Budget succeeds in partially reversing cuts to FE funding, but skills system still lacks coherent mission

19 March 2020

By Andy Norman

The situation has clearly dramatically changed post Budget with colleges closing but adult education will be an important part of our long run recovery and we must have a clear vision and strategy for the sector when we come out the other side. The skills system will have a major part to play in delivering long term economic resilience. In this context, here are some of CPP’s post Budget reflections.

This was an important Budget for skills policy. The sector – like many others – has endured severe funding cuts in recent times. But it has also suffered from a lack of a long-term vision and clarity of purpose. This Budget succeeds in partially reversing the funding cuts, but the government once again has failed to set a coherent strategic mission for the skills system.

In terms of funding, the Chancellor confirmed a number of previously promised spending boosts for FE and adult skills. There’s £1.5bn in capital funding for colleges, a £400m increase in funding for 16-19 education and the £2.5bn National Skills Fund. £120m for the eight new Institutes of Technology was also confirmed, as was £95m for T-level providers to spend on facilities and equipment.

It is of course positive that these spending pledges have been locked in. Yet they are not enough to reverse the deep cuts the sector has faced in recent decades. According to data from the IFS, spending on classroom based adult education has fallen from £4.1bn in 2003/04 to £1.5bn in 2018/19. A National Skills Fund worth £500m a year will reverse less than 20% of this cut in funding.

This Budget also does little to provide the kind of strategic vision the system has been lacking. For some time now, successive governments have had a fuzzy and confused overall approach to FE and skills policy. The mission creep seen in the apprenticeship system is symptomatic of this. Having been given too much power to define the purpose of apprenticeships, employers are increasingly using them as a jack of all trades: routes into skilled jobs for young people, upskilling existing staff and retraining workers.

The apprenticeship system cannot fill every type of skills need and currently young people and those from disadvantaged backgrounds are being squeezed out. For example, the share of apprenticeship starts going to people from the most deprived backgrounds has fallen across all levels since 2015/16. Smaller businesses are also being excluded, with the latest DfE figures showing the proportion of apprenticeship starts at small and medium sized employers having fallen from 54% to 39% in recent years. The government must step in to ensure the apprenticeship system focuses on what it does best: acting as a ‘ladder of opportunity’ into high skill careers.

The government now acknowledges there is a problem, with the Education Secretary Gavin Williamson finally calling for a review of MBA apprenticeships. But wider strategic direction set out through creative policy is necessary if apprenticeships are to play the right role in ‘levelling up’ the country. This could take the form of ringfencing parts of the Budget for young people or offering less public funding for degree apprenticeships for existing employees. It was therefore disappointing to see only vague promises for “sufficient funding” for apprenticeships and to “look at how to improve the working of the apprenticeship levy” in this year’s Budget. It seems little progress has been made since the 2018 Budget, which promised to “consider how [employers] are responding to the apprenticeship levy.”

The problems with apprenticeships are a symptom of the lack of clarity and purpose in the wider skills system. Unfortunately, this Budget continues the trend of shiny new schemes being unveiled and quickly shelved. The National Retraining Scheme’s absence from this year’s Budget, for example, suggests its days are numbered, less than three years since it was first announced. Instead, there is a promise to consult on how to use the new National Skills Fund. The half-life of these schemes seems to be decreasing with each successive Budget. No wonder then that employers are clinging to the known brand of apprenticeships for all their skills needs.

The sector urgently needs greater clarity and long-term strategic direction from government. An effective apprenticeship system for young people and adults stuck in low paid work must go hand in hand with clear and stable programmes to upskill and reskill existing staff. But the big questions remain unanswered, deferred to the spending review in the summer or the next Budget in the autumn. And so, while the confirmation of some extra money for the sector is welcome, when it comes to confronting the key strategic challenges, it was a Budget of dither and delay for skills.