Waiting for the FE White Paper – Skills Reform and “Levelling Up”

January 18, 2021

The promised ‘radical’ White Paper for Further Education (FE) is due imminently. How will it balance the need to respond quickly to improve employment without losing focus on the more complex, and slower process of transforming post-school learning?  How will it link this to growth and productivity, acknowledge the importance of place, and ‘level up’ local and regional inequality? And what does this mean for devolution, in places such as Greater Manchester, where the conflict between local and central government has been so evident in recent months, where Covid has impacted hard and the hopes for new powers and resources to shape a more productive, wealthier economy, remain high?

The Government’s challenge is to reignite the post-school education and training system as a whole, not just one part of it. It appears to have a rough idea of what it wants the system to be, and which institutions will play a part.  But while all institutions have their strengths, they also have weaknesses which could be significant obstacles to change.

Universities are the largest, most powerful and best funded and can easily destabilise other parts of the system by diversifying into new areas of work on their own terms, as proposed by Edward Peck in his recent Policy Exchange paper.  Colleges, under resourced and damaged by incessant waves of policy reform, are fragmented, suspicious of new structures, but need to find new ways of collaborating if they are going to play a significant role. Devolved authorities, still new to the broader skills system, focus most attention on commissioning the part they control. They seem not to have understood the wider vision for skills implied by the Augar Review or grasped that reform means building a system which trusts institutions more, not less. Central government needs to let go but cannot do that unless it has confidence that this will lead to something better.

As Augar argued the relationship between FE and HE and their relative roles are problematic.  To some extent they are the unforeseen consequences of competition in the education marketplace and some consider the remedy to be less competition, either through more planning or monopolies.   We argue for a system which places ultimate power in the hands of learners and employers but also builds capacity and expertise in institutions and ultimately, drives economic renewal and growth. But it must do this while responding to the biggest employment challenge of a generation.   This will not be achieved by replacing markets, but by judicious interventions which level the playing field, reset the system, and then let institutions get on with the job.

Tackling Unemployment

Covid has exposed many economic weaknesses but one of its main legacies will be unemployment.  Before the health crisis, the quality of work was an issue, together with technological change, climate change, and our ageing population.  But employment was at a record high.  Economic recovery will involve structural change and adjustment in firms and by employees. The broader skills system must play a central part in this transition with incentives for colleges and universities to do so. It will demand particular attention on adults in the workforce and those young people joining it.

It is estimated than an additional 600,000 18-24-year-olds will be pushed into unemployment in the coming year, causing long-term damage to their pay and job prospects. Another 800,000 18-24-year-olds are expected to leave education, and according to the Office for Budget Responsibility – unemployment is forecast to rise by 6 percentage points. This is twice as large as the increase following the financial crisis.

Gavin Williamson wants to ‘abolish’ Tony Blair’s 50% target for participation in HE and scale back full-time university numbers in favour of alternative, FE led routes. In time, the effects of Covid 19 on graduate employment and earnings may in any case undermine the existing model of funding full time HE in England. But even in the shorter term in parts of the country like Greater Manchester, there are already broader issues to address. According to Alison Wolf, a member of the Augar Review panel and now an adviser in Downing St, ‘this imbalance looks even harder to justify in the light of regional inequalities’ noting that ‘among young people in their late 20s, over half of the London-schooled went to university’: it’s under 30% in the North East and the South West. It is around 35% in Greater Manchester and across the North West. So in many places it isn’t the other 50% not going to university but rather the other 60-70%.

But it is important that, in dealing with shorter term challenges, the long term ambition for transformational change is not lost. Augar noted that overall some £8 billion is spent on 1.2 million undergraduates in universities while only £2.3 billion is spent on 2.2 million students at 18 or above in FE. That’s roughly a quarter of the amount on twice the number of students. At a minimum that has to change – which is why a short-term Spending Review has made it harder (either to push the latter figure meaningfully upwards or to bring the former down).

