In its latest report, the Centre for Progressive Policy (CPP) warns that we must improve the way the skills system serves young people in education and adults in work if we are to drive inclusive growth.

CPP analysis finds that young people are struggling to navigate through the skills system and on into good work. For too many, low skill, low pay work remains their only option. Falling behind at an early age is hugely costly in terms of future progression and earnings potential: for learners who do not achieve a Level 2 qualification by the age of 18, almost three in five will not by the age of 25 either. These young people are then locked out of good work and decent pay.

Even for those able to gain a Level 2 qualification, progression routes to higher paying Level 3 qualifications are often unclear. Just 22% of those who completed a Level 2 apprenticeship in 2014/15 progressed to a Level 3 apprenticeship within 12 months. As such, an estimated 37,530 16- to 18-year-olds miss out on a £2,100 boost to their earnings in the first year alone.

In addition, too many adults in work lack the skills to progress out of low pay. This is compounded by a 34% decrease in public funding for adult skills and a fall of 6% in per employee private sector expenditure on training since 2011, leaving the UK languishing near the bottom of EU tables.

Our analysis also suggests significant local level variation in terms of positive engagement with the skills system. An adult completing a further education course in some areas of the country has more than a one in three chance of it leading neither to a sustained job nor further learning. In other areas, this chance is as low as one in 10.

The report warns that history is at risk of repeating itself: low pay, low skill adults in the Midlands and North of England as well as parts of Scotland are expected to be worst affected – the same areas that were hit hardest by deindustrialisation in the 1980s.

The structure of the labour market is changing, and the skills system must react. CPP estimates that between 2015 and 2017 alone, 600,000 jobs identified as being at risk to automation and industrial change were lost, despite overall employment rising by 800,000.

The burden of this structural change has not fallen equally across the country. This report identifies 29 local authorities with both a higher than average percentage of workers in at risk jobs and falling overall employment. In just two years (2015–17), these high-risk local authorities experienced an average 2 percentage point rise in their economic inactivity rate, compared to an average fall of 0.5 percentage points across the country. These high-risk local authorities are disproportionately in the regions previously most affected by deindustrialisation.

A range of new policy instruments have been designed by government to respond to some of the challenges outlined in this report, including the proposed National Retraining Scheme, forthcoming T- level qualifications and Skills Advisory Panels. Yet, as currently formulated, these do not go nearly far enough. CPP is calling for a wide range of reforms, from raising the income threshold for access to fully-funded adult courses (up to the real living wage), to making local grant funding and business support contingent on providing good jobs.

Andy Norman, CPP Research Analyst, said:

“Despite many examples of excellent practise under ever-tightening financial constraints, our skills system is condemning too many people to lives of low pay and insecurity. We must better equip young people still in learning and adults in low-paid work with the tools they need to access high quality employment and participate in the economic opportunities this country has to offer.”

David Hughes, Chief Executive, Association of Colleges, said:

“This important report sets out the investment our country sorely needs to make in helping people progress in education and skills. The current and future labour market requires people who can learn, adapt and be resilient to change. Sadly, many adults and too many young people entering adulthood have not got the skills and confidence to fit that description. Investment will help, but more than anything we also need to encourage a culture of lifelong learning underpinned by a policy of inclusive growth.”

Tom Hadley, Director of Policy at the Recruitment & Employment Confederation (REC), the professional body for the UK recruitment sector, said:

“There has never been a more important time to energise the debate around preparing future generations for the rapidly changing world of work. Employers and recruitment professionals can play a big role in building better bridges between education and work, but we need a skills infrastructure that better reflects the evolving needs of business and society. Equipping people with the right skills at the right time holds the key to unlocking inclusive growth and ensuring that employers can access the workers and skills they need in a post-Brexit UK jobs market.”

About the Centre for Progressive Policy

The Centre for Progressive Policy is a new think tank committed to making inclusive economic growth a reality. By working with national and local partners, our aim is to devise effective, pragmatic policy solutions to drive productivity and shared prosperity in the UK.

Inclusive growth is one of the most urgent questions facing advanced economies where stagnant real wages are squeezing living standards and wealth is increasingly concentrated. The Centre believes that a new approach to growth is needed, harnessing the best of central and local government to shape the national economic environment and build on the assets and opportunities of place.

The Centre for Progressive Policy is fully funded by Lord David Sainsbury, as part of his work on public policy.

For more information see www.progressive-policy.net / Twitter: @CentreProPolicy

Notes to editors

A key recommendation of the report is to raise the threshold at which adults in work will be fully funded for Adult Education Budget (AEB) courses in the future to the real living wage. The ESFA will be conducting a one-year trial for AEB providers to fully fund learners in work earning below £15,736.50. This is concluded on the basis of a 37.5 hours a week at £8.07 an hour – which is the low pay threshold of 2/3 of the median hourly wage from 2016. CPP recommends that the threshold should be put up to £17,062.50, based on 37.5 hours a week at the real living wage of £8.75 per hour.

The report other key recommendations include changes to the proposed National Retraining Scheme, full implementation of the Baker Clause to provide school pupils with information on the career opportunities presented by vocational education and clearer progression routes within the skills system.

This report forms a key part of our ongoing work as a leading proponent of inclusive growth. The Centre will be presenting the report at our inaugural Inclusive Growth Conference on Tuesday 30 October. In advance of the conference, CPP Director Charlotte Alldritt has written an essay discussing why inclusive growth can rekindle progressive politics – read the full version here.

Contact

For all media enquiries, please contact Thomas Hauschildt, Centre for Progressive Policy on 020 7070 3370 or email thauschildt@progressive-policy.net.