Wednesday 11 December 2019

Can the manifesto pledges plug the skills gap?

The parties are offering plenty of promises on improving technical and vocational skills, but, says Sandra McNally (CVER Director), there are significant gaps in their thinking.

Improving technical and vocational skills is a key aspect of improving productivity and social mobility in Britain. The relatively high number of people with poor basic skills and low number of people with high-level vocational skills are long-standing national challenges and have been highlighted in reports by the OECD, the government and academics. In light of this, key priorities of the incoming government should be:

  • To raise attainment and improve educational trajectories for “the forgotten third” who do not get good GCSEs year-on-year and many of whom never achieve a good upper secondary education.
  • To address the shortage of higher-level technical education (at Levels 4 and 5) that was highlighted by the Augar review. 
  • To increase the ability for adults to upskill or reskill later in life. 

But none of the manifestos acknowledge any problem with a “forgotten third” of young people. The source of the problem is partly structural, partly a question of resources, with spending per student between 2010–11 and 2018–19 falling by 12 per cent in real terms in 16–18 colleges, and by 23 per cent in school sixth forms. The Conservative manifesto makes no promise to increase baseline funding beyond existing commitments. Both the Labour Party and Liberal Democrats make large spending commitments to FE in general with the Labour Party making specific mention of aligning the base rate of per pupil funding in post-16 provision with Key Stage 4. The Conservative manifesto does make a significant commitment to increase capital expenditure in Further Education Colleges. While this addresses one of the issues addressed in the Augar review, investment in buildings will not improve student outcomes if there isn’t also investment in their teachers (who are paid considerably less than teachers in schools).

The manifestos do not acknowledge that there is a particular problem with the lack of high-level vocational education in England vis-à-vis higher education. In England, only 4 per cent of 25 year-olds hold a Level 4 or 5 qualification as their highest level, compared to nearly 30 per cent for both Level 3 and Level 6. In contrast, in Germany, Level 4 and 5 makes up 20 per cent of all higher education enrolments.

The main Conservative pledge relevant to this is the establishment of 20 Institutes of Technology with a focus on STEM skills. The Liberal Democrats also promise some institutional reform with the establishment of national centres of expertise for key sectors, such as renewable energy, to develop high-level vocational skills. However, they go further in explicitly acknowledging a “skills gap” and committing to address this by expanding higher vocational training, without however, stating how they would go about this.

Labour promises a free lifelong learning entitlement for everyone, including training up to Level 3 and 6 years of training at Levels 4-6. To the extent that this removes some of the distortions in the financing of the post-18 education system (as well-documented in the Augar review), this would help to address the problem of the lack of higher-level vocational education. But it would be an expensive way of doing so, with the taxpayer (most of whom does not have Level 4-6 education) having to pay the full cost. Moreover, people who are educated up to Level 4-6 have a high private return from this investment compared to people with a lower level of education.

The party manifestos all have something to say about apprenticeships. They all acknowledge problems with how the apprenticeship levy is working. The Conservative manifesto states that they would look into the working of the Levy and see how it can be improved. Both Labour and the Liberal Democrats are far more explicit. They both commit to expand the use of the levy to other forms of training. While this seems like a sensible idea, only two per cent of employers actually pay the levy. All political parties could do with a few more ideas on how to incentivise the other 98 per cent of employers to invest in the training of their staff. The apprenticeship levy is not sufficient for this. The Conservative manifesto has ideas about how to expand R&D credits and it is a pity this does not extend to human capital.

With regard to lifelong learning, Labour and the Liberal Democrats make commitments that are universal whereas the Conservatives’ commitment is more targeted to specific groups through a National Skills Fund (which does not have much detail). Labour’s commitment is to a free lifelong learning entitlement (discussed above) whereas the key Liberal Democrat commitment is the introduction of “Skills Wallets” worth £10,000 for every adult to spend on approved education and skills courses, with the first £4,000 at age 25, £3,000 at age 40 and £3,000 at age 55. This idea has similarities to the “individual learning accounts” that were introduced in 2000 but abandoned a year later because of fraud.

Although the idea of investment throughout life is sensible (and does need to be facilitated), it would be important to ensure that similar mistakes are not repeated. But a more substantive issue is where employer investment appears in this framework. As a major beneficiary of adult training, there needs to be a mechanism for co-investment. This may also help to ensure that the training undertaken meets the needs of the labour market.

Any incoming government needs to be held to account on the extent to which their promises actually address national priorities and whether we see an improvement. The extent to which this is possible depends on the success of their overall economic strategy as well as to the success of specific measures relating to education and skills.

This article was originally published by King's College London's Policy Institute:

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