Government proposals to extend loans to level two and also include learners from the age of 19 were put on hold this week as part of the official response to a two-month consultation launched in June. David Hughes assesses the response and also the future for FE loans.

The Government’s response to its consultation on Advanced Level Learning Loans is, at one level, of hardly any consequence. This is partly because it came out a week before the effective end of the Coalition Government, but also because it results in only minor changes rather than the expansion it might have led to. So hardly worth commenting on, perhaps?

As ever with these things, it is important to read the words carefully, as well as between the lines to appreciate why it is an important response.

The introduction by Nick Boles, the current Skills Minister, sets out clearly that the consultation intelligence gathered will be used as evidence for the Spending Review which the next Government will carry out and which will impact in 2016-17. That’s worth thinking about, particularly in light of the recently announced cut to the Adult Skills Budget.

It’s also worth remembering that the loans were introduced as a means of avoiding even greater cuts. That was in 2010 during what felt like tough negotiations as part of the Spending Review which has led to more than a million learning opportunities lost for adults.

Nobody at that time really wanted loans to be introduced, it was a compromise in which officials and politicians deemed it better to hold onto as much funding for adults as they could, even though the loans were wholly un-tested.

The experience of loans has been mixed, but so far it has to be viewed as a failed policy. The drop in numbers is staggering. Apprenticeships were in, then out of loans: and around half of all loans taken out have been for Access to Higher Education courses (for which the loan is written off if the learner completes an HE course).

Unsurprisingly, the market for part-time, flexible level three and four course has not taken off, very much like the collapse of part-time higher education after loans were introduced.

If loans are not working now, then how will colleges and independent learning providers respond when they are extended? What evidence will be available of what works? Where is the investment in testing and innovation?

For an average college, the business is often not important enough to invest in at a time when cuts are biting all over.

For learners, though, the opportunities to learn have disappeared just at the time when employers are reporting more and more skills shortages and gaps at level three and four.

Our recent Policy Solutions paper, entitled No Limits: from getting by to getting on, also pointed to the almost complete lack of skills and support for the 5m people in low pay.

We proposed a new advancement service for people which would stimulate their demand for skills and help boost productivity. We believe that this would lead to more people progressing onto loan-funded intermediate learning, helping their careers and meeting employers’ needs.

But the reality is that we’ve seen too little action to understand how to stimulate demand and not enough work to find out what would be attractive to learners.

More flexibility, day-release supported by employers, promotion of ‘signature’ qualifications which employers recognise and use of technology could all make a difference. Sadly, this new and un-tested policy has not had the R and D innovation to support it and it is not working.

We need to find out how to make it work, and quickly. The next Spending Review will come at us very soon and the cuts heralded in the recent Budget look brutal.

It is almost inconceivable that loans will not be extended by age (to 21?) and by level (to include level 2?). If loans are not working now, then how will colleges and independent learning providers respond when they are extended? What evidence will be available of what works? Where is the investment in testing and innovation?

Like others, Niace has been shouting about the skills crisis we are already in. The extension of loans will only make that worse unless we find ways to make the loans work.

So, the Government response this week to its own consultation was inconsequential, but there is a storm on the horizon and I don’t believe that we are prepared for it. We need to act fast.