Autumn statement: It’s time for real incentives for skills development

Employers urgently need chancellor Jeremy Hunt to provide real incentives to address skills shortages within their industries and to drive economic growth. In particular, confusion surrounding the apprenticeship levy is a missed opportunity.

Since its introduction in 2017, the apprenticeship levy has undergone a series of changes, and many employers have lost sight of its purpose and how it could help them to tackle skills shortages and future-proof their businesses. At a time when businesses are facing significant commercial pressures, they can no longer afford for so much of the levy to go unclaimed and return to the Treasury unspent.

The chancellor needs to think outside of the box about how to use fiscal measures to encourage more private sector investment in skills development and provide greater clarity too. Businesses know that they need an urgent injection of skills to support them in achieving positive transformations. They need a whole host of skills – business analysts, data scientists, software testers and developers. What they often don’t realise, and don’t have time to find out, is how the current system can help them to meet those needs.

For example, there are currently about 800 different apprenticeship standards in existence, as well as multiple delivery models. It’s not easy for companies of any size, but how can small companies with limited resources be expected to make sense of it all and select the right options?

Meanwhile, many don’t realise that they could reskill existing staff or recruit talented people to complete an 18-month apprenticeship programme leading to an industry-recognised, degree-level qualification. Crucially, they may be unaware that they can work with a specialist training provider to build programmes that fit around the operational demands of their business. 

How can small companies be expected to make sense of it all?

To address these gaps in understanding and encourage more investment in skills development, the Chancellor needs to take a different approach. A key problem is that many businesses are put off by the idea of paying the levy and an apprentice’s salary on top; they see this as a lose-lose proposition rather than a scheme that could support the delivery of their strategic growth plan.

Additionally, many larger employers don’t realise that if they don’t spend their levy funds each year, the money available to them is effectively wasted. They also may not know that while apprentices must be paid a salary, the business isn’t required to pay employers’ national insurance contributions.

Data sourced by FE Week as part of a freedom of information (FoI) request shows that levy payers are spending less on level 2 apprenticeship participation. Spending in this area dropped from £622 million in 2017/18 to £421 million in 2021/22. This needs to be rectified.

The good news is that more is being spent on higher level apprenticeships. This shows that larger employers recognise the value of some of the programmes supported by the levy. There is an opportunity now to build on this and spread the benefits of apprenticeships to businesses, to encourage more to take on people at a lower entry level, who are focused on skills attainment and learning their way to a rewarding career.

When the chancellor makes his autumn statement next week, we would like him to introduce real incentives for employers to invest in skills development. He could do this by transforming the apprenticeship levy into a fiscal benefit, with opportunities for corporation tax relief. Instead of paying a levy, employers could earn tax relief based on their investment in apprenticeship programmes and other training initiatives. This could help to change the way that employers think about skills-based training and the benefits it can bring. To avoid confusion, we also think that the new incentives should be made available to all employers, regardless of size.

But boosting interest alone won’t be enough. As well as providing a real and easily understood incentive, government needs to focus urgently on better signposting. Employers and prospective learners alike need to know where they can go for more information about apprenticeship programmes and the options available to them. The new UCAS search facility will aid learners through this process. Employers likewise should be able to easily access information and advice.

The economic challenges are clear for all to see. Unfortunately, the solutions – though they are here – are far less clear to those who need to implement them. Unless we get this right, and urgently, some UK businesses will find it increasingly difficult to compete, and the economy as a whole will suffer the consequences.

AoC conference: brewing optimism amid a sector finding its voice

The AoC annual conference was back in Birmingham this week. The event is always the main highlight in the FE calendar, with thousands descending to the ICC to hear from senior politicians, sector leaders, students and other inspiring speakers, as well as getting the chance to share best practice and network with colleagues.  
 
It is safe to say that the mood at the conference this year was a stark contrast to the last. Against the backdrop of qualification reform, more than a decade of funding neglect, workforce challenges and much more, the 2022 autumn statement was understandably a bitter pill for the sector to swallow. Less than 24 hours after education secretary, Gillian Keegan took to the stage, we found out that the school sector had been awarded £2.3 billion, with no new funding available for colleges.

This year, however, it feels as though our fortunes have changed. In his opening remarks, AoC chief executive, David Hughes cheekily half-joked that we are now having to say “and universities” instead of “and colleges”.   
 
Rather than seen as moaners, colleges are now being recognised by decision makers as the solution to the nation’s challenges. And while it’s still not enough, the funding is starting to follow.  

In July, we found that colleges had been awarded £185 million through the 16-19 study programme budget, with a further £285 million pledged for next year too to help tackle pay disparity.

