

Read in full: CMI’s 2018 Budget submission to the Chancellor

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