The government, employers, and individuals should inject an extra £2.2 billion every year over the next decade to restore skills attainment to 2010 levels, boost the economy and save £8 billion annually for the taxpayer, a think tank has said.
Learning and Work Institute (L&W) has today unveiled a decade-long roadmap to reverse government and employer cuts in training investment and undo the decline in adult literacy and numeracy skills.
In a new report, the think tank urged for an expanded lifelong learning entitlement, an incentivising skills tax credit and reiterated proposals for a “flex and match” skills levy for employers to spend part of their money on non-apprenticeship training.
It comes a week after prime minister Sir Keir Starmer announced a new target for two-thirds of young people to enter higher-level learning by age 25.
L&W said that any plan to deliver this ambition would need to triple level 2 and 3 achievements every year for a decade.
The Department for Education last year calculated around one in five 16 to 64 year olds – nine million people – have low literacy or numeracy, and millions more have low digital skills.
By 2035, the UK should aim to have nine in ten adults (3.5 million more people) with essential English, maths and digital skills and an extra three million more people to have at least a level 2 qualification.
Stephen Evans, L&W chief executive, said the ambition arose after their research revealed that the UK had growing inequality in the proportion of people with essential skills compared to other OECD countries.
“A step change in effort from government, employers and communities to create a lifelong learning century could reap the rewards of a £22 billion growth prize,” he added.
“It’s time to rewire our learning and skills system, focusing more on outcomes, encouraging employers to invest more, and harnessing the digital learning revolution.”
10 years of effort
L&W reported that population growth has meant stretched and reduced public spending has caused a 22 per cent real terms spending fall per 16 to 64-year-old since 2010-11, from £154 each year to £120.
“Reversing this fall would mean an extra £1.6 billion per year,” the report said.
It also calculated a 20 per cent drop in government spending on adult skills in England between 2010 and 2025.
“This has to change,” the think tank said.
An extra £2.2 billion would need to be spent on lifelong learning to reverse the cuts. This would come from a mix of government funding, employer spending and individuals.
Around £1.4 billion should be earmarked for level 2 and 3 qualifications, assuming each costs £5,000.
Another £800 million should go towards essential English, maths and digital skills qualifications, based on a £1,800 per qualification.
The report concluded: “Lifelong learning can help turn changes in demography, technology and society shifts from a gathering storm to a time of opportunity. That will take a ten-year concerted effort from people, employers, community organisations and governments. The prize from this is great, the cost of inaction large.”
The report proposed redirecting funding, such as £140 million of spending on level 7 apprenticeships and “already highly qualified people” on skills bootcamps to learners to achieve essential skills and up to level 3.
It added that the £60 million expected annual revenue from the immigration skills charge could add to the public spending on skills.
L&W also recommended an “expanded” lifelong learning entitlement that would give extra help with the costs of learning, including maintenance loans for level 3 in “priority areas” and allowing training up to one year while on universal credit.
The think tank proposed the expansion should also include a new learning account, where the government provides every learner with an initial £5,000 toward course fees, and “targeted” top-ups for career changers.
“[The LLE] should be paired with a strengthened right to request time off to train so people can come back to their current job should they decide while training that they did not want to switch careers,” the report added.
World-class skills base could help employment rate target
L&W laid out several targets for adult attainment by 2035.
One target was to aim for at least nine in ten adults having essential skills like functional literacy, numeracy and digital, equating to an extra 3.5 million people, over 3 million of which would be in England.
To achieve these, the report estimated that literacy and numeracy skills achievements would need to double to 600,000 per year for a decade, with full level 2 and 3 achievements trebling to 430,000 per year.
The economic benefits, L&W said, would equate to a boost to the economy of £22 billion.
It explained that there would be 170,000 more people in work, saving £7.8 billion annually to the taxpayer per year once delivered.
This would also contribute 10 per cent of the employment growth needed to reach the government’s 80 per cent employment rate ambition.
But the report added that the benefits are “likely to be underestimates” as researchers looked purely at employment and earnings impacts.
“It doesn’t include potential spillover impacts of a more highly skilled workforce on innovation, investment and the productivity of other workers, or social outcomes like health, or impacts of learning that don’t result in full qualifications,” the report said.
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