The next UK government will have to completely reboot the post-18 tertiary education system. Why? Because the current devolved and separate four nations’ skills policy model has largely failed to shift the dial on UK productivity and investment in training.
The reasons are many and complex. In a report commissioned by the Federation of Awarding Bodies, my co-author, Matilda Gosling and I painstakingly audited decades of policy reports and recommendations designed to improve skills. Time and again, we read statements written by successive governments with terms like ‘skills revolution’, ‘world-class’ and ‘gold-standard qualifications’.
We concluded that on the important skills metrics, the UK has been ‘running to stand still’. Since the Leitch Review of Skills reported under the last Labour government, only the target to increase HE participation has been met. We were supposed to be world-beaters in productivity by now. Instead, we are skills laggards.
Real wages have stagnated since 2005. The UK has come second from bottom since 2010 in productivity growth compared to our main European competitors. Investment from employers in training workers has nearly halved over the same period, with a staggering 60 per cent decline in training hours since 1997. We liken all these efforts by policymakers to running up an escalator the wrong way.
You can see this struggle in the data: in the period from 1993 to just before the 2008 financial crash, UK productivity growth increased by 40 per cent. Since that time, it has resulted in only 4 per cent growth according to ONS.
No wonder then that people are feeling worse off, exacerbated by the current cost of living crisis. Yet, talk to economists and about the only thing they can all agree on is the positive relationship between better skills and higher wages.
The UK doesn’t have to accept decline. Poland and Slovenia are projected to overtake British living standards by 2030. Strip away the economic powerhouse that is London and your average Brit is poorer today than a resident of Mississippi – the most deprived state in the US.
The academic, Daron Acemoglu argues that nations fail when they allow extractive institutions to prevail. Prosperity flounders when politicians forget that skills and labour markets are like ecosystems that need to be cultivated carefully.
When you look at the current phalanx of devolved bodies and skills quangos, what we see are far too many extractive regulators and institutions. Our research found that the regulatory burden on the FE and tertiary sector has doubled since 2010. The Office for Students is a prime example, labelled ‘must do better’ by a parliamentary committee recently.
Instead of creating UK-wide bodies to regulate post-18 qualifications and apprenticeships, we have allowed the erosion of the UK’s own internal market by setting up and paying for parallel skills bureaucracies. For British citizens, depending on where they live in these islands, it increasingly means a postcode lottery of support.
A reboot is needed that dismantles the top-down English skills delivery model based on ‘Whitehall knows best’. But that doesn’t mean government getting out of the way.
The UK lacks an industrial strategy with a determined focus on improving skills and productivity. Therefore, it’s time to end the nonsense of so many competing quangos and replace them with a UK-wide approach.
One of our key recommendations is to establish a new UK Department for Employment, Productivity and Workforce Skills. By using the reserved employment powers Westminster retained since 1997, it should be possible to reclassify some policy areas like apprenticeships and national occupational standards as UK legislative competencies.
That doesn’t mean to say that devolved administrations (including mayoral combined authorities) should not enjoy a high degree of flexibility when it comes to implementation. Ministers need to trust the sector more. But it really does make sense to pool stretched resources in a more effective UK national skills mission.
Perhaps only then will we start running up the skills and productivity escalator the right way. Prosperity depends on it.