Five questions that the FE White paper struggles to answer

When the Skills for Jobs white paper finally arrived in January this year, it was met with a generally positive welcome from the sector.

Closer scrutiny since then, however, has revealed a far less radical set of proposals, argues Tom Bewick:

Five failings of the FE White Paper

Putting aside all the political hyperbole that trailed the white paper as being “really revolutionary”, the government’s ambition for FE is still an incomplete picture. Indeed, there is nothing in minister’s plans that have not already appeared in one guise or other over the last five decades.

Once again, “employers will be placed at the heart of the system”; “the funding system will be made simpler.”

Everything is on offer, from greater learner satisfaction, to better teaching and classroom facilities. All this, we are told, will help unleash human capital potential and set the country on a new path to world-class renown.

Of course, the long-toothed amongst you will feel like you’ve heard it all before.

And indeed, you have: with major skills-related white papers in 1963, 1976, 1981, 1988, 1992, 1999, 2001, 2003, 2005, 2009, 2012, 2015 and January 2021. (Can you name them all?)

People often ask me, what would a really radical skills white paper have looked like?

And why does what the government is now proposing fall considerably short of the mark?

To really comprehend the scale of all the shortcomings, in both vision and implementation terms, you have to read on and look at detailed answers to the following five questions:

1. Does the white paper really empower individuals?

Just think for a moment about how the relationship between the state and the individual has changed during the last 45 years. As a society, we’ve moved away from being overly deferential to one that is more demanding and sceptical of our institutions. Paternalism generally is no longer accepted like it used to be. Imagine if the government still issued ration coupons for food, as it did for long periods after the second world war? We’d probably disparagingly refer to it as the nanny state.

Yet, that is precisely the system of rationing that we have in place today, via the Education and Skills Funding Agency. It applies to all post-18 learning below degree level. Politicians and senior civil servants decide the priorities. Technocrats devise the ‘funding rules’ and administrators’ in colleges/ training providers interpret ‘the rules’ to decide who is eligible in order to claim the funds. It’s a hugely top-heavy, costly and complex system. The only people who make any real money out of it are the ‘funding gurus’ providing consultancy advice; and of course, the bureaucrats who have to constantly tinker and change the system as it regularly malfunctions. Even then, the model is still open to lots of error, underspend and fraud.

Take the Lifetime Skills Guarantee (LSG) – an elaborate form of rationing if there ever was one. Whitehall has decided in lieu of any meaningful consultation which 400 qualifications or so are eligible for funding. Providers then have to go out and find the learners who match the eligibility criteria. In the meantime, millions of adult learners are either blissfully unaware of the LSG; or they are simply ineligible for its support.

Research by the House of Commons library for the opposition Labour party estimates that over 9 million adults will be ineligible for this centre-piece of the governments skills reforms. No rational human being could argue that such a system, of top-down bureaucratic rationing, helps empower the individual. Not when ‘purchasing power’ is placed firmly in the hands of institutions, not individuals.

A truly radical white paper would have turned this archaic funding model completely on its head. The starting point would have been recognition that people themselves are the best judges of how to fund their learning post-18, especially with a lifetime characterised via multiple job and career changes. It would have been far better for the state to introduce a Lifetime Skills Loan Entitlement (equivalent to the £54,000 undergraduates can already access at Level 7), via the mechanism of a Universal Post-18 Education and Skills Account. Repayment of the loans would only be recouped via the tax system once the individual was earning above a salary threshold, similar to the one that already applies to graduates (i.e. c. £26k per annum).

Crucially, digital or blockchain currency – credited to each skills account – would only be able to be spent on courses that are regulated; delivered by bona fide post-18 institutions. At a stroke, this would make the learner, not the state, the customer of college-based and training provider provision. It would do away with the need for the ESFA, since the loan entitlement could be administered by the tax system, just as HMRC has operated both the furlough and the Apprenticeships Levy schemes (via online digital accounts).

With the schools budget of the ESFA properly devolved to local authorities and Mayoral Combined Authorities, taxpayers would start to see how over £94 million in ESFA staff overhead costs; and other administrative efficiencies, could be saved each year.

2. Are we seeing the required investment for the scale of the challenge?

No one disputes the years of austerity that FE has suffered. You could argue that all parts of public sector saw real terms reductions in the decade after 2010. But that’s not true. Thanks to the cap being lifted on undergraduate numbers, the universities experienced a boom time. Total cash budgets for schools were largely protected (even if a cut of 8% per pupil funding took place when adjusted for inflation); and NHS spending actually increased in real terms throughout the main austerity period by an average of 1.4% per annum). Meanwhile, FE budgets were slashed by up to 40%. Even with a £300 million uplift in the 2019 spending round, colleges still find themselves, on a funding per student basis, about 7% down on where they were in 2010. FE capital funding is also less than it was in the period 2001-2010.

