Pat McFadden and Jacqui Smith: The Skills Policy Juggling Act

The arrival of Pat McFadden in the DWP has got everyone in the tertiary education sector talking. How is his beefed-up Skills policy responsibility going to fit with Jacqui Smith’s continuing Skills brief in the DfE? How are two government departments going to set about coordinating and synchronising their policy interventions, when there are clear overlaps between them? Most importantly, what does this move tell us about how the government sees the nature and scale of the skills challenge the UK is facing and which aspects will be given priority?  

Behind the Skills agenda lie two interrelated but distinct economic challenges, linked by the need to stimulate economic growth and spread prosperity around the country. Growth and productivity have been stagnant for years, and the symptoms of this malaise can be seen not just in sluggish business results, but also in the eye-watering rise in the number of economically inactive citizens which is driving steeply rising welfare and benefit spending.

Challenge 1

Challenge no.1 is not just economic, but a major social justice and community cohesion challenge. The spreading pool of unemployed and inactive people is not just stifling the labour market, but causing social fragmentation and contributing to the rise of parties of political protest. This is undoubtedly why this has become one of Labour’s top priorities, as reflected in Pat McFadden’s first public comments on his new role. The problem is that there are few policy levers available to tackle NEETs or the adult unemployed. With Adult Education budgets run down over the years, and with bootcamps delivering very mixed results, we’re left with not much else except apprenticeships, but the levy budget is already overstretched.

The Economic Inactivity and Youth Guarantee Trailblazers now up and running across the country have taken up the challenge of finding ways to motivate unemployed individuals and give them the confidence and work-readiness skills needed to be successful at work. A startlingly high proportion of 16-24 year old NEETs have never had a job in their lives. It will require a sophisticated combination of careers advice, counselling, coaching, mental and physical health support, training, work experience placements and proactive employers to make headway, and progress could well be slow.

Challenge 2

Challenge no.2 has been clearly identified for some time and here at least the government can build on some major initiatives started by its predecessors: specifically the moves to increase take-up of Higher Technical Qualifications (HTQs), the development of a network of Institutes of Technology, and – most radical of all –  the Lifelong Learning Entitlement. To these we can now add Labour’s Modern Industrial Strategy, with its strong focus on skills for productivity. But the challenge is still daunting. Employer investment in training has fallen by over a third over the past 20 years and apprenticeship starts have nosedived.

Twin Challenges

And here’s the rub: while each of the twin challenges has to a large extent got its own separate policy interventions, apprenticeships and the school curriculum reform are critical to both. The  school sector has been re-shaped to prioritise the academic pathways leading to university and higher skills employment, at the expense of the practical and work-related skills needed to respond to the needs of those who are not academic high-flyers. The recommendations due soon from the Francis Review of School Curriculum and Assessment will therefore be potentially vital in getting a better balance and reducing the numbers of demotivated and demoralised school leavers. But responsibility for turning this round lies with the DfE, not the DWP; with Bridget Phillipson, not Pat McFadden or Jacqui Smith.

Apprenticeships

As for apprenticeships, the sharp rise in higher and degree apprenticeships is draining more and more of the budget away from the lower level apprenticeships needed to provide a ladder of opportunity for young people at lower skills levels. With no more money available, Pat McFadden’s stated ambition to tackle inactivity through increasing job-entry apprenticeships is a policy without a readily available budget, and some difficult re-prioritisation will surely be needed to achieve it. At the same time, the scope for funding the shorter, more flexible courses that employers are crying out for from the Levy is becoming ever more limited as the budget is squeezed.

It may well be time to adopt Alison Wolf’s proposal that apprenticeships should be focused solely on the young and on new entrants to the labour market, and a new policy – and funding mechanism – created for workplace training and upskilling of adults. (“Revitalising apprenticeships”, Baroness Alison Wolf, Social Market Foundation, Jan 2025.) Otherwise, in the zero sum budget game we are now in, the DWP will have no option but to siphon funding away from the DfE’s apprenticeship budget to pay for expanding apprenticeships for NEETs, and the DfE will have no choice but to curb apprenticeship spending to find Growth & Skills Levy funding for more flexible programmes. Neither scenario is very palatable.

So here’s the big question: which is more important, Challenge no 1 or Challenge no.2? If they are both equally important, then maintaining a balance in prioritisation and funding is going to be the signature theme of the rest of this Parliament. Pat McFadden and Jacqui Smith have a skills policy juggling act to perform.

By Andy Forbes, Executive Director, Lifelong Education Institute