In the prime minister’s Conservative party conference speech, he announced a further £600 million would be made available over the next two years to improve teacher recruitment and retention in key subject shortage areas, to increase teaching time by 15 per cent and to improve quality and attainment.  

Over to the opposition. Shadow skills minister, Seema Malhotra used her AoC conference speech this week to reaffirm Labour’s commitment to colleges with pledges to introduce technical excellence colleges, reform the apprenticeship levy into a growth and skills levy and launch a new body, Skills England to oversee a national effort on meeting skills leads. This hasn’t happened by accident. It’s on the back of significant campaigning from the AoC and our members.  

We head into the most critical election of a generation

Colleges are fighting clever, fighting better and fighting together. And it is paying off. We need to continue channelling this newfound optimism into action as we head into the most critical election of a generation. The next year is where we can make a real difference for students, staff, businesses and communities.  

Alongside an impressive main stage line up, we had some brilliant break-out sessions on the key issues impacting our colleges.  

Despite a crowded field, the session that I chaired on local skills improvement plans (LSIPs) on Wednesday morning was packed out, with well over 100 attending to join the discussion on how we can make them deliver. It felt timely, not least with the announcement of a local skills investment fund last week.  

Regardless of the outcome of the next election, we know the direction of travel around devolution and employer engagement in skills is only going to continue at pace. LSIPs are a major part of this space, and it is very early days, so it’s unsurprising that there is lots of variation in practice across the country. 

AoC have been conducting research on LSIPs, speaking to college leaders, MCAs, chambers of commerce and employer representative bodies to evaluate their experience, learn about the challenges and the green shoots of best practice. The conversations have been eye-opening: colleges want genuine and mature partnerships with the other organisations involved and they are frustrated by the lack of national strategy. The role of universities still seems unclear, and there’s feeling that LSIPs sit outside of MCA strategies and the wider funding system.  

The good thing is, there’s broad consensus and commitment to making LSIPs work from college leaders, employer representatives, devolved government and regional stakeholders. Let’s not give into the temptation of scrapping LSIPs, only to have to replace them with yet another local skills plan.

And while we’re at it, let’s make LSIPs the plan – instead of one of far too many. 

GCSE students set to be given exam aids for one more year

Students taking GCSE maths, physics and combined science will be given exam aids for one final year due to the pandemic disruption, under government proposals published today.

This comes despite former schools minister Nick Gibb previously saying there was an “expectation” that formula and equation sheets would not be offered for 2024 tests.

However, a two-week consultation published today proposes that this support continue for exams next summer, “in view of the disruption this cohort of students may have experienced”. 

Ofqual said there was “strong support” for the aids in 2022 and 2023 and that they “had a positive impact on student confidence when preparing for their exams”. 

The regulator’s review of those assessments “indicates that there is no evidence that the functioning of the assessment was compromised”. 

But DfE said in 2025 exams will return entirely back to normal. 

This reflects “that those pupils will have had the opportunity to benefit from more time with support from teachers and interventions such as the National Tutoring Programme, compared to students from the previous two cohorts”. 

Dr Jo Saxton, Ofqual chief regulator, previously confirmed there would be no grading protection in 2024.

This summer’s exams marked the end of a two-year plan to remove pandemic inflation. 

Returning back to pre-pandemic standards means “people know what that benchmark is and what students need to know, understand and do to achieve a certain grade,” Saxton said.

Asked whether it was fair to have no protections next year, she said while the pandemic has “cast a long shadow” it is “further and further in the past”.

Education Secretary, Gillian Keegan said today:“Young people taking GCSEs next year will be the last who experienced two years of national closures during secondary school and it’s right that we recognise that with some additional support.

“GCSEs are young people’s passport to their next stage of education and we must ensure students have the opportunity to show what they know and can do, and ultimately meet their potential.”

The exam aids will also apply to GCSE maths resit students.

The consultation will run until 11.45pm on November 30.

Amanda Spielman’s swansong AoC conference speech

Ofsted boss Amanda Spielman delivered her last speech as chief inspector to the Association of Colleges conference today, ahead of her departure from the role in December.

Here’s what she told the sector in full…

Good morning, thank you to all of you for coming. And to the AoC for inviting me. I’m just going to make a few introductory remarks and then I’m going to sit down with David for more of a conversation.

My first speech on post-16 education as Chief Inspector was at an AoC conference, just a couple of months after I started. So, it’s really nice to be speaking here again as I prepare to hand over the role at the end of the year.

And so I’d like to reflect a little not just on the past year but also on the past 7 years.

