Investment in learning by individuals was meant to go up with FE loans, despite FE budget cuts. But latest figures show the system isn’t working, explains Stephen Evans.

Learning and skills have to be centre stage for the new government — helping people to achieve their ambitions; businesses to grow; and our economy to succeed.

So it is a national problem that the UK ranks 15th and 17th of the 34 Organisation for Economic Co-operation and Development (OECD) nations for literacy and numeracy, 19th for GCSE-equivalent skills, and 24th for intermediate skills (A-level equivalent). We rank somewhat better for degree-level skills, at 11th.

However, it is equally clear there will be much less public money around. Unprotected departments, such as business, innovation and skills (BIS), are likely to have cuts on broadly the scale seen in the last five years, where the FE budget was cut by around one third.

The cuts in the FE budget were accompanied by the introduction of Advanced Learning Loans and, while we await the details, many expect these to be extended below the age of 24 and for learning below level three.

Low take-up of FE loans to date and the lack of wider coverage of this is worrying and disappointing

But Advanced Learning Loans are about more than making cuts. They are intended to help increase investment in learning and skills by individuals — a longstanding public policy aim. And to put more power in the hands of individuals to shape provision to their needs. The intention is that, with some ‘skin in the game’, individuals will make more active choices for provision that will help them earn more and build their careers — getting a return on their investment.

So Advanced Learning Loans really matter.

This makes low take-up to date and the lack of wider coverage of this is worrying and disappointing. We have worked hard to shine a light on this. But latest figures show, despite a recent increase, that take-up remains relatively low.

The result is that in 2014/15 there were just over 60,000 applications for Advanced Learning Loans. For 2015/16, the Skills Funding Agency has £498m allocated for such loans. Given the average loan size is £1,160 this would require up to 430,000 people to take out loans in 2015/16 (although some people who first took out loans last year may be in the second year of a course, so fewer new applicants are likely to be required in practice). This would be a sevenfold increase.

So where do we go from here? We think there are three key reasons the current system isn’t working and that need to be tackled.

Firstly, the link between learning and earning. People are more likely to invest in their learning if they can see how it will lead on to greater earning and link to their life and career goals. Yet information on the career and earnings destination of FE learners is not well developed, particularly compared to higher education.

Flexibility in learning is second. People (and employers) often want shorter, tailored provision, including modules of qualifications. And they want it delivered flexibly, fitting around their life and work. But the loans system funds only full qualifications, many of which are offered on fixed term timetables. Over time, this could build into a wider system of Personal Career Accounts.

And thirdly, devolution. Learning and skills will have greater impact where it is integrated with wider support for social inclusion and economic growth — in other words matched to employer and local needs. We want to see cities and regions given power to provide wraparound career advancement support and tailor provision to local need.

Our skills base has long held us back as a nation. We need to do better to improve our economy and boost social inclusion. Advanced Learning Loans will be important in doing this, but they’re not working as they need to at present. We need action so that people get the opportunities they need to improve their skills and build their careers.