From the TUC

Adult skills and apprenticeships in the #SpendingReview

25 Nov 2015, by in Public services

In one respect the Chancellor’s announcements on skills and apprenticeships in the Spending Review has been viewed as another u-turn with the welcome news that there will not be the degree of cuts to FE colleges and the adult skills budget that was widely anticipated.

In addition the Apprenticeship Levy is going to bring in more revenue from large employers than many commentators had been forecasting in recent months (the levy was announced in the July Budget) and this may have been one factor in giving the Chancellor greater fiscal leeway.

While the government had not of course made any public commitments to cut the adult skills budget over the rest of this Parliament, there was a widespread assumption that this would be necessary in order to achieve the scale of cuts required of BIS as an unprotected government department.

Even last week the Skills Minister was reported as having said that FE and adult skills would not be “insulated from further cuts” in the spending review, with this being interpreted as a case of colleges “staring into the funding abyss”.

The Association of Colleges has expressed “huge relief” at the outcome of the Spending Review, saying that it shows that “the Government recognises the key role of colleges in driving the country’s economic prospects, closing skills gaps and raising productivity.”

Many other commentators, including the TUC, have been pressing this very same point in recent months. The campaign coordinated by UCU – #loveFE – involving unions and other stakeholders has also played a key role in making the case for safeguarding adult learners from further cuts.

It was also notable that Professor Alison Wolf, who advised the Coalition government on reforms to vocational education in the last Parliament, published a report – Heading for the Precipice – in June warning against further cuts to colleges and adult skills.

However, the adult skills budget has not escaped completely unscathed with £360M of “efficiencies and savings” planned from supporting budgets. On this point, paragraph 2.80 in the main Spending Review document makes direct reference to cuts in funding for the national body that currently advises the government on education and skills, the UK Commission for Employment and Skills.

The Chancellor also responded positively to calls from various stakeholders for Sixth Form Colleges to be exempted from VAT payments on the same basis as schools. However, the government could not resist the temptation to use this as a means of extending the academy school model into the college sector by stipulating that the VAT exemption will only be available to sixth form colleges that become academies.

The other big story on skills was the further detail made available on the Apprenticeship Levy that was announced in the July Budget and welcomed by the TUC. In addition to increasing revenue, the levy should prove a powerful catalyst for incentivising much greater investment in apprenticeships and skills by employers that currently rely largely on recruiting skilled labour.

The Government consulted on the mechanics of how the levy would operate over the summer and the TUC submission emphasised the need for the levy to underpin high quality apprenticeships and for employers and unions to agree these apprenticeship standards as is the case in much of the rest of Europe.

The Spending Review confirms that the levy will be payable by UK employers at 0.5% of the total payroll costs of all employees and that this will raise around £3B per annum for the Exchequer. This is more than many commentators had being predicting (£2B had been a widely quoted figure).

The Chancellor also confirmed that there will be a new body to oversee the levy and apprenticeship standards. A new business-led body, the “Institute for Apprenticeships”, will be established and this presents a real opportunity to adopt the principles of social partnership that govern similar bodies in other European countries.

More detail on the Spending Review announcement on the levy is available on the unionlearn website.