Skills England must have one priority – making skills work for productivity growth

Since the announcement in the King’s speech of a new skills body for England there has been much speculation, not least on this platform, about what Skills England should be and what it should do. In the absence of any firm details different commentators have expressed various positions in the interests of their respective constituencies.

Skills England should correct the current mismatch between the supply and demand for skills

There is much agreement. Skills England should integrate a fragmented system, and it should correct the current mismatch between the supply and demand for skills. It must work for all ages, old and young, for those with low and higher skills, for those in work and those furthest from the labour market, for pre-and-early as well as mid-careers. And it should advise upon if not provide a new, more equitable funding settlement for adult skills. By the time the sum of all these parts has been added together we have a long list of functions and responsibilities and no real sense of strategic priority. In other words, we end up with something approximating what we have already got.

In a new report, ‘Making Skills Work: The Path to Solving the Productivity Crisis’ the Lifelong Education Institute, with City & Guilds, makes the case for Skills England to focus on the Governments stated mission to achieve the “highest sustained growth in the G7” by the end of this five-year term. In doing so it must make some difficult choices.

Skills England to focus on the Governments stated mission to achieve the “highest sustained growth in the G7”

Its main objectives are to provide labour market intelligence and skills forecasting to inform the supply of post-16 vocational and technical skills. It must work across government departments to limit dependency on imported labour, and with Mayoral Combined Authorities to narrow the gaps in regional inequality. A core function will be its oversight of the national apprenticeship system, and the new Growth and Skills Levy, as well as large parts of adult learning and vocational training programmes. But Skills England is unlikely to hold sway over the entirety of the English education and skills landscape, including vocational degrees and higher-level qualifications. Clarity is needed about the relationship with the Office for Students in shaping skills provision in this critical area.

Skills England should integrate a fragmented and complex system

Our report highlights the constant policy churn and reinvention of institutional bodies over the past sixty years which has contributed to an overly complex and highly fragmented skills system. We highlight the various turns in government policy in this area, shaped by deeper changes in the prevailing ideologies around the role of the state in the economy.

These point to shifts between business-led and government-led models; centralised and decentralised approaches; and the intermittent focus on sector specific and place-based strategies. We observe that throughout this period too much of our skills system has for too long disproportionately focused on the young (the pathway from school into further and higher education), the unemployed, and the low skilled. This has come at a great cost to the skill needs of the vast majority of people that are already in the workforce.

The skills profile for the working age population has changed since the Leitch Review

The skills profile for the working age population has changed since the Leitch Review recommended that 40% of all employees should be qualified to Level 4 and above. It is currently around 47% compared with 29% in 2006. This is largely due to a policy focus on higher education and the rise in the number of graduates entering the labour market. Over the past twenty years the UK has seen the biggest increase among G7 nations in the proportion of 25- to 34-year-olds who have completed tertiary education. Yet this increase in skills acquisition has not translated into productivity gains.

The UK has a longstanding problem with skill utilisation with one in three graduate workers not in graduate-level jobs. At the same time employers are reporting an increase in skill vacancy shortages as well as skill gaps among the existing workforce. A survey, commissioned by City & Guilds, finds a high degree of pessimism among employers about the current skills system and its ability to prepare learners for the careers of their choice. All this indicates an out of kilter skills system that is failing to meet the needs of the economy.

Skills England has been created to align with the new Industrial Strategy

If Skills England has been created to align with the new Industrial Strategy and if its aim is to drive productivity growth via skills development then this should mean focusing on higher level skills for people in work, in productive sectors or industries capable of crossing the innovation frontier. Investments in human capital should recognise the importance of Level 2 and 3 qualifications in kickstarting careers, filling industry gaps and enabling progression into higher education. However, Skills England should prioritise the continuous upskilling and reskilling needs of the workforce, in the places and industries that are most likely to deliver productive growth.

Rebalancing the supply and demand for skills will therefore be a central task for the new Government and Skills England. Going further this will mean assessing the relative volume of qualifications at all levels including degrees in non-vocational and non-stem subjects. This will be necessary in achieving a single integrated tertiary system that can drive economic growth. It will require strategic choices in deciding where limited public resources are best concentrated and how skills development can unlock productivity and help the country meet the challenges ahead.

By Mark Morrin, Lifelong Education Institute