Bridging The Funding Gap With New Skills Accounts

A new report by the Lifelong Education Institute makes the case for the introduction of an Adult Skills Account – a contribution scheme that can help share the cost of training between employees, employers, and state.

The report, titled ‘Making Lifelong Education Work: Skills Accounts for Bite-Size Learning’, which was kindly supported by Staffordshire University(@StaffsUni), argues that such a mechanism can help stimulate participation in education and training among the working population and provide a pathway to higher education, including the take up of loans such as the Lifelong Learning Entitlement.

The paper advocates for the introduction of an ‘Adult Skills Account’ that could be financed through a system akin to National Insurance Contributions (NICs) or workplace pensions, enabling employees, employers, and the government to contribute towards the costs and benefits of skills training.

An online ‘Adult Skills Account’, administered through a payroll enrolment system, would provide a digital record of learning and total contributions. This account could then be topped up with additional funds, including a Lifelong Learning Entitlement, as well as other public funding, bursaries, and grants.

The report suggests that an annual contribution of 1% on the median wage (£26,000), matched pound-for-pound by both employer and state, would fund the cost of a 10-credit microcredential. This relatively small amount of funding could be sufficient to help employers and employees reskill with bite-sized training at a bite-sized price. Learners could build and stack credits over time, while stimulating take-up of loans for larger units of learning.

Professor Annabel Kiernan (Pro Vice-Chancellor Academic, Staffordshire University) commented:

“Our experience of the short course trial, and the evidence emerging from the evaluation, confirm that reforms are needed to provide the incentives for adult participation in education, at the scale needed to make a significant difference to economic performance. We need shorter, more flexible units of learning (e.g. 10 credit courses) that can build and stack credit towards full qualifications, and alternative funding arrangements to share the costs of adult education, and to incentivise lifelong learning.

The report states that with funding for higher education falling in real terms, and more universities reporting an operating deficit, the sector will struggle to deliver on lifelong learning. Systemic change is required to meet this challenge and realise a new market for lifelong education, in addition to the current offer for 18–21-year-olds, who will commit to a full-time degree.

Report author Mark Morrin said:

“The Chancellor has just enacted another ‘tax cut’ with the reduction of national insurance contributions. Numerous polls suggest that a significant number of people in the UK, including those inclined to vote Labour at the next election, would pay more tax to provide better public services. The introduction of an education contribution scheme would allow working people to invest in themselves, to upskill for more productive and better-paid work. This could help lifelong learning work, and make work pay.”

The report suggests that an education contribution scheme could be piloted on a regional basis, allowing devolved areas in England to levy adult skills funding into a single pot. By pooling various funding streams, devolved areas could top-up Adult Skills Accounts to address priorities identified by employers through the Local Skills Improvement Plan. This would determine the choice, of course, eligible for top-ups.