UVAC Response to IFS Report on Investment in Skills

UVAC sets out its consideration of the likely implications should the IFS recommendations be adopted by a future Westminster Government. The IFS fails to avoid the usual ‘pitfall’; of assuming training and skills in England is synonymous with further education and failing to adequately consider the fundamental role that higher education and universities have in provision, including apprenticeships.

The IFS also poorly define higher and degree apprenticeships, ignoring the all important level 5 (associate professional) and level 7 (post-graduate) programmes that play a critical role in creating routes into the professions for ALL types of apprentices. UVAC’s message is for the need to focus on skills training at all levels and, how, to raise UK economic productivity we need the engagement of a range of stakeholders including government, employers, further and higher education working with statutory and professional bodies.

While the Institute for Fiscal Studies (IFS) analysis of and proposals for apprenticeship funding do not add up, in UVAC’s view – see UVAC “Making Sensible Recommendations on Apprenticeship Funding” the report does contain some useful analysis. There is, however, a key problem.

The Overlooked Role of Higher Education in Training and Skills

The problem with the report is that the IFS too often seems to regard training and skills as synonymous with further education (FE), without adequately considering the fundamental role of higher education (HE) in training and skills provision.  Higher education is responsible for training the registered nurses, police constables, social workers and a range of other occupations needed by the public sector.  In the private sector higher education trains engineers, digital specialists, scientists, managers and a multitude of other professions.

For a report entitled Investment in Training and Skills, it is both surprising and disappointing to see so little consideration given to the role of higher education in training those within the workforce and those entering the workforce. The author’s statement in the introduction to the report that “university is not the only place of learning beyond the school gates”[1] is obviously true but unhelpful.

Rethinking the FE vs. HE Debate in Skills Provision

In England, there can be a tendency to pitch the debate as FE versus HE, the importance of tackling lower-level skills shortages and gaps versus higher level learning and prioritising the training of those entering the workforce at the expense of those already in work.  Little is said by the IFS about the role of universities in delivering vocational programmes and work-based learning, or how higher education student loans are used by individuals to gain the skills and develop the competencies needed for key occupations in the economy. 

FE and HE both have fundamental roles in skills provision and providing the programmes needed by employers and individuals in order to raise their performance and productivity. Anyone not convinced that HE has a fundamental role in skills, should look through the 209 occupations for which degree level apprenticeships (at bachelors and masters levels) have been and are being developed. We need to banish the concept that we have a further education, ‘training and skills’ sector and a higher education sector.

Concerning Trends in Adult Education and Training Decline

The IFS, however, does usefully highlight the substantial decline in adult education and training and the fall in public and private sector investment in training. Adult education provision has a vital role in tackling inequality and raising skill levels to increase productivity. The figures outlined by the IFS are deeply concerning and any report raising these concerns makes a positive contribution in this area.  For example,[2]:

• The average number of days of workplace training received each year has fallen by 19% per employee in England since 2011

• Average employer spending on training has decreased by 27% per trainee in the same period.

At a policy level, the IFS highlights the slow “glacial”[3] progress in the implementation of the Lifelong Learning Entitlement (LLE) and unanswered questions regarding its design and operation and how credit transfer will work. UVAC shares these concerns.

Debate Over Apprenticeship Levy Reform and Training Tax Exemptions

The IFS, while stating that the Labour Party’s plan to reform the Apprenticeship Levy and introduce a new Growth and Skills Levy “warrants attention”[4], also notes a risk of deadweight loss. The IFS suggests that, as such, levy funds could be used to subsidise training that would have taken place without levy funding. UVAC has never accepted this argument. Part of the rationale for introducing the Apprenticeship Levy was to counter low rates of employer investment in training. Surely, a levy should not ‘punish’ good employers who already invest in training. Instead, a key purpose of a levy should be to compel ALL employers to invest in training.      

The IFS raises some interesting ideas concerning tax exemptions for individuals spending their own funds on training.  The proposal raised here for consideration concerns “widening the range of untaxed training categories”[5].  Such an approach would also help the self-employed, who historically are less likely to participate in training. UVAC would suggest that to ensure such funding has an economic impact, such an approach should be restricted to IfATE approved programmes. 

Rightly, the IFS highlights constant “chopping and changing” and the “policy instability and inconsistency which have plagued the sector”[6].  The report then goes on to propose what would be significant change to the Apprenticeship Levy, by adjusting the amount of levy contribution that would be available to fund apprenticeships in levy paying employers and smaller businesses.

This contrasts with the more evolutionary changes to widening the scope of the Apprenticeship Levy proposed by Policy Exchange[7], in a report endorsed by several former Conservative and Labour Secretaries of State for Education. The IFS proposal also contrasts with the Labour Party approach to the levy, where 50% of levy payments could also be used to fund non-apprenticeship approved training programmes.

Conclusion

UVAC would add that a national debate is needed on the skills England needs to raise our productivity, how such skills should be delivered and who should fund such provision: government, employers and/or individuals. 

We need to focus on skills at ALL levels that are needed by individuals, employers and the economy.  To raise UK performance and productivity and tackle inequality we will need the full engagement of a range of stakeholders, including government, employers, FE, HE and professional bodies.

By Dr Mandy Crawford-Lee, Chief Executive, UVAC

[1] Investment in Training and Skills, The Institute for Fiscal Studies, p3

[2] Ibid 1., p1

[3] Ibid 1., p22

[4] Ibid 1., p37

[5] Ibid1., p38

[6] Ibid 1., p4

[7] Mansfield I and Hirst T, Reforming the Apprenticeship Levy, Policy Exchange, 2023

FE News on the go…

Welcome to FE News on the go, the podcast that delivers exclusive articles from the world of further education straight to your ears.

We are experimenting with Artificial Intelligence to make our exclusive articles even more accessible while also automating the process for our team of project managers.

In each episode, our thought leaders and sector influencers will delve into the most pressing issues facing the FE sector, offering their insights and analysis on the latest news, trends, and developments.