In that first speech I talked about the importance of colleges. I said:

“We owe it to the vast number of students passing through colleges every year to make sure their education is as good and as valuable as it can be, and our economy demands that too.”

That’s as true now as it was then. But I also acknowledged some of the challenges this sector faced then, many of which remain. The funding situation, the introduction of T Levels, difficulties recruiting and retaining staff, students with poor maths and literacy they all featured. And of course, this was all before the pandemic and its disruptions.

Progress

In this context, the progress we’ve seen is welcome. Because we have seen an overall trend of improvement. More colleges are now judged good or outstanding.

Two years ago, 8 out of 10 colleges were good or outstanding and now it is 9 out of 10. That is a tremendous achievement and reflects the hard work that you have all put in.

And the early results of our new judgement of skills needs are also encouraging. Almost all the colleges inspected so far are making strong or reasonable contributions. And by the way, reasonable is a positive judgement, not a bad one. And the positive response from the sector to this work has been welcome.

We also welcome the recent government commitment to fund an increase in post-16 teaching hours in the context of the Advanced British Standard, that’s something I’ve regularly talked about as Chief Inspector. It cannot be right for 17-year-olds to get half as much teaching as their peers in schools. From my point of view, that equalisation can’t come soon enough.

And the extra money to retain and retrain more teaching staff is a positive step. But, as government has acknowledged, this won’t be a quick fix. It will take time to build the capacity.

Areas for improvement

Of course, there are areas where we would like to see faster progress.

T Levels are one of those. Our recent review found some good practice but also significant weaknesses. And these are contributing to a high proportion of learners dropping out of courses. The planning for the new Advanced British Standard should take account not just of the T Level experience, its development and implementation, but also the sad history of the diploma.

We also have some concerns about apprenticeships including the number of starts, the quality of provision, and achievement rates.

The number of starts at levels 2 and 3 has fallen by at least half since 2015/16. These should be a significant part of the offer to school leavers. It’s hard to get a precise fix but it does look as though less than 5 per cent of 16–18-year-olds are going into apprenticeships, even though we know there is a lot of unsatisfied demand out there.

And of those who do start, an increasing proportion aren’t finishing. This is partly down to economic factors. But poor provision and a lack of information and guidance are playing a part too. Improving provision needs to be a priority as the quality of apprenticeships in colleges is lagging behind the other things you do.

But I do recognise the uncertainty that’s hanging over the sector with the possibility of defunding and the introduction of the Advanced British Standard (ABS). It is making it hard to look forward and have a realistic view of what the student numbers in different pathways will look like.

What next for Ofsted

We’re already aware that some of you are subject to double regulation, and there’s potential for it for those of you offering Level 4-5 technical qualifications. Further education has always been in a slightly unusual and overlapping place in terms of regulation.

The kind of quality inspection that Ofsted does is a powerful regulatory lever, but it’s fundamentally different from the way that the OfS, for example, operates.

Deciding what is the right model is a difficult question and it’s simply not one that Ofsted can answer. But, we do know the complications and tensions you face and will continue to look for clarifications.

And we are really grateful for the constructive engagement that we get from so many of you, from the AoC, and from the whole sector. It really is valuable and Corrienne was talking about it very well. We’re constantly looking for ways to improve what we do. For example, after consulting with you, we have recently introduced greater depth in our reporting on large and complex providers.

That engagement has also helped us to develop our curriculum reports, which I hope are already proving useful to you. We have already published the report on business education and will be following it up with ESOL, HR, and software development very soon.

Our reports on national curriculum subjects like maths, history, and English have already been downloaded over 700,000 times and are obviously very relevant to much of what you do, not just to schools. We’re using them to train our own staff and of course, hope that they’ll be valuable to you.

So do look out for them. And if you want to learn more about the work of our curriculum unit, we have a breakout session with our HMIs this afternoon.

But given that David and I would very much like to have a conversation; I’ll leave it there.

FE Commissioner sets apprenticeships and bootcamps targets for colleges

The FE Commissioner has tasked colleges with increasing their share of apprenticeships and skills bootcamps.

Shelagh Legrave told today’s Association of Colleges she wants to support colleges to grow their market share in apprenticeships delivery by “at least 10 per cent”. Colleges currently deliver less than a fifth of apprenticeship starts annually despite repeated ministers urging them to stop letting private providers “nick your lunch” in this space since 2015.

The FE Commissioner also said she wants to support colleges to grow their market share of skills bootcamps delivery by increasing the number of colleges involved by “a minimum of 25 per cent”. It comes after FE Week revealed last week that over two-thirds of colleges currently do not deliver the flagship government scheme.

