Funding Skills Accounts through the National Skills Fund

Two Schemes

Since the general election manifesto commitment, we have learnt that there will be a tie-up between the proposed National Skills Fund and the National Retraining Scheme.

The latter of course owes its conception to a previous manifesto but progress in getting it off the ground under its ‘Right to Retrain’ brand has been slow.

The National Retraining Scheme

AELP hopes that the £3bn allocation for the Fund over the course of the new Parliament doesn’t all get channelled into the National Retraining Scheme. It is true that we were one of the organisations who said that the £100m initial funding for the scheme wouldn’t be enough to make a tangible impact, but on the basis of what we have seen so far, a further injection of £3bn would be unwise and difficult to justify.

Irrespective of whether much more funding will be allocated to the National Retraining Scheme, the government should work with employers, trade unions and training providers to transform the programme to really make a difference to the 1.5 million individuals whose jobs are at risk of automation along with supporting those trapped in low-level employment with little prospects.

AELP has called for the creation of a form of adult traineeship for both the unemployed and employed participants through the scheme. Its recent shaping into an information-sharing platform simply duplicates existing government-backed job signposting initiatives.

What’s needed is a clearly defined set of outcome and progression measures within a proper training scheme, with providers being financially incentivised to support participants to both complete and progress. At present, the lack of investment in core delivery and provider participation funding is a weakness and there’s a danger that government will repeat the mistakes made with the Employer Ownership of Skills pilot which over five years until 2017 saw £350m of taxpayers’ money completely wasted.

The National Skills Fund

AELP believes that the National Skills Fund gives us the opportunity to bring back skills accounts twenty years after the experiment with individual learning accounts went so badly wrong.

The link-up with the National Retraining Scheme makes sense because one of the areas in which skills accounts could make an impact is supporting the right to retrain.

Other target areas should include:

• The digital skills entitlement
• Level 2 and level 3 entitlements
• Higher Education and Advanced Learner Loans funding; and
• Maths and English.

National Skills Fund Financed skills accounts

The faults with the original individual learning accounts largely relate to failures in quality control. Addressing these should be at the forefront of a relaunch of skills accounts and we should start by ensuring that their funding is routed through a robustly tested and approved provider base as opposed to the unmanageable 8,910 providers that previously accessed funding for individual learning accounts. This is not about restricting access to the market for new providers who offer innovation and competition but learning from past mistakes and experiences from programmes.

The government should control the breadth of qualifications and programmes available for individuals to buy with their skills account with a catalogue of approved programmes, building on the lessons from advanced learner loans and the use of an approved central qualifications catalogue.

In 2013 for the launch of advanced learner loans, the ESFA produced a central online catalogue of fundable programmes which is regularly updated. Having a similar catalogue for skills accounts would be a sensible way forward.

Digital Skills Accounts

The National Skills Fund should actively embrace the latest technological advancements to enhance, control and protect the integrity of the skills account system. This means identifying trends quickly, with the ability to suspend or investigate accounts based on specific behaviours or patterns, be that by learner type, geographical location or by programme/qualification type.

We shouldn’t always expect government alone to shoulder the full responsibility to meet the total cost of the investment required. In addition to the entitlements and access to loans, there could be incentives for individuals and employers (and even combined authorities) to top up a skills account for targeted training. Incentives could be in the form of tax relief, national insurance contribution relief or rebates.

The government should structure skills accounts in a way that enables it to flexibly direct funding to support additional specific targets to meet new or developing needs; for example, it could include an amount in an account to fund training on digital skills development.

An account should be able to facilitate a mix of grants and loan funded provision in one place, acting as a one-stop shop for the individual to control and make informed choices.

Recommendations

1: Retain the National Retraining Scheme

The government should retain the National Retraining Scheme to meet the needs of adult workers whose jobs are at risk from automation and use some of the National Skills Fund to finance it but by no means exclusively.

2: Reintroduce Skills Accounts financed from the National Skills Fund

The government should reintroduce skills accounts financed from the National Skills Fund and drawing on lessons from the first individual learning account experiment.

3: Individual Choice to Drive use of Skills Accounts

Skills Accounts should be designed in such a way as to allow individual choice from a list of approved courses but enables government to direct funding to specific priorities.

Mark Dawe, Chief Executive of the Association of Employment and Learning Providers (AELP)