How skills policy can energise the modern industrial strategy
The failure of successive governments to design and implement effective reforms to technical education in the UK has been well documented. Its legacy, according to the current government, is a complex, confusing system of technical education which ‘does not deliver either for individuals, for the skills needs of employers, or for the wider economy’.
It is unsurprising therefore, with Britain languishing close to the bottom of numerous international technical league tables and no end in sight to the productivity crisis, that the government’s recently released industrial strategy green paper had technical education right at its heart. Following the inefficacious tinkering of previous governments, Theresa May seems determined to get it right once and for all.
The importance afforded to an improved system of technical education is a welcome recognition of its ability to simultaneously deliver much needed increases in incomes, productivity and social mobility. For this to happen, the industrial strategy must reflect the needs of employers in two ways: it must ensure not only that the skills produced in technical education are of a sufficiently high quality to make British businesses competitive, but also that it produces enough workers with these high quality skills in the right areas. On the first, the green paper identifies clarity and employer engagement as paramount, lamenting the complexity of the existing system, with students facing a ‘bewildering choice of thousands of courses’ along progressions paths that are ‘insufficiently clear’. The government argues that a simplified system of 15 core technical routes will improve educational outcomes, with employer panels to design and develop the new qualification requirements to be up and running by the spring.
It is hoped that this approach will improve the quality of technical courses and in turn help deliver the ‘long-term surge in skills that this country needs’. However, some technical roles are more in demand from businesses than others and this may well vary across different areas of the country. As such, any skills surge – if it is to be the most effective and efficient use of taxpayer money – must be sensitive to these variations. Centre for Progressive Capitalism analysis has shown that the country is suffering from a number of technical skills mismatches, with chronic undersupply of some courses relative to employer demand contrasting with swollen oversupply of others.
Analysis of job vacancy and FE course data by the Centre suggests that in one Local Enterprise Partnership in the midlands, there were approximately 3,000 more manufacturing operative job vacancies than there were relevant FE course completions in 2014/15. Conversely, there were around 1,000 more FE course completions for sports and fitness instructor roles than there were job vacancies. Of course, part of the surplus in these kinds of roles can be absorbed by higher rates of self-employment. Yet this analysis nonetheless suggests that, while clearly important, when it comes to filling skills shortages, raising quality is only half the battle. Encouragingly, the green paper does acknowledge the need to identify and address sector-specific skills gaps. However, an effective strategy must be cognisant of not only under-provision of certain courses but also of over-provision of others.
The industrial strategy must empower prospective students and technical course providers to make choices better aligned to the realities of local labour markets. On this, good data is key. Such an approach would be in keeping with the broader message of the industrial strategy. Despite fears of a return to the state ‘picking winners’, the green paper confirms that the government sees an effective modern industrial strategy as one which enables the smooth functioning of markets rather than one which seeks to circumvent them. The 15 simplified technical pathways may well improve market function, but local areas need to be equipped with the data necessary to respond effectively to local variations in the levels of employer demand for the skills these pathways will create. The Centre believes that the most effective way to do this would be to arm local enterprise partnerships with detailed, localised data on the relationship between the supply and demand for technical skills in their area. This can then be used to inform course provision decisions.
In the meantime, can the government’s flagship policy of providing 3 million apprenticeships by 2020 fill the technical skills gap? As argued above, Centre analysis of skills mismatches across the country makes a strong case for a more nuanced, localised and evidence-led response to the technical skills deficit. There is a danger that the government’s apprenticeships policy will take a sledgehammer approach to a problem perhaps better suited to a surgical knife.
If apprenticeships are to fill the gaps, they must be better targeted at areas of under provision. For example, in another midlands LEP, there were only around 180 apprenticeships completed in 2015/16 to counter an undersupply of 3,360 IT engineers and technicians left by FE courses relative to job vacancies. However, there were 440 apprenticeships completed for hairdressers and barbers roles, for which there were already almost 400 more FE course completions than job vacancies. Overall, an estimated 23% of all apprenticeships in the LEP were completed in areas that were already experiencing an oversupply of FE courses relative to vacancies.
As debates about structure rumble on, it remains clear that further education is still perceived as intrinsically inferior to higher education. More must be done so that in the eyes of prospective students, further education is recognised as a legitimate route to prosperity in its own right, rather than the default choice for those deemed not ‘intelligent’ enough to go to university. It is perplexing that this is still the case, especially given that salaries of technical roles compare more favourably with those of many graduates. Centre analysis estimates that the average advertised salary of technical job vacancies in the UK was more than £30,000 in 2015/16, whereas, according to a recent study by the Institute for Fiscal Studies, more than half of creative arts graduates have earnings below £20,000.
Providing young people with the right information about what kinds of careers stemming from technical education are available in their area and the salaries they could earn – not to mention the levels of student debt they could avoid – would constitute an effective strategy for combatting the misplaced sense of inferiority that continues to taint further education. The green paper calls for better careers guidance, but the only way that this will be effective is if it is armed with comprehensive local data. With the closure of the UK Commission on Employment and Skills later this year, the government’s true commitment to investing in this type of data seems to be wavering.
The green paper represents a key step in the right direction for reforming technical education in this country, but there is more to do. At last year’s conservative party conference, Theresa May outlined her vision for a post-Brexit Britain, built on a society and an economy that works for everyone. If this vision is ever to materialise into anything more than catchy political rhetoric, proper investment in the sort of localised data necessary to develop a dynamic and inclusive market for technical skills will be vital. Such an approach – which the Centre is fully committed to supporting – would surely energise any modern industrial strategy.
The image is by Pat Guiney, published under CC BY-SA 2.0