The targets from Legrave, who is now two years in post having previously been the principal of the Chichester College Group, came hours after skills minister Robert Halfon also urged colleges to step up in the skills bootcamps space.

Around £600 million has been earmarked to fund the programmes, designed to quickly get people into employment in skills shortage areas, both nationally and in mayoral combined authorities between 2020 and 2025. There were over 16,000 bootcamps starts in 2021-22, which rose to over 40,000 in 2022-23.

FE Week reported last week that the complex funding models, administrative burdens, and a risk-averse attitude have kept most colleges away from delivering the scheme.

Halfon said today: “I would encourage all colleges here today to apply for skills bootcamp funding and embrace this unique entry point for adult learners.”

Other key performance objectives set by Legrave included reducing the time colleges spent in intervention by 50 per cent, and for 75 per cent of colleges to have participated in some form of “active support” that her team offers.

DfE appoints first FE student support champion

An assistant principal has been chosen by the government as the first further education student support champion. 

Skills minister Robert Halfon announced the appointment of Polly Harrow, assistant principal for safeguarding and inclusion at Kirklees College, to the new role in his keynote speech at the Association of Colleges’ annual conference today.

It follows the appointment of a student support champion for higher education, Nottingham Trent University vice chancellor Edward Peck, last year.

Halfon said: “Further education students need as much support to complete their studies and make a success of their efforts as undergraduates. In fact, they often need more, especially those from disadvantaged backgrounds. 

“For social justice and helping these students to succeed is a key pillar of the ladder of opportunity and an absolute priority for me. 

“That is why I’m delighted to announce the appointment of Polly Harrow as the first further education student support champion.”

A recent FE Week investigation found that demand for student support services has soared in the wake of the cost of living crisis.

DfE told FE Week that the new role will include advising the minister on student mental health and well-being, SEND support and careers and will work closely with Peck and FE Commissioner Shelagh Legrave.

Harrow will “act as a channel between the sector and the government, driving a strategic approach to informing and improving the experience of students at colleges”, Halfon said.

The department expects the role to “improve colleges’ ability to give learners the full opportunity to succeed and progress”.

The role is a two-year appointment, requiring around 25 days per year, DfE said. The funding for the role is £40,000 per year over two years. 

Harrow is well-known in the student support sector, having chaired the National Association of Managers of Student Service (NAMSS) for ten years.

Her college career has included spells at Dewsbury College in the early 2000s as head of additional learning support and Barnsley College as head of personal and social development. She joined Kirklees College as head of progress and inclusion in 2012 and was promoted to assistant principal in May 2019. 

Harrow told FE Week: “I feel terribly honoured to have this role.”

Halfon pleads with colleges to convince more students to take T Levels

Skills minister Robert Halfon has pleaded with college principals to convince school leavers to study T Levels amid plans to replace the qualifications with the Advanced British Standard (ABS).

Halfon told today’s Association of Colleges conference there would be no slowing down of the rollout of the flagship courses, insisting they will be the “backbone” of the new overarching qualification which ministers aim to introduce in 10 years’ time.

Prime minister Rishi Sunak announced the ABS last month during the government’s T Levels celebratory week. It would replace both T Levels and A-levels as a single post-16 qualification in which 16 to 19-year-olds would “typically” study five subjects including some form of English and maths.

The announcement left many college leaders and staff feeling “demoralised”, considering the reform comes only three years after T Levels were launched and with over £1 billion investment.

T Levels have struggled to take off since their launch, with around 16,000 starts between 2020/21 and 2022/23. FE Week recently reported that some colleges have cancelled the courses this year due to low demand, and an AoC survey released last week found T Level enrolments were below expectations in most colleges in 2023/24.

Halfon told college leaders today that T Levels are the “most future proof option you could offer” a school leaver.

He said: “When the ABS was announced, there was some concern that it would come to bury T Levels – ‘what was the point of three years rollout if T Levels were eventually going to be surpassed by something else?’. I’m here to tell you that one supports the other. T Levels will provide the backbone of the Advanced British Standard. We will continue to roll that out with more to come in 2024/25.

“Technical education has undergone unprecedented reform over the last decade. We will continue this programme to simplify the skills landscape and create a stronger set of qualifications than ever before.

“All of this puts T Levels in a better position than any current qualification. As I say they will be the backbone of the Advanced British Standard, making them the most future proof option you could offer 16- to 19-year-olds.”

He then made a rallying call to college leaders for them to persuade more young people to take on the qualifications.

