New approach to skills devolution needed to ‘put communities in control’

Safeguards over funding, pay and post-16 education capacity are needed to ensure that devolution brings positive change for communities across England, new report warns.

The roll out of devolution deals across England has the potential to transform regional economies – but safeguards are needed to prevent parts of the country being left behind, a new report has warned.

Four new devolution deals were announced last month as part of the Autumn Statement, with Chancellor Jeremy Hunt arguing that the move would allow Metro Mayors to “fund and deliver solutions to their own challenges”. Labour leader Sir Keir Starmer has also confirmed his intention to “put communities in control”by offering further powers to current and future Combined Authorities, should his party win the next General Election.

But LTE Group, a leading group of national education and skills providers, has highlighted a number of emerging risks in the devolution of post-16 skills policy and funding. Lower funding rates for less affluent regions – particularly those in the North – could undermine the aspirations behind the Levelling Up agenda, the report, Skills Devolution: Putting Communities in Control?, warns. The uplift applied to the national funding rate for the Adult Education Budget (AEB) in London and the West Midlands in 2022-23, for instance, was at least double that on offer in Greater Manchester and Liverpool City Region, while other Combined Authorities provided no uplift at all.

The report also argues that Combined Authorities should focus on commissioning provision rather than seeking to directly control it, and points out that while employers rightly have a major role to play in strategic skills planning, a wider range of social issues should be factored into the process.

The report, authored by the LTE Group Centre for Policy and Research, calls for:

• the £7,000 pay gap between teachers in schools and colleges to be eliminated within five years to allow further education providers to recruit and retain the high-calibre teaching staff needed to train the future workforce with the up-to-date skills required by employers.
• guaranteed inflation-based annual funding uplifts for all apprenticeships and AEB-funded provision to allow providers to continue offering high-quality training, while protecting Combined Authorities’ ability to adapt their own funding rates and rules to respond to regional need.
• Local Skills Improvement Plans to draw on insight from a broader range of areas, such as migration trends, regional health data, levels of in-work poverty and the need to reintegrate individuals released from prison back into the workforce, rather than narrowly focusing on the needs of employers.

The Autumn Statement confirmed new devolution deals for Cornwall, Hull and East Yorkshire, Lancashire and Greater Lincolnshire. With deals already in place in major urban areas such as the West Midlands, West Yorkshire, Liverpool City Region and South Yorkshire, some 57% of England’s population will be covered by devolution by 2025. This represents substantial progress toward the government’s commitment to extend devolution across the whole of England by 2030.

John Thornhill, CEO of LTE Group, said:

“As a national group of post-16 education and skills providers, we are proud to be working with regional and national policymakers across England to prepare the next generation of skilled employees for the workforce, driving the economic growth that regions across the country so badly need.

“Across England, Local Skills Improvement Plans (LSIPs) are setting out the skills gaps and priority sectors where the pipelines must be strengthened. But there are issues to be ironed out. Providers are grappling with the challenge of how to achieve the high ambitions for skills provision they share with politicians and businesses, while ensuring that no parts of the country are left behind as a result of an increasingly fragmented policy environment – this, surely, would be the polar opposite of the aspirations behind the Levelling Up agenda.

“With this report, I hope that LTE Group’s insight into the challenges we face, the opportunities in front of us and how we can grasp them will help the next government – whichever political party goes on to form it – to make skills devolution the policy success which communities across England so desperately need it to be.”

Dame Ann Limb, chair of the Lifelong Education Institute, said:

“This report makes a vital and significant contribution to the current skills debate. It tackles the key issue of the next decade – namely how to square the circle of variable regional devolution across England with maintenance of high national standards in qualifications as well as meeting employers need. It proposes pragmatic and equitable policy interventions which mayors and MPs alike would do well to heed.”

Kirstie Donnelly MBE, CEO of City & Guilds, said:

“This is a timely contribution to the ongoing debate around effective and impactful support for skills development across the UK.  As we have highlighted through our own Impact Report and the Future Skills Coalition collaboration, there is a need for a National Skills Strategy but with the flexibility for localisation and attention to regional priorities. 

“We must however keep a careful eye on the unintended consequences of differential investment to ensure there is still a fair deal for all and we do not let a dominant stakeholder focus dilute the needs of other groups.  The productivity and social mobility challenge will require a balanced response that is kept under constant review with the opportunity to recalibrate if needed.”

David Hughes CBE, CEO of the Association of Colleges, said:

“Devolution is having a huge impact on the way in which education, skills and training are delivered across the country, and this report is a welcome and very useful addition to the conversation about how to ensure it best delivers for communities.  

“This report supports the central ask in our Opportunity England report for a more coherent and planned devolution to deliver clearer and better pathways and offers for learners and employers, more efficiency through collaboration and simplicity, and to ensure that decisions about what are needed are made where they will impact.”

Recommendations

1. Prioritise commissioning, not control

A framework to bring commissioners together in a coordinated way, while retaining colleges’ autonomy to balance the demands of national and regional funders as well as their own stakeholders and governors, would enable colleges to flourish as anchor institutions at the heart of their communities.

2. Facilitate coordinated post-16 capacity planning

In each Combined Authority region, a strategic capacity planning process, bringing together FE providers, schools and national and regional commissioners, should take place annually, to ensure that capacity can meet current and future demand – and that no student misses out on a place in post-16 education or training, whether they wish to pursue an academic, technical or vocational pathway. Closer coordination between capacity planning and capital funding processes across funders would facilitate more strategic, long-term planning.

3. Ensure funding stability – while enabling innovation

Guaranteed inflation-based annual funding uplifts for all apprenticeships and AEB-funded provision, alongside the protection of Combined Authorities’ ability to adapt their own funding rates and rules to respond to regional need, would provide a sustainable framework for the high-quality education and skills provision needed to boost regional economies and drive up national productivity.

4. Guarantee fair, sustainable pay

Colleges, representative bodies and unions should form a working group to develop a new approach to pay and conditions in the sector to attract the high-skilled professional specialists needed to pass on industry-standard skills to young people across England. The next government should commit to closing the gap in average teacher pay between schools and colleges within five years.

5. Ensure the employer-led system takes a broader view

As well as exploring current and projected growth areas and skills gaps, LSIPs should draw on a broader range of evidence when making recommendations for future skills provision. This should include migration trends (both within the UK and internationally), physical and mental health in the wider community and the need to address in-work poverty and support over-50s back into the workforce. The planned Prison Education Service should also be closely aligned to regional economic priorities through collaboration with Combined Authorities.