However, it is provision for adults which is going to be the real challenge.  This has been the most neglected aspect of the whole skills system for too many years.  The impacts of the pandemic will demand that we better meet the challenge of upskilling, reskilling and retraining for people of all ages. But for adults, the trends are running in the opposite direction.  Between 2010 and 2018/19 the number of adults in part time higher education fell by 53%.  In the same period government spending on adult learning in England (excluding apprenticeships) fell by 47%. The rediscovery of adult skills as a political priority is therefore long overdue and an important part of any recovery.  The Conservatives pledged to spend £3 billion on adult skills at the election and this has now been followed up with the announcement of a lifetime skills guarantee (of at least three years guaranteed government-backed loans) beginning in April 2021.

All of this needs more detail in terms of practical delivery – how the funding will work, which qualifications will be prioritised, and how to ensure providers are ready to operate and deliver at scale.  An effective strategy will also require better joining up with employment policies owned by DWP, and a further positive step would be to reform the rules for Universal Credit claimants to allow them to enrol on full time courses. In the shorter term, the Treasury’s furlough scheme now extended to March could be directly linked to the lifetime skills guarantee. Furthermore, there needs to be much more policy attention on learning qualifications at all levels in the workplace as that too adjusts to new structures and (hopefully more productive) practices.

Colleges as Civic Institutions

The national commitment to “further education, further education, further education” is effectively a local strategy.  The Secretary of State talks very positively about colleges, not just as training centres, but as civic institutions, central to their communities.   This reflects an understanding of what colleges currently do – but also a vision for what more they can achieve. It is the commitment to adult learning, more than changes to 16-18 funding rates, which can be the catalyst. Adult programmes will need to be creatively delivered, mixing short and ‘full fat’ qualifications, part time and full time, daytime and evening, compressed hours and ‘roll on roll off’.  This is complex work, requiring specialist community and pedagogical skills, and clever curriculum planning to create opportunities to progress to higher level learning.  There are no organisations better placed to lead this than general further education colleges.

It is clear that both colleges and universities should be doing more for their local communities and economies especially as they recover and rebuild after Covid.  This is recognised by both the Civic Universities Commission and the Commission on the College of the Future. To deliver this civic role there is no doubt that colleges will have new opportunities and new demands placed on them, and they must respond to both.  The proposal for college ‘business centres’, which has circulated for some time, linked to a more coherent way of organising employer involvement in the skills system through chambers of commerce, must surely be part of this.

Higher Technical Provision: The Trouble with Peck

The key to the relationship between colleges and universities is what happens above Level 3 (A level or equivalent). As the Greater Manchester Independent Prosperity Review showed, at the moment there is ‘no clear route through vocational training to higher levels’ and provision of education and training ‘is patchy, fragmented and lacks co-ordination’.

Many FE colleges have successful higher education provision, but all too often this mimics the degree model championed by universities (but without a residential element). This, as in universities, has been driven by the primacy of the full-time, three year honours degree and the higher fees and resources that it brings.   In apprenticeship provision, FE is focussed on intermediate and (to a lesser extent higher) qualifications.  Degree apprenticeships are increasingly a focus for some universities, who have made a concerted collective effort to become the providers of choice.

What then of the planned expansion of new Level 4 and 5 programmes? Augar recommended redistributing significant resources to a ‘missing middle’ between further education and universities, noting that current incentives for learners and providers ‘are stacked in favour of the provision and take-up of three-year full-time undergraduate degrees and against the provision and take-up of Level 4/5 courses – and of part-time and adult study generally.’ The big policy change then is to recommend ‘a stronger technical and vocational education system at sub-degree levels to meet structural skills shortages’.

This has been more of a vacated space than a crowded market, especially in England. But the promised expansion of alternative routes in higher education, with investment and resource to go with it is attracting universities back into these areas. Some are very keen to develop more L4/5 especially as they see Government trying to constrain full time degree numbers.  But this may be a sign of market power rather than the best outcome – an ‘Amazon-isation’ of supply from the strongest institutions. Echoing a HEPI publication, by Dave Phoenix  in 2017, Edward  Peck, VC of Nottingham Trent University suggests in that recent Policy Exchange paper that L4/5 should be territory for modern/applied universities as Government seeks 1) to find ways of filling this gap and 2) to redefine the role/focus of certain parts of the HE sector.

On some levels this is to be welcomed – filling/rebuilding the gaps in applied, technical skills is going to take Herculean effort and sticking to it (which we’ve failed to do in England for many years) is important. Even more so if we accept that this is much more than just about increasing supply at these levels or building new institutions such as Institutes of Technology.

