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FE and Skills investment and reform: Four tests for the Spending Review

Stephen Evans, CEO, Learning and Work Institute
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By 2025, spending will still be £750 million less on FE, than it was in 2010 

@LearnWorkUK Chief Exec Stephen Evans, sets out four tests for the #SpendingReview on FE and Skills and what the FE sector should look out for on Wednesday:

“This Government is obsessed with skilling up our population” said Boris Johnson talking about levelling up in July. 

The Treasury leaked some spending review details over the weekend, though we’ll have to wait until Wednesday for the details.

How can we judge whether this is really is the promised ‘Skills Revolution’? 

Here’s four things to look out for:

1. Is there extra investment to get more adults into learning?

It sounds obvious, but after a decade in which the adult education budget in England basically halved and participation in adult learning plummeted, we need more investment to get more adults into learning. 

How much? In 2018, we argued for an extra £1.9 billion per year to return the number of adults learning to 2010 levels and halt our projected decline down the international rankings. The subsequent National Skills Fund, expected to be around £600 million per year when fully up and running, makes up a third of that gap. So that leaves about £1.3 billion per year.  

The Treasury says there’ll be an extra £550m in the NSF by 2024-25. Is that on top of the already-expected £600m per year? If so, great. If not, then it seems likely the NSF will end up being less than the £3 billion promised over this Parliament in the Conservative manifesto.  

How we invest is at least as important as how much we invest.

I’d like to see a shift toward empowering people, for example through new Learning Accounts, a greater focus on basic skills learning, which has fallen 60% in the last ten years, a greater focus on the outcomes we want to achieve, and link to the upcoming Levelling Up White Paper

2. Is the Shared Prosperity Fund equal to European Social Funds?

After years of waiting, the Spending Review should hopefully tell us more about the UK Shared Prosperity Fund, the replacement for European Social Funds. This really should be of at least equal size to ESF, about £500m per year, as part of total EU structural funds (which includes things like ERDF) of £1.5 billion per year. 

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The Treasury pre-announcement suggested EU structural funds would rise to £1.5bn by 2024-25, equal to EU structural funds now. 

Some ESF projects continue, so will remaining ESF plus UKSPF equal £500m each year?  

Beyond the overall budget we also need to look out for: 

  • How funding will be distributed? The signals suggest more for ex-industrial areas and coastal areas for example. But more for some areas inevitably means less for others. 
  • Will it be devolved? Or will local government and devolved administrations need to bid to the UK Government on a project-by-project basis? 
  • What will it be focused on? It’d be great to see UKSPF try to reverse the declines in adult basic skills learning in England, for example. 

3. How will we increase apprenticeships and employer investment in learning?

The number of apprenticeships, particularly for young people and at level 2, have fallen significantly over recent years. 

In part this is due to the incentives created by the reforms that introduced the apprenticeship levy. It’s also linked to a general decline in employer investment in skills.  

The Treasury has suggested the apprenticeship budget will rise £170m by 2024-25. That looks like the natural rise you’d expect in the amount the levy raises as employment and wages grow. 

Will the Chancellor also reform the levy to encourage more apprenticeships for young people and at entry level?  

4. Are we investing in young people?

Our Youth Commission showed how education and employment outcomes fall short for too many young people compared to other countries. It argued for an Opportunity Guarantee so all young people are in education, employment or training, delivered by a £4.6 billion per year increase in investment, including raising the 16-18 funding rate to £5,000; centrally funding apprenticeships for 16-18 year olds; and engaging all young people who are not in education, employment or training.  

We know there’ll be an extra £1.6 billion to support 100,000 T level places by 2024-25. Beyond this, I hope the Spending Review sets out a plan to deliver an Opportunity Guarantee

In summary, my tests for the Spending Review for learning and skills will be: 

  1. Lifelong learning. An extra £1.3bn per year to return participation to 2010 levels, with a focus on boosting basic skills learning 
  2. Shared Prosperity Fund. At least equal in value to ESF and integrated with other support 
  3. Apprenticeships. Encourage more apprenticeships for young people and raise employer investment in training 
  4. Young people. Implement a new Opportunity Guarantee so all young people are offered a job, training place or apprenticeship, including raising the 16-18 funding rate 

Stephen Evans, CEO, Learning and Work Institute

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