Will prime minister Sunak embrace a new vision for FE?

The new prime minister has a chance to move beyond ‘Statism’ and ‘Cakeism’ and restructure post-16 education and skills around a new FE ownership model, argues Professor Tom Bewick

There is a saying in Westminster politics: ‘one day you’re the cock of the walk, the next a feather duster.’ 

Perhaps what the anointment of Rishi Sunak as Britain’s 57^th prime minister proves is that this phrase can also work in the opposite direction. After a long summer campaign, Sunak failed to capture enough votes of the Conservative party membership to beat Liz Truss. 

His downbeat message about the UK economy struggled to cut through. He was seen to represent the failed economic orthodoxy of the treasury.

Big state. Low growth. Stagnant wages. Poor productivity. High inflation. And a declinist mentality that goes to the heart of how it is often said senior mandarins in Whitehall, really see their role in steering the ship of state. 

Fast forward just a few weeks and all the economic doom and gloom of Sunak would, it seem, be proven right. From feather duster to cock of the walk, you might say. 

The ‘shock and awe’ unleashed by Truss and her short-lived chancellor, helped precipitate the biggest collapse of market confidence in the British economy since the country crashed out of the Exchange Rate Mechanism (ERM) in September 1992. 

Historians take note (and party managers in CCHQ), the Tory reputation for sound money and economic competence in that debacle never quite recovered, despite John Major using his full-term in office to try and turn the situation around.

The British electorate has a deep sense of fair play. It also has the wisdom to ultimately hold to account those who would seek to play fast and loose – turning our national life into the pages of a soap opera. 

Rishi Sunak – under our constitutional system – has plenty of time on his hands. He has the votes in Parliament to go all the way to January 2025 if his party so chooses. 

My personal bet is that he will go to the country in June 2024, provided he has closed the monumental chasm in the polls that has opened up with the opposition Labour Party. 

In the meantime, Sunak must decide on what programmes he is going to govern. What kind of prime minister does he want to be? 

One thing is clear, the fiscal event due 31 October will be austerity 2.0., no matter how well dressed up it is as a path back to growth and prosperity.

Against the context of increased (stealth) taxes and real terms decreases in public spending, further education leaders must be there with solutions not platitudes. 

Begging bowl campaign strategies do not work. They did not work in the period running up to the last comprehensive spending review. And they will not work in this tumultuous period when government borrowing has reached its limits. 

The sector needs to move beyond what I call ‘Statism’ and ‘Cakeism’.

It’s time to move beyond the state  

Statism is the belief that in skills policy terms, the bureaucracy has all the answers. 

For more than a decade, every crisis in FE funding and growing concerns about skills gaps, has been met with the clamour for more central government action.

Take apprenticeships. In 2012, there was justifiable concerns about quality. The government had to act, for example, to protect the legal definition of apprenticeship and increase on-programme duration. 

But as we approach the tenth anniversary of the Richard Review, no one can argue (with a straight face) that we’ve seen a renaissance in English apprenticeships. Policymakers promised higher-quality standards and more employers would be engaged. 

In general terms, not one of these objectives have been met. Instead, we are supposed to just go along with the delusion that these things take time. Or that all we have to do is to allow the institutions involved in delivery the ‘stability’ to get things right. 

In reality, these skills policies have failed. In macro-terms the issues they were supposed to resolve have been made worse. Fewer young people are engaged in apprenticeship than in 2016. The architects of this monumental policy failure need to be held to account. 

NEETs (not in education, employment or training) stand at more than 700,000. Average achievement rates are far worse than what we saw under the old apprenticeship frameworks. And billions of pounds of unspent apprenticeship levy has simply been handed back to the treasury. 

It’s time for the politicians to face some hard facts. Despite the hyperactivity of one skills initiative after another, where is the tangible impact in terms of increased output per hour worked? Why are there such manifest skills shortages in the economy? And throughout the whole time the state was intervening and growing its tentacles in the technical education sphere, why did it allow employer investment in workforce training to collapse? 

It’s worth noting that all these metrics were headed in the wrong direction long before the pandemic and while Britain was still a member of the EU. 

The answer is that the state itself is now a big part of the problem. In particular, Whitehall is not best placed to second guess a complex labour market. Neither are the ‘parallel skills bureaucracies’ that are being set up in mayoral combined authorities of England, the answer either.

In relation to the adult education budget, many MCAs have simply adopted what economists call arbitrage (a complex way of profiteering from different financial instruments). In the end, this means less money for adult learners. At a time when perhaps as many as 4 million adults have left the rolls, this is a scandal in the making. 

You only have to read the recruitment adverts of MCAs to see how a small army of skills advisers are being recruited by these authorities to duplicate the efforts of what is best left to individuals, not institutions, making these decisions. 

As Sunak appoints his cabinet, once again there will be a renewed clamour for government to act. 

Both the new prime minister and the Labour Party, if they win the next election, have a whole different prospectus on which to embrace the future. 

It’s time to take on ‘Cakeism’ –  by facing down those who believe that you can grow your way to prosperity by increasing the size of the state.