However, there are also some serious flaws in this approach. Firstly, it’s wrong to see colleges as a secondary, subordinate part of the plan. They have longstanding expertise in particular sectors and in delivering qualifications such as HNCs and HNDs. Many have won awarding powers for Foundation Degrees on this basis.  Others work very effectively with Awarding Bodies to deliver qualifications and together they offer huge experience, specialist knowledge and longstanding industry relationships.  Having choice in qualifications is important for employer, learners and providers – and if universities dominate this marketplace, that choice might disappear.

Secondly, if we want to grow participation amongst the ‘other 50%’ (or 60-70% in regions outside the SE) who don’t go to university, then colleges are more experienced and better equipped to accommodate them.  Colleges are also well placed to build local relationships with SMEs – as the college-as-business-centre proposals recognise.

Third, ‘place’ matters here.  Arguably mass higher education, has seen universities focussing more on national and global recruitment, and less on local economies and populations. This is one aspect of Michael Sandel’s criticism of meritocracy and David Goodhart’s ‘head, hand, heart’ and ‘somewheres’ vs ‘anywheres’ analysis. Put simply, it is vital for our politics that we find better solutions for those places that have suffered during waves of structural economic change. It is a collective mission across FE and HE to find solutions and to help revitalise local economies, build skills, wages and life chances of those that live in them. In places such as Greater Manchester that must mean better resources for places that have colleges (and not universities) and also more effective – and equal -partnerships between them.

We also need a system which remembers what skills are for. Too often, the argument between HE and FE is focussed on who will take what share of the skills supply market,  while treating the wider challenge of growth and productivity as either a given or an afterthought. Yet the UK has a pressing and urgent productivity problem and more human capital on its own is unlikely to solve it.

The ‘Missing Middle’ in R&D

Here Augar’s and Williamson’s focus on L4 and L5 should practically join up with another ‘missing middle’ – that in applied research. Governments over several decades have hollowed this out too, with R&D focused more on high end, ‘blue skies’ or basic research. However, with increasing political focus on regional inequality, the Government has promised to double spending on R&D, hitting and exceeding a target of 2.4% of GDP (the OECD average) by the middle of the decade. This also comes with a new focus on ‘place’ and on tackling regional and local inequality. As Ottoline Leyser, the new Chief Executive of UKRI has observed, science and knowledge economies can’t just be ‘something that happens somewhere else‘.

The obvious first step here is to better connect the DFE’s programme for Institutes of Technology as well as L4 and 5 expansion to BEIS and UKRI’s plan (and the government’s promise) to double funding for R&D. The particular focus on applied R&D and on regional innovation and productivity makes this an opportunity for joined up government that cannot be taken for granted.
Most policymakers and plenty of principals and vice chancellors are by now aware of Sheffield’s AMRC. Its success lies in bringing training together with applied research. Employers and their supply chains are significant partners and the facilities are world class. This is also a good example for the ‘levelling up’ agenda. The AMRC sits in Rotherham on the former site of Sheffield’s airport and before that the Orgreave coking plant. With investment, flexible policy and funding frameworks and strong institution and employer relationships a future for post industrial places is possible.

Regional and Local Inequalities (and Devolution)

According to Phil McCann at the University of Sheffield, the UK has a ‘geography of discontent’ pointing out that ‘the UK is one of the most inter-regionally unequal countries in the industrialised world‘. We hope the White Paper will acknowledge and support FE’s role in addressing this, confirming the important role of colleges and skills for driving economic and social recovery. That means a policy framework that understands not just the gaps between the North West and the South East, but the equally steep differences within Greater Manchester such as those between Oldham and Rochdale and the city centre or the more prosperous communities nearby.

Thinking more broadly about R&D, recovery, geography and productivity allows us to think more expansively about the different complementary roles and strengths of universities and colleges alongside employers, local government and other important players.

