A true ‘skills revolution’ requires Conservative MPs to stop talking and take action

The writer is a Labor member of the House of Lords Special Committee on Youth Unemployment, which Skills report for each young person was released last week. Lord Clarke, another member, also contributed to this article.

Skills reform is in the air again. The Government Skills Bill is currently under consideration in the House of Commons, with transformative amendments added by the House of Lords. But it is independent-minded Conservative MPs who will decide whether or not we get real change, defying the government and voting to approve our proposals.

What is at stake are the skills of half of our young people, the 50% who never go to college. By the age of 18, almost 22 percent of 18-year-olds are neither in education nor in a job involving training. According to many economists, this lack of professional skills is the main source of high wage inequality in our country – and our low national productivity.

Our Lords’ report on youth unemployment tackles this issue head-on. The fundamental problem is the enormous shortage of places for the “remaining 50%” to study and train. The contrast with the academic background is obvious. In universities, the basic principle (since the historic 1963 Robbins report on improving access to higher education) is that there must be enough places for every qualified young person who wishes to study. But for the rest, there is no comparable provision.

It is one of the greatest injustices in our public life, and of great ineffectiveness.

Take the funding first. Downstream of the academic course, it automatically follows the student. If a sixth or university takes a student, the money automatically goes back to the institution – along with the student. This produces a dynamic system where providers are constantly thinking about new demand they might meet, knowing that if their idea is good, the money will flow. In contrast, in higher education establishments, which mainly offer vocational courses, funding is capped by the Treasury. Unfortunately, funding for the FE sector for people over the age of 18 is in 2021/2 half of what it was in 2010/11. By 2023/4, the Expenditure Review will have closed only a third of the deficit in real terms.

Higher education should be funded in the same way as the academic track – the money should come automatically (at the national tariff rate) – for any qualified student studying an approved program. The government has already put in place a lifelong skills guarantee, up to the equivalent of level A for those who have not yet reached this level of qualification. But such a guarantee only makes sense if it is automatically financed.

Likewise, apprenticeship places must be reoriented towards young people. When the apprenticeship tax on employers’ payroll was introduced in 2017, its main objective was to improve the opportunities open to young people. But the opposite has happened. The number of apprenticeships started by those under 25 has decreased and half of all apprenticeships now start after this age.

Much of this is continuing training which should be funded by employers. And the evidence is clear: the benefit / cost ratio is highest for apprenticeships under 25. Thus, at least two-thirds of the apprenticeship money should go to people under 25 who take qualifications up to the baccalaureate equivalent.

For the ‘skills revolution’ promised by the government to happen, there needs to be some big picture, at national and local levels. Nationally, our committee recommends an annual assessment of the skills that will be needed. Most importantly, new local skills improvement bodies should also be required to guarantee enough places to meet the needs of young people in their region.

Finally, there is the question of qualifications. The government is introducing the new occupational T levels as a route to skills through full-time study. But for this to be successful, ministers are proposing to abolish other well-established qualifications like BTEC. Funding for BTECs has already been postponed for a year in response to protests. Destroying what works is madness, very anti-conservative and almost everyone opposes. Parliament should insist that T-levels prove themselves in an open competition.

We call on MEPs as they consider the next steps of the bill to support Amendment 25, which includes the first two key recommendations above: on the automatic financing of the EF and on the allocation of two-thirds funding for apprenticeships for those under 25.

We are at a crucial time, when MPs can decide whether we are having a real skills revolution or just talk about it. Hope they choose well.

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