“It’s thanks to all those pioneers here today who championed T Levels from the start that we can see a way to achieving a long-held ambition of parity of esteem between technical and academic education. But we need your continued support. The best advocates for T Levels who can demonstrate that ethic and versatility to upcoming year groups, are yourselves, the principals, the tutors, the teachers.

“Now is the time to persuade the year 11s visiting your open days to consider T Levels and the life changing opportunities they bring.”

The Department for Education is expected to launch a consultation on the ABS this month.

Labour’s levy plan would limit apprenticeships to 140,000 a year, government claims

Expanding the apprenticeship levy so that half of funding can be spent on other forms of training would limit the country to 140,000 apprenticeship starts per year, the government has claimed.

New Department for Education estimations for the plan, which has been proposed by the Labour Party in the buildup to the general election, state that doing so would cost an additional £1.5 billion.

Skills minister Robert Halfon revealed the forecast in an answer to a parliamentary question, tabled by Conservative MP Simon Jupp. He said it is “important that the apprenticeships budget remains ring-fenced for apprenticeships to ensure continued affordability of the programme”.

Labour leader Sir Keir Starmer last year announced his intention to reform the apprenticeship levy so that it can be spent on other types of training if the party comes into power.

It would be called the “growth and skills levy” and allow businesses to use 50 per cent of their funds to fund non-apprenticeship training. But experts have warned this would swallow up funding for small and medium-sized enterprises (SMEs) which are funded by the levy as well as large firms.

In June, then shadow skills minister Toby Perkins committed to additional spending for a ringfenced budget for apprenticeships in SMEs.

Halfon reiterated that in the last two financial years, an average 98 per cent of the Department for Education’s apprenticeships budget was spent.

He said: “If employers were able to use 25 per cent of their levy funds for non-apprenticeships training, the department estimates that this would create an additional cost of up to approximately £700 million per annum.

“Allowing employers to use up to 50 per cent of their funds for non-apprenticeship training would increase this cost to up to £1.5 billion per annum.

“Without making additional funding available to support this flexible use of levy funds, the department estimates that this would require a significant reduction in new apprenticeship starts to approximately 140,000 per annum.”

This is around a 60 per cent decrease on the 336,000 apprenticeship starts reported for the 2022/23 academic year.

The DfE told FE Week it calculated the estimations on the basis that around £3 billion enters levy payers’ apprenticeship service accounts each year, so “assuming the 50 per cent flexibility is fully utilised by employers (i.e £1.5 billion), and that the apprenticeships budget remains around £2.5 billion a year, that would leave around £1 billion annually to support apprenticeships”.

Education secretary Gillian Keegan said today she was “shocked at Labour’s plan to halve the number of apprentices. It’s an attack on working people”.

Data expert and chief executive of the Learning and Work Institute Stephen Evans said the DfE’s estimates are based on “quite simplistic analysis”.

He told FE Week: “The analysis involves dividing the apprenticeships budget by two and four.

“It just says if all large employers use all of their levy and use up the 50 per cent they might be allowed for non-apprenticeship training then this is the gap that there would be.

“Non-apprenticeship qualifications can also be a good thing and it depends what incentives you set up in the system as well – so what rules do you place around what employers can and cannot do, what rules do you place around SMEs.

“It is pretty simplistic and we need a bit more of a nuanced analysis.”

Labour did not respond to requests for comment.

Damian Hinds returns to DfE as minister of state

Former education secretary Damian Hinds has returned to the Department for Education as a minister of state, Downing Street has announced.

FE Week understands he is replacing schools minister Nick Gibb, who resigned this week to pursue a job in the diplomatic service.

Hinds is the sixth person to hold the role in 18 months.

Hinds led the DfE between January 2018 and July 2019, during which time the government completed its reforms to technical education, including forcing through the 2020 introduction of T Levels against the advice of DfE’s most senior civil servant.

Hinds would be 6th schools minister in 18 months

Speaking to FE Week’s sister publication Schools Week after his departure, Hinds spoke of the fact there was “still an awful lot of work to do” on social mobility, and called for greater understanding of the role of education technology.

“Also character and resilience, which I think is such a fundamental part of social mobility and general preparation for life. I would’ve liked to have been able to develop our approach there further.”

Hinds returned to the government front bench in 2021 as minister of state for security and borders, and had served as minister for prisons, parole and probation since October last year.

During last year’s first Conservative leadership election, Hinds co-authored a Times article with Gibb backing Rishi Sunak, titled ‘We trust Rishi Sunak to deliver for our children’s futures.

Sunak lost that leadership race, but became prime minister later in the year after Liz Truss resigned after 49 days in office.