Let’s prioritise skills spending on level 4 to level 7

25 Jun 2022, 6:00

Suggestions that training spend should be limited to those with the lowest qualifications are misguided, writes Mandy Crawford-Lee

In the past couple of months, there has been some very useful analysis out from the Learning and Work Institute (LWI). This includes one of its most recent reports called ‘Raising the Bar’, on the lack of employer investment in skills.

This report is more balanced than the LWI’s previous report ‘Bridging the Gap: Next Steps for the Apprenticeship Levy’, where it proposed prioritising the apprenticeship levy pot by age or level. This proposal thankfully failed to gain traction.

The University Vocational Awards Council concurs with the excellent analysis in the ‘Raising the Bar’ report on the need to reverse the decline in employer investment in skills. We also sympathise with the view that action is needed to train low-paid and low-qualified employees who have missed out on training.

Points on the short-termism of skills policy in England are equally well made.

Crucially, LWI is also right that we need to focus on how to increase employer investment in skills.

However, with the skills gap and cost of living crisis making these issues more important than ever, we also want to raise the following points.

Allow training for older and more skilled employees too

If we’re really interested in raising productivity, employers should be allowed to invest in the development of the skills their organisations need to raise performance.

Unfortunately, the LWI does not seem to accept this argument and makes recommendations that undermine this approach.

These include proposals to restrict employer spend to train older employees or for higher-level skills programmes.

But it’s not market failure if employers spend their training budget on developing the skills needed to raise productivity.

It’s not market failure if employers spend their training budget on what’s needed

LWI’s contention that employers need to spend more on training those with the lowest qualifications will elicit sympathy. But I doubt anyone would object to more being spent on the initial and ongoing training and development of a nurse (level 6) than a retail role (level 2).

We believe LWI’s proposals to restrict employer apprenticeship spend for the over-25s and for higher-level programmes would undermine the social mobility it seeks to champion.

What is needed are more work-based opportunities and career pathways for individuals to progress to technical and professional level jobs.

[x-head] Prioritise training on level 4 to level 7

A tax credit to incentivise employer investment in training is worthy of exploration.

But focusing the tax credit on functional skills and limiting coverage up to and including level 3 is a puzzling suggestion. Surely the government, not employers, should pay for training that rectifies a failure of the school system?

If we want to develop as a high-skill, high-wage economy, spend should be prioritised on training at level 4 to level 7.

The government should invest

Three groups benefit from investment in skills: society, employers and individuals.

We’d suggest that government covers the cost of those skills that society would expect an individual to acquire through compulsory education alongside incentivising spend on training in areas of need.

It should also ensure the skills system works effectively by facilitating regulation, quality assurance and the operation of the apprenticeship and loans systems.

Meanwhile employers’ primary role should be to invest in skills to enhance performance and productivity and support progression to technical, managerial and professional level occupations.

Think carefully about an apprenticeship versus skills levy

The argument that the apprenticeship levy should be replaced by a skills levy may be superficially attractive.

But LWI may wish to explain why we should prioritise subsidising SMEs to pay the wages of restaurant staff and hairdressers, while restricting the ability of the NHS to use its apprenticeship programmes and levy payments to train nurses.

We appreciate LWI’s focus, but the skills debate is, however, far broader.

Proposals that support young people and those with lower-level qualifications, but which undermine investment in training to raise productivity, are not the way forward for the skills agenda.

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