Instability of the skills and employment landscape

Despite the fundamental role that skills levels play in city economic performance, the policy area is far from coherent. Skills policy suffers from three fundamental problems:

1. A lack of stability and a cluttered landscape

Skills policy is characterised by numerous interventions that are short-lived or quickly re-branded. The policy area itself has switched between departments or been shared by multiple departments 10 times since the 1980s. And there have been 28 major Acts related to the development, organisation and structure of vocational and further education and skills training over the same period. In the last few years, changing Governments, priorities and funding cuts have contributed to the large degree of alterations observed. This has resulted in many different organisations holding some level of responsibility for skills design and/or delivery, including: the Department for Business, Innovation and Skills, the Department for Education, the Department for Work and Pensions, Job Centre Plus, the Skills Funding Agency, the National Apprenticeships Service, the UK Commission for Employment and Skills, Connexions Centres, Employment and Skills Boards and Local Enterprise Partnerships.

Three key areas of skills policy to have undergone recent change are apprenticeships, out-of-work skills support and in-skills work support (see Box 3). But despite the many changes observed, issues still exist.

Box 3: Key areas of recent skills policy change

Vocational qualifications

Apprenticeships: Key changes implemented in the last 5 years have included the creation of the National Apprenticeship Service (NAS) in 2011 to increase awareness of apprenticeships and connect learners with employers. Following the Richard Review a number of proposed changes to apprenticeships were outlined in 2013, particularly around designing clear standards and assessment approaches. Groups of employers, known as trailblazers, now lead the way in developing and piloting these changes with the Skills Funding Agency. The final standards and assessment approach are due to be agreed in 2015. Consultations on how best to fund apprenticeships and the degree of control over funding employers should have are also ongoing.
Traineeships: Introduced in 2013 these offer young people who don’t meet the minimum skills requirement for an apprenticeship with a route into this type of training. As well as undertaking a work placement, participants are also given basic numeracy and literacy training.

Out-of-work skills support

The Work Programme: This provides the unemployed with opportunities to improve their skills levels through work placements or volunteering. It also provides a financial incentive for those delivering the programme to move people into work. Introduced in 2011, it brought support for the long-term unemployed into one core programme. It replaced the New Deal, which supported long-term unemployed jobseekers from 1998 to 2009 and was then rebranded as the Flexible New Deal, lasting from 2009 to 2011; and Pathways to Work, which supported those on incapacity benefits and Employment and Support Allowance from 2005 to 2011.

The Future Jobs Fund: This provided temporary paid jobs for long-term unemployed young people and those living in disadvantaged areas. Introduced in 2009, it was ended just 2 years later despite having a significant impact on the target groups’ employment prospects. High operating costs were given as the reason for cancellation.

Youth Contract: Introduced in 2011 to help unemployed 18-24 people find work, the Youth Contract offers work experience places, wage incentives for small businesses taking on an apprentice aged 16-24, and additional support from Jobcentre Plus advisers to help young people move into education, training or employment with training. Local delivery is being piloted in three areas (Liverpool, Newcastle-Gateshead and Leeds-Bradford-Wakefield) as part of the City Deals.

Sector-based work academies: A government initiative run by employers, colleges and training providers, these currently offer pre-employment training, a work experience placement and a guaranteed job interview to those aged 18 or over and claiming JSA.

In work skills support

Train to Gain: Introduced in 2006, Train to Gain provided funding for employees aged 19 and over to achieve Level 2 qualifications. Small employers could claim compensation for the time their employees spent away from their job gaining new qualifications needed to progress in the firm. The programme ran for only four years and during this time was heavily criticised for funding training that employers would have paid for their workforce to complete in the absence of any public funding.8

The Skills Pledge: A similar programme to Train to Gain, this ran from 2007-2010. A voluntary scheme, it encouraged employers to commit to supporting their employees become more skilled through gaining qualifications up to Level 2 in an area relevant to their work. This included basic numeracy and literacy training. It was heavily criticised for a lack of clarity about its objectives.

Investors in People: Introduced in 1991, this advised employers on how to invest in their own workforces, settings standards that organisations must meet to be considered as investors in their employees. Still in existence today it is one of few schemes to have enjoyed longevity. But it has still seen changes in structure. Introduced by BIS, it is now entirely commercially funded but overseen by the UK Commission for Employment and Skills (UKCES). It has a high satisfaction rate amongst employers, with over 90 per cent reporting a positive net impact on their organisation.