For all areas, the challenge of ‘levelling up’ means rethinking assumptions about post industrial growth. The metropolitan centre agglomeration model has not been sufficiently successful in extending its benefits to everyone. For some, this will mean investing even more into the model – with improved infrastructure a common theme.  Others will see relocating big chunks of government into “left behind” areas as a catalyst for change.  But there is also a need for new approaches to science, innovation and the eco-system needed to make the link between new knowledge and business applications work more effectively.   In Greater Manchester that means an explicit prioritisation of key sectors such as health and life sciences, manufacturing and digital. If this is picking winners then it’s a pragmatic understanding of the long term need for resilience in PPE, vaccines and manufacturing, alongside green and digital rather than a new version of the Austin Allegro. But it also must take ‘levelling up’ seriously and consider how better to connect places like Oldham, Bolton and Rochdale to these sectors and jobs. And this will also include a reconsideration of the employment and skills potential of the so-called foundational economy (amenities, public provision and so forth).

All of this implies that devolution becomes more important, but that it must also change as part of a whole system reset. In one sense, the biggest threat to the vision for a new skills system, rebalancing FE and HE, are the devolved authorities.  The role which universities have played in regenerating urban centres through physical investment and swollen numbers of undergraduates, means devolved authorities often see them as standing outside of the skills system – or views them as the bit that “works”. By contrast, most Mayors and Combined Authorities would like a lot more direct control over colleges and skills budgets – which is a very limited vision of “what is wrong with skills”, and will not lead to good solutions, particularly for those who most need alternative routes to high skilled work.  The solutions to skills lie in the design of the national system, not the local application of parts of it.  Local is important in supporting central government to make that national change, and to help focus the new system on the unique challenges and opportunities of particular places.

We think the debate over who controls or plans the system is the wrong one to be having in this White Paper. This doesn’t mean the end of skills devolution but rather a radically different way of thinking about it.  The notion that the “skills mismatch” is a problem of “planning” which can be solved by someone mapping the market and brokering supply and demand is a myth and failing to recognise this will waste resources and create a more, not less complex system. This must include the strengthening of capacity and expertise inside colleges and not just those overseeing them – whether that’s in Whitehall or in Mayoral offices across our city regions.

This must involve resetting the relationship between stakeholders, to “level up” the balance of power between them and focus them on a common purpose.  The most powerful role that devolved authorities should undertake, is to work with central government to focus the reformed system on resolving the problems of “place” as envisaged in the original Greater Manchester devolution deal.  In 2014, it was clear that despite its regeneration successes, Greater Manchester still had a negative “balance of taxes” with central government.  Powers to influence and shape resources were given on condition that growth and productivity were improved.  Progress to this end has not been remarkable, with Covid underlining many of the fragilities that had been around for some time.  The need to fix them has become more urgent, but the approach will need to move away from trying to manage chunks of the system, to building partnerships, including with central government, so that a reformed FE and HE system is aligned with R and D, housing, transport, health and other community policies to drive change locally.


The shape of local and regional economies and the need to improve them varies significantly across different parts of England. One size does not and cannot fit all.  We believe that strong local institutions including colleges and universities are vital building blocks in addressing these regional inequalities. It is vital that FE colleges have the flexibility and incentives to build partnerships and programmes at a local level – whether with LEPs, government, employers or universities. In turn this leads to a very different conversation about devolution and not one based on control, power or planning a system.

We need colleges responding better to both local and regional issues – Oldham for example has many social and economic challenges. It has roughly half of the numbers qualified at L4+ (26.9%) and over three times as many adults with no qualifications (13.3%) as more prosperous parts of the city region such as Trafford (50.9% and 3.8%). Wages are also low with £12.47 an hour (median for full time workers) compared to £17.25 in Trafford and £15.18 for the North West as a whole. So there are different needs for colleges to serve – whether for local businesses and jobs or skills and qualifications for residents whether working locally or in the centre of Manchester.  No other institution will focus on these needs.

But we believe that this isn’t just a carving up of different parts of the system and offering local leaders more control. Rather the priority is to build autonomy, flexibility and capacity in colleges (as well as the resources that must accompany this) so that they can work more strategically with employers, employment services and with universities on R&D, higher level skills and economic growth. This is the approach that works best in our other great local institutions including universities, local government and also in the NHS, the BBC and in a host of leading private sector organisations. We should trust FE with the same approach. If DFE’s White Paper and devolved authorities’ plans for growth and further devolution are really radical, then this is what they should be aiming for.

Policy Exchange hosted a roundtable discussion in November 2020 as part of the release of the report Technical Breakthrough authored by Edward Peck

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