How to close the £55k per worker Human Capital Gap

The Commission’s third report focuses on the UK’s human capital - the knowledge, skills and health of the workforce.

Analysing the ONS’ own measure of ‘human capital’ - an estimate of the value of labour of the working population across their working lives - the Commission calculates that were returns to and growth in human capital to match pre-crash patterns, our human capital stock would be £1.8tn higher. This gap could end up costing every worker in the UK £55,000 over their working lives.

To close this gap, the Commission proposes the following:

Firstly, we need to improve the system that develops human capital in the UK. This can be done by creating a devolved employment and skills service, ensuring the new Growth and Skills Levy effectively supports apprenticeships, and encouraging demand for the Lifelong Learning Entitlement among excluded people and populations.

Secondly, we need to adapt human capital to technological progress, by embedding the teaching of innovation skills into the education system, collecting real-time data on employer skills needs and shortages, and requiring Local Skills Improvement Plans (LSIP) to consider the most relevant cutting-edge technologies to their local economies.

Thirdly, we need to lower the barriers to development of human capital by improving the health of the workforce, providing the means for people to access bigger jobs markets, and reducing the employer cost to develop human capital using a Skills Tax Credit.