This book argues that raising skill levels is crucial to both economic success and social inclusion. It shows that the UK, despite substantial progress in recent years, has a number of serious skills deficiencies. At the same time it shows that the need for skills is great, and increasing, and that there are significant benefits which are likely to accrue to people, companies and the community at large, through raising skill levels. It sets out the barriers that need to be overcome to effectively tackle skills deficiencies and proposes an agenda of what needs to be done in order to create a highly skilled, prosperous and inclusive society.

The skills agenda is at the heart of many of the current government’s policy priorities. It is not, however, the purpose of this book to describe, review or assess such policies. In itself this would be a considerable undertaking. Instead, the book makes the economic case for a skills agenda, synthesising a wide range of argument and evidence in a convenient form that is accessible to practitioners and policy makers as well as to students and academics. Necessarily, the arguments and evidence are condensed. However, readers are referred to the references indicated in the text if they should require a more intensive treatment of specific issues.

The rest of the chapter proceeds, firstly, by providing a brief indication of the competitiveness and social exclusion problems, to whose resolution an upgrading of workforce skills can contribute so much; and secondly, by dealing with some terminology and definitions used throughout the book.

The economic challenge

The UK economy is one of the largest and richest in the world. Nevertheless we are faced with a number of important challenges. First, in terms of overall living standards we can assess the UK’s relative position in terms of Gross Domestic Product (GDP) per head (DTI, 2001). Indeed, GDP per head is also often thought of as the best single measure of a country’s competitive position. GDP per head in the UK, in 1999, was around £23,000 (at purchasing power parity), which therefore ranks the UK 16th in terms of the 29 Organisation for Economic Co-operation and Development (OECD) countries.