In September 2018, NOCN and the Learning and Work Institute published their report “Skills for a Productive Society”, which addresses the challenge of historically low levels of productivity in the country as a whole. It also identified productivity gaps in individual sectors and the regions. This article brings out some of the issues from this research which are relevant to the North of England.
We need to first set our thoughts in the context of the national picture. There has been significant investment in skills over the last 30 years; however there has been no stability in government policy nor the proper skills ecosystem over this time.
Cyclical major change every five to seven years has resulted in a lack of confidence from employers and others, as well as creating an unstable environment for education providers. In addition, poor integration of educational initiatives and a poor focus on the productivity skills, have resulted in significant skills gaps and low productivity across the economy.
Another factor is low demand from employers for highly skilled workers, particularly in the North of England where there has been a sense of “we can carry on as we are” without making the necessary long-term decisions on skills investment.
The UK, along with other countries, also assumed that if we focus on higher education we will solve the productivity and skills problem. Hence we have tried to increase the proportion of people with academic-based degrees rather than driving up practical skills.
An OECD report showed England had one of the largest proportions of low-skilled young workers among advanced economies in respect to literacy and numeracy; their report shows that around nine million adults in England have low numeracy and literacy skills.
It also established that young workers were no more skilled in numeracy and literacy than older employees, suggesting that we are not developing a cohort of effective and skilled young workers to progressively contribute to improving productivity. The majority of our “comparator” countries such as Canada, France, Germany, Japan, and South Korea have seen major improvements in the skills of 16-24-year-olds compared to 55-65-year-olds.
The North, comprising the North West, North East and Yorkshire and Humber, has low levels of productivity compared to most other regions. A large proportion of adults have no qualification or qualifications at or below Level 3 and a low percentage have qualifications at Levels 4 and 5, the levels at which it is predicted there will be the biggest growth in jobs.
There has been recognition at the national policy level that change is necessary. The government has been reforming apprenticeships for six years and has now embarked on reforming technical and vocational education and training (TVET) through the new T-Levels at the equivalent level to A Level. Reviews are underway on skills provision at Levels 2, 4 and 5 and a national retraining scheme (NRS) is now starting.
The problem is that these reforms are bureaucratic, not integrated and not specifically designed to increase productivity. They are also taking an inordinate length of time to get up and running, in fact there is no end in sight! Saying this, we appreciate that the many implementation difficulties are only slowly being recognised and amended.
As well as these fundamental reforms in the system, funding is radically changing. The Apprenticeship Levy was introduced in May 2018, with a corresponding reduction in apprenticeship starts. The government also decided to delegate the Adult Education Budget (AEB) to local areas. This is laudable, however, there is a piecemeal and slow approach to this in place against a backdrop of cuts in funding rates which has created uncertainty and financial failures amongst training providers.
We think that the Northern Powerhouse needs to focus on practical skills which it can do while also trying to influence government policy.
There needs to be a recognition that we need national standards for apprenticeships and TVET courses and qualifications (T-Levels). Accordingly, we should not waste time considering this as part of government policy, but press for a national strategy with a vision to speed up apprenticeship and TVET reform.
Focus needs to be given to convincing the government to move away from the delegation of national programmes with their restrictive and inflexible rules, such as AEB. Instead the Northern Powerhouse needs a single delegated funding pot which can be deployed flexibly at the local level.
The North can then establish realistic and practical skills plans which deal with specific local priorities and the key sectors that are important for local economic growth.
These programmes can then focus, for example, on increasing management skills in respect to productivity improvement. They should tackle poor local employability, literacy and numeracy challenges, and programmes can be developed and delivered to increase the number of people with Level 4 and 5 skills in key sectors matched to jobs demand.
Implementing these local strategies requires excellent employer engagement, which is present in several areas, and must be underpinned by a robust labour market intelligence (LMI) database. The latter can best be delivered through effective intelligence sharing between regions and local areas. Critical investment programmes then need to be targeted at building and aligning the training provider base to support the implementation of the local skills strategies and plans.
Finally, a warning; we should all be concerned that without real and meaningful delegation by Westminster of sufficient resources to fund locally agreed skills strategies, the Northern Powerhouse will be nothing more than a catchy slogan! This would be a tragedy not just for people and businesses in the North but for the nation as a whole, which will suffer economically through reduced productivity as we face uncertain times ahead.
Graham Hasting-Evans is managing director of NOCN Group.