Education and skills in the Budget and Spending Review

Austerity gone but not undone. Little sign of transformative policy or investment  

Yesterday the Chancellor set out his stall for the next three years. He claimed that his Budget and Spending Review welcomed in “an economy fit for a new age of optimism”. But how optimistic should we be about education and skills over the rest of the Parliament?

There’s no doubt there was good news in yesterday’s announcements. The Chancellor started to reverse lost funding over the last decade, but big funding gaps remain.

Spending on adult skills is increasing over the Parliament by £3.8 billion by 2024-25. That’s a real terms increase of 26% since 2019-20 and restores around 60% of the funding lost since 2009/10. However, the Learning and Work Institute estimate that a funding gap of about £700 million a year remains.

The UK’s dismal record on basic skills was also addressed, with £550 million going into a new adult numeracy programme. This is very welcome, but there’s no sign of similar steps to address our big literacy and digital basic skills deficits.

Funding for apprenticeships rises to £2.7 billion by 2024-45, an increase of about £200 million, coming from the levy rising naturally as employment and wages recover.  However, the £3000 hiring credit for apprentices ends in January 2022, with the government hoping employers will be sufficiently motivated by labour shortages to take people on and train them without that added incentive.  

Extra funding for 16-19 year olds will help cover the cost of rising numbers and the rollout of T-levels and there is some welcome capital funding for FE college facilities and to continue building twenty Institutes of Technology.

There is no doubt that this adds up to a much improved situation compared to the massive funding cuts of the last decade. However, it is more in the realm of repairing damage than transforming the nation’s skills or productivity.  

There was also a resounding silence about the many policy challenges linked to this funding, from the fact that skills bootcamps (set to be quadrupled) are being filled mainly with people who already have a level three qualification, to the worryingly low proportion of apprenticeships being taken up by young people and those with very low qualifications.

More ambitious calls for investment in young people were not met. The Youth Commission has been calling for an Opportunity Guarantee – £4.6 billion per year to raise the 16-18 funding rate to £5,000; centrally fund apprenticeships for 16-18 year olds; and engage all young people who are not in education, employment or training.  Nothing along these lines was forthcoming.

The skills sector should also be nervous about problems being stored up in our schools, which will inevitably feed into future challenges for lifelong learning. Funding for children’s education has increased, but not enough to reverse all previous cuts or meet the challenges of enabling catch up. This is a big risk given that pupils are estimated to be two or three months behind after the pandemic and the attainment gap has widened considerably.  Per pupil funding has been restored to 2010 levels, which is better than not restoring it, but it means that there have been no increases for a decade, despite rising costs and cuts elsewhere placing more pressure on schools.  In addition, schools are expected to fund the Conservative’s manifesto pledge of raising teacher starting salaries to £30k (16% higher than now). Funding for sixth forms will increase but remain below the 2010 level. As for catch up funding, the subject of an enormous row earlier in the year, the Chancellor has added another £1.8 billion to the previously announced £1.4 billion.  But that is very far short of the £13.5 billion the Education Policy Institute thinks is necessary or the £15 billion proposed by the government’s catch-up tsar.

Overall then, yesterday’s announcements signalled that austerity is over, but its impacts are by no means undone. There is little sign of either policies or funding which could deliver the step change in skills and productivity which our economy so sorely needs. 

Helen Barnard, Associate Director, Joseph Rowntree Foundation