It will require turning on its head more than three decades of received wisdom in post-16 policy. 

Because the answer to the skills and productivity challenge is not simply more money for FE. 

The answer lies in FE itself coming up with the ideas that will help bring the big changes about.

It could start by making the argument for why the current top-down model of skills delivery needs to be turned on its head. Not by transferring funds and responsibility from one set of bureaucrats to another, but by trusting individuals and those on the front-line to deliver. 

At the centre of the reforms should be placed the idea of far greater employer, employee and community ownership of FE providers. 

In practical terms, this means a massive programme of mutualisation of the sector. A Sunak premiership has a golden opportunity to divert the Office for National Statistics (ONS) likely reclassification of FE colleges as public sector institutions away from the government’s debt-laden books – i.e. placing colleges firmly back in the non-state sector. 

This could be done by essentially making all publicly funded post-16 education and skills provision, in future, being tied to autonomous non-profit making organisations. This is already the case with the university sector and could also become the case in FE within five years. 

A popular way to think about such a reform is that every region in the country would have the equivalent of the John Lewis Partnership of skills and apprenticeship operating in their local area. 

In other words, FE in future would be owned by its members (or customers), not the government. Of course, the members of the mutual could be local authorities and employers – national and/or local. 

Importantly, FE staff would also have a major stake in the mutual, just as the employees of John Lewis do in their enterprise. The voluntary and independent sectors would also be able to invest in the mutual FE system, delivering contracts in return for sustainable long-term commitment and expertise. 

England would be divided up into about 40 areas where these mutual post-16 organisations would operate. The existing capital estates and financial reserves of GFE colleges, UTCs, sixth-forms and academies would all be rolled into a regional mutual trust. The boards of these mutual bodies would be made up of staff, unions, employers, businesses and civic leaders. 

All the boards would be elected by members, with articles of association that would allow some or all the directors to be removed at the AGM. To ensure appropriate governance, oversight and management, the chair and non-exec directors of the mutual would be paid market-based salaries, restricted to two terms of office. 

The era of gifted amateurs in FE, working as volunteers on boards, would be brought to an end. FE executive directors, including CEOs and principals, would be limited to contracts working in the entire mutual system for no more than 15 years. FE staff collectively would get a vote on senior remuneration and bonuses, able to veto exorbitant packages. 

Crucially, FE mutual organisations would be completely autonomous from the state. They would set all pay, terms and conditions. For example, if a mutual thought it was necessary to pay a retrofitter £60,000 (pro-rata) per year to teach on the latest heat pump installation course, they would be able to do so. 

And the FE mutual would be liable to insolvency just like any other business. The board of directors would have borrowing powers and be able to merge or close down operations by consolidating provision across a whole region where the mutual had a government-backed franchise to operate. 

Longer-term there would be no need for the Education and Skills Funding Agency, because all funding for post-18 would be routed via individuals in skills accounts, or in the case of 16-19 and highly specialist/ SEND provision, via local councils. HMRC would handle the skills accounts in a reformed Levy programme. And the department for local government would channel the adult and community/ SEND provision via its own grant structures.

The Department for Education would get out of the top-down ‘skills initiatives’ game altogether and revert to being a policy only organisation. It would retain some central skills foresight and labour market intelligence capability, although the Stalinist inspired LSIPs would be scrapped. 

Instead, FE mutual bodies would organise provision so that it was aligned with labour market and community needs. After all, it would have no other choice or become a loss-making enterprise. 

On post-16 training and inspection, including qualifications regulation and apprenticeship standards development, a single body in England would be created, streamlining the current quango landscape quite considerably. Ofsted would inspect schools only. A single regulator – the post-18 Education Commission for England – would span both FE and HE courses.

The smart state is not about more money. It is about spending what you have more wisely. 

In FE that means restructuring the whole system around the notion of the ‘FE mutual’. It would unleash billions of pounds of additional non-state investment, as regional and local bodies would seek to be part owners in these mutually owned businesses. It could include existing universities and privately backed investment vehicles. 

It would be for each membership owned business – financed via individual skills accounts and run by mutual trust boards, who would have to come up with answers to the different skills and productivity challenges each area faced. Not well meaning civil servants sitting in Whitehall. 

Let’s democratise FE in the 21^st century, like we did house building in the last century.

When the first mutual building societies were created in the 1800s they gave working people access to mortgages and privately built housing for the first time. In 1962, the Building Societies Act, saw a further democratisation of home ownership as a result of mutualisation. 

Ironically, it was only after a Conservative government allowed these societies to ‘de-mutualise’, in 1986, that we have since seen the collapse in house building, including declining levels of home ownership. 

It’s time for a genuine democratic revolution in FE. Where the learners and communities are placed ahead of vested interests. A new economic and ownership model where the mutual interests of FE staff, local leaders and employers, is put before the whims of Whitehall technocrats operating in an overcentralised state. 

FE mutual organisations are a new path – along with a genuine entitlement-based approach to lifelong learning – that could help bring about a renaissance for a New Britain. 

Because as the history of mutually owned enterprises shows, they are the most resilient kind of coalitions around.