What is in store for FE from the comprehensive spending review (CSR)?

Policy Exchange has done it again. Probably the most influential of our current crop of think tanks, Policy Exchange published an interesting report that grabbed the headlines last month.

Higher, Further, Faster, More: Improving Higher Level Professional and Technical Education proposed switching more than £500 million of government spending from HE to FE.

This went down like a lead balloon in HE circles. The HE community argued that the current funding regime worked just fine and to add insult to injury the authors had got some numbers wrong.

Such a reaction is to be expected. Making a case for HE to raid its reserves in order to promote widening participation in HE while using the BBC as an example of how an existing public body has had to take on government decreed activity (paying for free TV licences for the over 75s out of its own cash in the BBC’s case) has sent shudders down the spines of every Vice Chancellor in the land.

So does this mean a windfall for FE from the comprehensive spending review (CSR)? With local area reviews expected to save the same amount (£500 million) from college mergers and resource sharing is this the quid pro quo BiS wants to make with the Treasury? Well perhaps. The politics of this report are interesting.

For Nick Boles, the current Skills Minister, helped establish Policy Exchange and was its first Director. He remains close to the institution. Publishing such a report, a month before the CSR is due, helpfully flies some kites and stirs up the debate around who gets what.

On one interpretation this could mean that Mr Boles, has been convinced that FE provides the skills solution to the productivity conundrum the Chancellor has identified as the number one economic priority for this Parliament.

As the above report says, HE institutions measure themselves against the litmus test of academic rigour and research. Sure they work with employers but that isn’t their raison d’etre. Asking HE to get stuck into providing higher technical and professional skills will flounder on the rocks of their research prejudices and priorities.

FE on the other hand, the report argues, often has better working relationships with employers and its output is aligned to getting students into jobs as efficiently and effectively as possible.

Indeed these are often the very employers who will be needed to co-produce more and better skills solutions that will help close the productivity gap.

On another interpretation it may mean that the opposite is true – that Nick Boles and his officials are desperate for HE to step up and deliver; that they are unconvinced that FE alone, or FE at all, is equipped to do the job required and need HE to face up to the challenge and seize the opportunity the productivity gap offers.

On one cynical interpretation local area reviews are nothing more than a ground clearing exercise for HE.

I think the truth is likely to be less stark and more nuanced. If I am reading this right, and I admit I may well not be, I think the Government and our skills minister are completely relaxed about which type of institution might dominate the delivery of higher professional and technical skills.

The experiment in the schools sector has seen a plethora or new institutions (academies, free schools and University Technical Colleges) spring up offering alternatives and ‘competition’ to the state sector.

In order to solve the productivity puzzle, consortia of FE and HE institutions are likely to emerge. Some FE groups will dominate in some areas. In others it is likely to be more HE led.

Outcomes will differ from area to area depending on the current institutional mix. What is not negotiable is that the Government wants to see more higher technical and professional skills delivery. They want the hour glass labour market to return to being a pint pot labour market with a rich supply of intermediate and technical level jobs. And to achieve this they need employers to engage.

Whichever institutional model engages best to get employers spending on skills will end up dominating the market. This is a rich opportunity for FE. If HM Treasury agree with the analysis carefully constructed by the authors of the Policy Exchange report, then FE may receive an unexpected windfall when least expecting it. Indeed there is some evidence that HM Treasury believes the HE sector has been feather bedded in recent times and is due a shot across the bows. It may be the case Nick Boles has become an FE enthusiast. It may not. Whatever emerges from the CSR the opportunity remains for FE to become the productivity sector – preeminent in engaging employers to invest more in the skills that will make Britain a more productive, and ultimately wealthier, economy and society. For if the productivity gap isn’t closed then the Prime Minister’s and Chancellor’s dreams of a high pay, low welfare, low tax economy will fail to become a reality. And if that happens Ministers heads will roll.

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