The headlines from the budget were undoubtedly the rises in taxes, spending and borrowing.
This was a mix of realism about what’s really needed to even marginally improve public services, plus aiming for growth through investment. There was also some welcome new funding for further education and new trailblazers looking at how to get more young people into work or learning.
But beyond the headlines, battles are looming between big ambitions and limited funding.
The results of these battles as we head toward a multi-year spending review in spring 2025, along with decisions on how ambitious policy will be, will help shape our path for years to come.
Here’s five things to look out for.
The end of austerity for adult skills?
The number of adults improving their skills has halved in England since 2010 as budgets have been cut. Reversing that would be good for opportunity and growth, two things the government says it cares about.
But the Office for Budget Responsibility says their spending plans involve a 1.1 per cent real terms cut each year in unprotected areas, including adult skills, from 2025-26. That would mean another £180m lost by 2030, leaving spending £1.1 billion lower in real terms than in 2010. We need more investment not less, but the spending review is going to be difficult.
An ambitious growth and skills levy or stealth tax for the Treasury?
This year the government will take £846 million more from the apprenticeship levy than it spends. We estimate that could rise to £1.2 billion by 2030 if they only raise apprenticeship spending in line with inflation.
While lots of people want the whole of the levy spent on apprenticeships, realistically it’s that extra £319 million that I think could be in play. Can the government be persuaded to spend that on valuable training focused on priority areas and groups that too often miss out, like young people and people with low qualifications?
More devolution on the way?
The budget commits to a devolution white paper to widen and deepen devolution. That could mean more areas of England getting more learning, skills and employment responsibilities, and greater responsibilities for areas that already have or will soon have them.
The chancellor namechecked West Midlands and Greater Manchester, confirming they’ll get a more integrated budget, trying to move away from the array of acronyms and ringfences tying funding in knots today. How can we gain the benefits of integrated funding and local tailoring, without increasing admin burdens or complexity?
Where are the people and skills to deliver the big ambitions?
The chancellor’s mantra was ‘invest, invest, invest’. This includes moving to clean energy, building 1.5 million homes over the next five years, investing in infrastructure, local growth plans and a new industrial strategy and so much more.
Taken together, the aim is to boost growth across the country. All of these require a skilled workforce. How can we make workforce and skills a golden thread running through these plans, will Skills England be enough?
What about employers?
There are big tax rises on employers (though most of the national insurance rises will eventually feed through into lower pay rises for employees) but also big expectations.
The government wants them to recruit unemployed people, train their workforce, and invest in the future. But our research shows employers are spending 26 per cent less on training than in 2005. Changing that requires a more fundamental shift than simply putting employers in the ‘driving seat’ of public funding. Will anyone, nationally or locally, grasp that nettle?
As a broader point, I’m hoping that individual departments will recognise the importance of learning. That includes promoting health and wellbeing and so reducing NHS pressures, supporting communities and integration, and helping people back to work to meet the government’s 80 per cent employment rate ambition.
There was lots to welcome in the budget. And longstanding problems of low growth and stretched public services cannot be solved in one go. But reading between the lines, it’s easy to see the clashes ahead. We need ambition to win out.
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