Life-long Learning Accounts: Devised in 2014 to help learners navigate the skills system, the National Careers Service (NCS) provides these accounts to anyone over the age of 13. They are a formal record of all training and qualifications individuals have undertaken. Provided with these details the NCS can then provide advice on what funding learners may be eligible for and the application process to access these funds.

UKCES employer-driven schemes: To try and further increase employer involvement with skills policy, UKCES is currently offering a range of competition funding and overseeing pilots that aim to place responsibility for skills policy design in the hands of employers. The UK Futures Programme, the Employers Ownership of Skills Pilot, the Employer Investment Fund and the Growth and Innovation Fund all aim to reduce current or future workforce skills gaps and skills mismatch through engaging with industry.

Apprenticeships have been subject to many reforms in just the last 5 years, and the policy area has been accused of suffering from poor leadership, with a stream of initiatives introduced but poorly implemented. In particular, problems exist around progression routes, with few apprentices going onto higher level education or training.

In terms of in-work skills policy, initiatives have included both policy-led and employer-driven schemes, with the most recent interventions emphasis placing responsibility for skills policy firmly in the hands of employers. This has led to a number of similar schemes aiming to reduce skills gaps and skills mismatch operating alongside each other, as different government agencies try to determine what works.

Out-of-work skills support has now been condensed into one main programme – the Work Programme – in an attempt to simplify this area of provision. However, given that providers are only able to obtain delivery contracts that last up to five years, uncertainty is embedded into the model and longevity remains an issue. In addition, for organisations working with individuals a long way from the labour market, such as the very long-term unemployed and those with health issues, the payment by results system is not regarded as financially viable. Such individuals may require intensive long-term support to move into work, and a payment that looks only at whether the individual got a job misses much of the progress this group has made. A focus on ‘distance travelled to employment’ rather than one based purely on job outcomes may be required.

These constant alterations and overlapping schemes create confusion as to what support is on offer for the unemployed and learners and what schemes and financial incentives exist for employers to offer work experience and engage with training. The UK Commission’s Employer Perspectives Survey recorded that only a quarter of organisations are aware of the existence of apprenticeships for those aged 25-plus and just over a third (39 per cent) have any knowledge of what a traineeship entails.9

2. A lack of local flexibility

Historically local policy makers have been unable to design and deliver projects that focus on the specific challenges their local areas face.10 Different cities face different challenges, from skill shortages and mismatch to weak employer demand and utilisation of skills. In order to improve on this cities need the power and funding to tie skills provision to skills demand.

Recent City Deals and Growth Deals have made some steps in the right direction here, with the introduction of devolved skills funding and policy. For example, Manchester has been given the freedom to design the Further Education system in the city using devolved Skill Funding Agency (SFA) funding and Sheffield has been handed control of £27 million of adult skills funding. Yet these are exceptions and the UK’s skills and labour market policy remains one of the most centralised in the OECD.11

3. A lack of robust policy evaluations

Regular changes can also lead to a lack of long-term funding for interventions. This has meant that few programmes have undergone robust evaluations, often because no funds are specifically set aside for evaluation or because programmes end before full effects can be determined. This dilutes our understanding of what and how well skills interventions actually work and stands in the way of determining the most effective way to increase skills levels and reduce unemployment.12

Footnotes

  • 8 National Audit Office (2009) Train to Gain: Developing the skills of the workforce
  • 9 UK Commission for Employment and Skills (2014) Employer Perspectives Survey
  • 10 Green, A. (2012) Skills for Competitiveness: Country Report for United Kingdom, OECD Local Economic and Employment Development (LEED) Working Papers, 2012/05, OECD Publishing.
  • 11 Froy, F. Giguère, S. Pyne, L and Wood, D. (2011) Building Flexibility and Accountability Into Local Employment Services: Synthesis of OECD Studies in Belgium, Canada, Denmark and the Netherlands, OECD LEED Working Papers, 2011/10, OECD Publishing.
  • 12 Green, A. Atfield, G and Adam, D. (2013) Local worklessness policy analysis case studies, DWP Research Project No. 844, DWP Research Report No. 844