This is what the respected independent think-tank, the Institute for Fiscal Students, has calculated as a £1.4 billion shortfall in FE budgets. It is a chasm over which the whole future of the FE financial system now hangs in the balance. Even then, this level of extra funding is just about what is required to close the gap on where FE spending was over a decade ago.

Why was a white paper even published that is completely silent on the issue of long-term investment in FE?

What this means in practice, is that for all the rhetoric of ministers about a world-class technical education system leap-frogging Germany by 2029, there is nothing like Teutonic levels of spending or investment being proposed. Indeed, a report by the Education Policy Institute last year discovered that Germany spends 37 per cent more on its vocational technical education qualifications than it does on its academic track.

England is lower than the OECD average, in per student funding of technical education. Not even the substantial T-Level investment takes the country over these average levels. Yet in England, we spend shed loads more than most OECD countries to help undergraduates get degrees (which are not always completely helpful from an employability perspective) at significant cost to the exchequer.

Until the Chancellor finds at least a £1.4 billion permanent increase in the FE sector’s baseline budget, it will be very hard to take this government’s promises on FE and skills seriously.

3. Are power and resources being devolved to the most accountable level?

Devolution in England, particularly when it comes to FE skills funding, has been a double edged sword.

On the one hand a system of national entitlements and funding distributed centrally avoids the problem of a post-code lottery. But on the other, we’ve spent the most part of 30 years creating a huge behemoth at the centre (now called the Education Skills Funding Agency).

One obvious way to deal with this conundrum is by ensuring the roll out of the universal skills accounts discussed above. Adults over the age of 18 would get the same ‘entitlement’ to lifelong learning support regardless of where they actually resided. Now outside the EU, these skills accounts only have to be given to those with UK citizenship rights and/or settled status. The era of overseas nationals being able to tap loans and maintenance payments and then abscond without repaying is over.

In a more radical version of the white paper, local government would be left to focus on planning strategic skills and labour market interventions at the community level. These funds would be raised either locally or devolved as a block-grant from Whitehall. Financial support would be used to support capital infrastructure projects, like new improved technical training facilities at the local college; or to intervene in specific skills shortage areas guided by local employers.

Post-18 providers, including colleges, would get their course fees from individuals just as higher education institutions do now. Indeed, one crucial element of this genuinely devolved FE system is that individuals would be in complete control of the kind of learning and skills training they required.

Real empowerment is made possible through the ‘purchasing power’ of individual skills accounts. Local players would be left to address market failures and plug travel-to-work area skills gaps and shortages. Working with sectoral and professional bodies, community leaders would be given the power to top-up skills and employer apprenticeship levy accounts to attract particular skills and businesses to their local areas.

In this truly radical model, there is absolutely no need for the £58 billion per annum national Education Skills Funding Agency to exist. Nor would we need the kind of hyperactivity of initiatives that we regularly see from the Department for Education. Power, resources and accountability would sit at a far more localised and democratic level.

Just as the Swiss cantons wield significant economic flexibilities within a well-functioning federal system, so would England’s new devolved skills system start to emerge. It would restore back to local government, in England at least, a role it uniquely once held at the start of the first industrial revolution (before their powers were usurped by successive secretaries of state and Whitehall mandarins in the late 20^th century).

4. Will the focus on ‘placing employers at the heart of the system’ make any difference this time?

If I got a pound for every time I found myself sitting in a meeting and someone said: “we really need to put employers in the driving seat of our skills system”, I would be a very rich man.

The brutal truth is that employers are no better drivers of the skills train than well-meaning civil servants at the ESFA. It’s a complete (self-defeating) delusion to think otherwise. Employers are good at what employers do best: they attempt to run successful firms; hire and fire people in ways that the law permits; and depending on the business models they operate; all firms try to make some kind of social impact or a profitable return for their shareholders.

We also need to understand that businesses buy in the skills they need. They rarely want to make them from scratch, unless they take on apprentices. Ideally, I would love to buy raw ingredients each evening and cook a wonderful family meal. But I’ve calculated that when my precious time/ (general laziness) is measured against my disposable income/ time available, it is more efficient (and a lot tastier) to outsource this job to the Marks and Spencer Food Hall. In other words, I buy in the ready-made products that has been put together with far more culinary expertise than I could ever possess myself.

