So that was the election result no one saw coming. Certainly not the pollsters. We have a new political animal that has entered the menagerie – the 'shy Tory'. Says they'll vote Labour, UKIP, Lib Dem or Green and actually votes Tory. But only found in the English shires. Then there is the Scottish surge of the SNP spoiling for a fight with the Tory administration in London. Or social democratic Wales with its large Labour majority wanting the same rights as Scotland. And a government with the slimmest majority facing a fight to keep Britain in Europe and a referendum now two years away that could reverse 40 years of recent history. If you are interested in politics, politics has just got very interesting.

But what will the new government mean for FE? Let's start with what hasn't changed. We still have Nick Boles as our Skills Minister under a new Secretary of State Sajid Javid. Not too much is known about Mr Javid except that he is a real gung ho Thatcherite who allegedly kept a picture of his heroine in his office while at the DCMS. I suspect that more marketization of the public realm will be the leitmotif of his reign at the Department for Business, Innovation and Skills (BiS).

For Minister Boles, who allegedly gave the Prime Minister the figure of 3 million apprentices to be recruited during the next parliament, his immediate challenge is to sort out the funding arrangements for these new apprentices. How to get employers enthused about taking on more apprentices while needing to pay more for the privilege? Densities of apprenticeship take up vary from sector-to-sector as we all know. The challenge is to recruit via the apprenticeship route into those areas of the economy promising the greatest growth prospects. So will BiS keep to the previous administration's industrial strategy? Will devolution to city regions continue apace beyond Manchester and the North? Will Local Enterprise Partnerships receive more cash for skills? And will all adult skills' funding now be channelled into apprenticeships or loans? Indeed will the Skills Funding Agency now become the Apprenticeship Funding Agency?

But of all the challenges currently facing the new government the greatest is to raise productivity. UK productivity (roughly how much is produced for every hour worked) has slumped by over 15% since 2009. We are now less productive than we were in 2007. This is due to the financial crash, companies' reluctance to borrow and the financial sector's ruin as a consequence of the crash which made lending all but impossible for the first half decade after 2009. Mark Carney the Governor of the Bank of England believes the financial system is now fixed and businesses can borrow again. And this should mean a rise in productivity. But it is by investing in human capital that real productivity gains will be realised. And this is why skills remains a top order priority. We need more technical and intermediate level skills formation and we need it quickly.
For Colleges the last Autumn Statement promised further cuts over the next three years at least. These could be in the order of a further 17% – 40% with some mitigation offered if colleges can recruit bucket loads of apprentices. For some this spells a doom-laden future. For others it means re-thinking how they operate and what they focus on to deliver their mandate to help people transform their lives and build successful careers. We will see the emergence of 'lean FE' and new types of college structures. We will also see greater regional inter-dependence and more alignment with particular clusters of businesses. The devolving of powers to Manchester will offer all of us a clue as to how this process might develop.

So we have a new Conservative government for the first time in nearly two decades. There is likely to be much continuity in terms of policy so there should be few surprises for those involved in skills. The challenges to do more with less will intensify. So too will the need to grow stronger more thoughtful partnerships with employers. Partnerships that enable the co-production of solutions to skills issues between providers and employers. Policymakers have talked a good talk about a demand led skills system. Perhaps over the next five years we will see if this can move from the world of rhetoric to the world of reality.

Nick Isles is deputy principal and chief executive of Milton Keynes College

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