The skills sector needs an effective market strategy that drives employer investment and supports providers to deliver high quality at scale, says Pippa Morgan.

This week saw the launch of the government’s industrial strategy – and it was great to see skills feature so highly in it. For businesses, a stable, long-term strategy designed to support the fundamental drivers of our economic success must address the question of training.

There was a lot to like. From strong support for technical education, to looking at building more level four and five skills, to progressing with post-16 maths, many ideas in the paper chime with business priorities.

But our challenge in skills hasn’t been lack of policy, it’s been effective delivery. How the system works on the ground – how it influences the behaviours and meets the needs of learners and businesses – is what really matters. The government’s approach must be built on understanding what drives employer investment and supports providers to deliver high quality at scale; rather than an approach that begins with Whitehall and works its way out, we need a more effective market strategy.

Our challenge hasn’t been lack of policy

The urgent need for this kind of approach is evident with the apprenticeship levy – now little more than two months away – and three key related issues being raised by companies.

Firstly, unclear definitions of success. The pages of FE Week constantly detail gloomy predictions for the new system, with ‘Employers turn backs on young’ a recent example, and there are certainly some causes for concern. We need to be honest that the aim of the reform is that provision changes and adapts to demand.

We can be clear about what success looks like: it will be making sure provision grows in areas that give learners real returns, through good careers. That will involve challenges and must avoid defending existing provision, simply because it exists.

Secondly, preparedness. From transfers to the new agreements, we have been working with officials to improve key aspects of the system in recent months. But policy and system design has been taking place when companies needed to be planning, creating schemes and recruiting. Of the 21 months since the levy was announced in summer 2015, it’s taken 18 months and counting for government to design, build and prepare itself for the levy – giving firms and providers an incredibly short window of clarity before the system goes live. And large parts of the longer-term system – rules around transfers, the Digital Apprenticeship Service, and the role and influence of the Institute for Apprenticeships – are not yet ready.

What we now need is a proper strategy for the skills market

Employers and providers have tried to fill this gap as best they can, but contracts written last autumn are currently being revisited to ensure they remain compliant with the system as we understand it now.

For a system that requires the support of employers and providers to succeed, this timeline breeds growing frustration in many businesses. This is particularly true in the devolved nations, where progress on real system reform – and interoperability with the others – is especially slow.

The third key issue is how the levy will change business behaviour. The CBI has always been clear about the real risk that, if poorly designed, the levy could have perverse incentives, such as firms training fewer apprentices, or being forced to rebadge existing provision to reclaim levy money.

To encourage the growth of better provision, the system of 2017 will need to adapt and adjust as we go through the early years and transition into a whole new system. This must start with a proper transfer regime that allows firms to share more than a sliver of their levy money within their supply chain or sector.

An effective regime for allowable expenses – such as time developing much needed new standards – will also help turn those perverse incentives round. If we really care about delivering a skills base for our new industrial strategy, then this is essential.

What we now need is a proper strategy for the skills market that deals with these issues, giving employers confidence to invest, offering providers stability throughout the substantial changes they need to make, and challenging the system where change doesn’t happen. The partnership approach of industrial strategy is the right road, but it is very late in the day to get the levy on track.


Pippa Morgan is head of education and skills policy at the Confederation of British Industry

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