IN the run-up to the recent Budget some Scottish business leaders became quite vocal on the subject of higher and further education funding. No one can deny the importance of our colleges and universities and the role they play in helping Scotland reach its ambitions for post-Covid, post-Brexit, economic success.

However, education in itself does not solve Scotland’s productivity and economic issues – or even address its skills shortage.

Skills shortages are very costly and higher and further education alone is not delivering what Scotland and its businesses need.

We are suffering from a severe skills underutilisation with a growing number of graduates doing jobs previously filled by non-graduates. The Organisation for Economic Co-operation and Development rates Scotland highly in terms of tertiary education while we lag behind other nations for productivity and youth employment. Countries with well-established vocational training routes into employment all rank in the top 10 OECD high-performing nations.

The whole system needs to change – and there’s plenty of data to back this up.

Many employers don’t only want people who emerge through purely academic pathways, as shown in recent finding from OECD. Research body The Edge Foundation also echo what employers have been saying for years. There are two areas that can turn around the education system and economy: "great technical skills – delivered through high quality vocational education" and "great transferable skills – problem-solving, creativity, teamwork, communication – which are core to every industry".

The issue isn’t about a lack of money being spent on education and skills – the money is there, but there’s an imbalance in how it’s split.

Last year, the Scottish Government committed £3.4 billion to education and skills. Of this pot of money, £100 million was allocated to apprenticeships – less than three per cent of the overall budget.

However, employers continue to value apprenticeships. They are the largest investors by a mile – 0.5% of their annual pay bill goes to the apprenticeship levy. Employers invest £10 for every £1 invested by government.

Apprenticeships offer a win-win for everyone – learners, businesses and the economy. Ninety-two per cent of apprentices remain in work after they qualify. Apprenticeships help people move directly into high-value jobs and earn a wage, paying tax and contributing to Scotland’s economy, as they learn. The same cannot be said of traditional academic courses which can result in graduates qualifying, but with thousands of pounds of debt and no job. Bear in mind a four-year university graduate course can cost the taxpayer around £32,000.

The crux of the issue? The skills employers are seeking are not completely aligned within the current education and skills system and it doesn’t look set to improve with apprenticeship funding reduced yet again. The funding disparity needs addressed and rebalanced because the current system just doesn’t add up.

A shift towards a skills system which is collaborative, ambitious and responsive is needed. I hope the current Independent Review on Skills will make recommendations to transform the landscape in a way that will truly benefit Scotland’s employers, learners and the economy.

Peter Farrer is Chair of the Scottish Apprenticeship Advisory Board (SAAB) and Chief Operating Officer of Scottish Water