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The public, politicians and policymakers are talking about productivity - the only way a country can improve living standards and workers' their take home pay. This report examines the contribution skills policy has made in recent decades to address the UK 'productivity gap'. Based on quantitative analysis and interviews with leading education experts, including former policy advisers, the authors outline why the UK has been 'running to stand still' when it comes to upgrading skills and qualification levels in the workforce. Despite strong ministerial leadership, including the well-intended efforts of civil servants and delivery bodies, none of the fundamental metrics appear to have shifted in a significantly positive direction since 2008. As the UK prepares for a general election before January 2025, the report provides critical insights into the main skills and policy challenges facing the next government.

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We argue that previous analyses of skills and inequality have been limited due to their binary focus on skilled versus unskilled labour. Using country-level data on earnings and qualification levels to show that income increases when there is a smaller proportion skilled to a particular level, we suggest that income inequality can be reduced by improving the match between the supply and demand of skills. Particular challenges of China and India in this context involve scale, rapid growth and the size of the informal sector. Useful future research areas include developing a better measure of demand and determining mechanisms for matching supply with demand.

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