Going further: The case for investing in Further Education and adult skills

Further education (FE) and skills are vital to delivering the government’s levelling up agenda. Low skill levels are a key factor in explaining the prevalence of low pay and progression in England. Skills gaps and poor skills utilisation have also both played a part in low and stagnant rates of productivity since the 2007/8 crisis. Furthermore, these challenges are all unequally distributed: the North - and the so called ‘red wall’ seats - consistently suffer disproportionately from low pay, low skills and low productivity. This means that driving higher skill levels and better skill utilisation is crucial to the government’s levelling up agenda.

Skills policy is also crucial to our ability to ‘build back better’ after the pandemic. Unlike the 2007/8 economic crisis, the impact of the Covid-19 downturn will be felt disproportionately in the labour market. We are facing the worst jobs crisis in a generation. Notably, IPPR finds that up to 1 million people on furlough are in jobs that will not return after Covid-19. We find that these people are significantly less likely to have qualifications than the general population. In total, up to 130,000 of these people do not have equivalent to a level 2 qualification (GCSEs) and a further 250,000 do not have a level 3 (A levels). Our ability to support people who lose jobs in these sectors depends on the support available to them, to help them move into growing sectors.

Policy recommendations:

1. Commit to increasing per pupil spend for 16-19 years in colleges and sixth forms from £5,200 today to £8,300 by the end of the parliament to help increase contact hours, increase staff pay, reduce college deficits and introduce a new ‘disadvantage premium’ for low income students.
2. Immediately establish a Job Training Scheme (JTS) as part of the ongoing reforms of the Job Retention scheme. This could provide a training budget worth around £4,000 for the 1 million people currently on furlough in jobs that IPPR analysis estimates are in sectors unlikely to rebound in 2021. This would cost up to £1bn.
3. Immediately suspend conditionality on people on Universal Credit who want to or are retraining as this currently discourages people from training whilst on UC by pushing them back into the labour market regardless of skill level.
4. Build on the recent announcement of a level 3 entitlement for adults with the introduction of a maintenance loan on higher education terms for this group. Over time this should extended to all people studying for their first level 3, 4 or 5 qualification.
5. Provide additional funding to fully fund the training component for apprenticeships for non-levy paying firms and introduce greater conditionality on the expenditure of the levy to target it at younger people.
6. Invest in colleges as key institutions in supporting the ambitions of people, productivity and places. This should include providing funding to support colleges to form local networks and take on the role of innovation/skills hubs.