One year into the new government and skills policy is being reshaped. Not by legislation, but by the return of industrial strategy as an engine of reform.
When the Department for Business, Innovation and Skills was closed in 2016, responsibility for further and higher education moved to the Department for Education, marking a shift towards a more education-led approach.
Now the pendulum is swinging back: the new industrial strategy, published this week by the Department for Business and Trade, is shaping where investment flows and is fast becoming an organising framework for skills policy.
Here are five things we’ve learned from this week’s publication.
The industrial strategy is now a major force driving choices in skills policy
The so-called ‘IS-8’ sectors it identifies are now at the head of the queue for most new skills initiatives, such as the lifelong learning entitlement, foundation apprenticeships and short courses funded by the growth and skills levy.
This focus on key sectors is something we should get used to. The strategy has buy-in from across government, including the Treasury for which it is a helpful mechanism to force spending choices.
It is deliberately focused on the long term, and this government is both more stable and more ideologically committed to an industrial strategy than the last government to develop one in 2017, so the approach is likely to be in place for the rest of this parliament.
But its sectoral approach is uneven
Looking across the individual sector plans published so far, we see different approaches.
Advanced manufacturing and defence sectors are to benefit from specific investment and new programmes, building on an existing skills package for construction, whilst others do not.
This shows the government is thinking sectorally: responding to those who can make a compelling case for their skills needs and, crucially, are able to be a partner in meeting them.
For other sectors to benefit from similar attention they will need to develop their own proposals; the workforce strategies due to be developed – starting with one for clean energy – are a crucial opportunity for this.
More growth and skills levy flexibility, but this may be it for now
Plans to allow the levy to fund short courses in IS-8 sectors are the first meaningful example of the flexibility many employers and training providers have been calling for.
The strategy’s reference to these being rolled out in ‘waves’ from next spring suggests it will be phased in over several years, potentially linked to the slow growth in levy receipts over the parliament.
But it is difficult to see where funding for any significant further flexibility will come from in the medium term; the £1.2 billion for skills announced in the spending review will mostly be spent on a rise in 16-19 learners and other pressures, and much of the forecast rise in the apprenticeship budget will go towards reforms already announced.
Short courses are a welcome change, but confirm the new levy is falling a long way short of the kind of flexibility Labour promised before the election.
Skills England is just one voice in the system
The industrial strategy includes many references to Skills England but these typically refer to convening stakeholders, and informing and implementing policy rather than deciding it. For example, Skills England is tasked with feeding into new workforce strategies for IS-8 sectors but these will be coordinated and published by relevant departments which will be listening to others too.
Skills England certainly matters. But for all the focus it has received over recent months, it will be just one voice influencing government decisions. Real power over system-wide changes to skills policy continues to lie with the Department for Education and Treasury.
Skills policy is having its moment
Stepping back, it is striking to see how much more the industrial strategy and various sector plans focus on vocational and technical education than higher education.
There were some warm words for universities, but almost no policy.
This reflects the importance the government attaches to building a stronger and more diverse skills pipeline for the high-growth sectors, but also the political benefits of focusing on skills, given that investment in apprenticeships and other forms of training is far more popular than more money for higher education.
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