Firms and HR departments follow exactly the same thought process. Why spend hours trying to train every employee when you can hire them on the open labour market ready-made. Moreover, the idea that employers, en masse, would want to be discussing the detailed processes that make up an occupational standard or the public skills system is absurd.

What employers can’t do (and won’t do in my experience) is sit around in bureaucratic meetings listening to some skills expert whining on about the difference between ‘reliability’ and ‘validity’ in formative assessment. And the so-called employers that often do turn up (again, in my experience), tend to have the job title ‘consultant’ (i.e. they are being paid for taking part in some way); or they are part of such a huge multinational company where no one really cares what Jim gets up to on his Wednesday afternoons.

The government’s latest wheeze is to get local chambers of commerce more involved in shaping area based skills plans. The secretary state for education, Gavin Williamson, prior to the publication of the white paper, met with representatives of the British Chambers of Commerce, to discuss a greater role for them advising on local skills needs.

In Germany, powerful business chambers have built up decades of prestige. They operate a bit like medieval craft guilds in some occupational areas; and more like sub-regional and local strategic bodies in other contexts. Above all, they are fully independent of the state and they have mandated to them the power to raise membership levies from firms. That makes them the paymasters of the training that vocational schools and local employers rely on. Any nursery child growing up in both Germany and England will readily tell you: he who pays the piper calls the tunes.

The big idea in England is to grant the 53 accredited local chambers of commerce access to a £65 million strategic development fund to work with FE colleges to shape local skills plans. These monies work out at less than £45,000 per FE college. Just about enough to commission a local labour market intelligence report or pay for a few employer focus groups.

It is this meagre resource envelope and lack of ambition for employer-led bodies that goes to the heart of the English skills problem. German Chambers of Commerce and Industry (“IHKs”) collectively raise over 1 billion Euros per annum. All registered firms with a trading turnover of more than 5200 Euros must pay the mandatory membership fees by law, at the start of each financial year.

In England, chamber membership is voluntary and the resources and expertise they have to deploy in each area will vary considerably. It is not unusual, in some parts of the UK, to find chambers with hardly any staff. Indeed, it’s a common refrain that a local employer is more likely to meet retired Colonel Blimp running the show. In stark contrast, IHKs are well resourced, professionally managed and have been operating in Germany and internationally since 1894.

Interestingly, the law that established IHKs translates from German to English as: “the Parliament of the business community.” This is a very powerful clue as to the operational deficit that lies at the heart of England’s business and employer community.

Here, it is Whitehall who various employer lobby groups and representative bodies look up to in terms of meeting the skills challenge. In Germany, politicians are largely kept out of these discussions as the Chambers effectively control how the vocational schools, technical education and apprenticeships can operate.

When compared in these terms, one can more readily see just how much of a mirage the FE white paper is from the perspective of ensuring real employer leadership of England’s skills agenda.

5. Overall, will these reforms create a high-trust culture built on England becoming a genuine world leader in FE, apprenticeships and skills by 2030?

The short answer is no.

Why? Because the massive elephant in the room is the lack of trust throughout the sector. For all the stirring speeches from politicians and sector leaders about the wonderful world of FE, the reality is somewhat different. The FE sector is starved of long-term investment. Whitehall calls all the shots and seeks to manage programmes on the back of a command and control mentality. Crucially, the whole way it which relations are managed by public servants is based on the self-perpetuation of a low-trust culture.

Why does England feel the need for an FE Commissioner on top of Ofsted and ESFA audit regimes?

The answer is because ministers don’t trust college governing boards and principals to run their institutions in the interests of their local communities. When the Skills Bill comes to Parliament in the autumn it will be laced with new provisions to give the secretary of state (in practice, civil servants), exceptional new powers to intervene in local college affairs. The centre will be able to force mergers and reconstitute FE leadership in the mould of Bolshevik-style five year plans. Of course, just like the old Soviet Union, it will eventually collapse in failure.

The long-term answer is the cultivation of a high-trust model of skills policy formation, built on the premise of an effective ecosystem where institutional plurality, individual empowerment and real devolution drive decision-making on skills attainment.

Until then, England’s policymakers will continue to do what Albert Einstein referred to as one definition of insanity: “doing the same thing over and over again and expecting to get different results.”

Tom Bewick is the Chief Executive of the Federation of Awarding Bodies

Tom is also presenter of the Skills World Live radio show podcast, available in audio www.www.fenews.co.uk/skillsworld and to watch www.skillsworldlive.com