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Ensuring England’s workforce has the right skills for a rapidly changing economy is key to Labour’s hopes of boosting social mobility and kickstarting economic growth.
So it seems unfortunate that more than a week after Keir Starmer’s drastic reshuffle, ministers are still wrangling about exactly which bits of the skills agenda will now move to Pat McFadden’s beefed up Department for Work and Pensions (DWP).
Broadly speaking, the education secretary, Bridget Phillipson, is expecting to hang on to responsibility for further education, while McFadden will probably take on apprenticeships and adult skills. Lady Jacqui Smith, the skills minister, will work across both departments.
Labour market experts say there is some logic to the shift: ensuring the right training is available in the right places is one crucial part of tackling the issue of economic inactivity in a rapidly changing employment market, which falls within the DWP’s bailiwick.
But “machinery of government” changes, as official parlance has it, can often bring more disruption than clarity.
Over the past two decades alone, responsibility for skills has bounced around Whitehall, from education into the short-lived Department of Innovation, Universities and Skills (2007-2009) then on to the Department for Business, Innovation and Skills (2009-2016), back into education again, and now across to DWP.
Perhaps this nomadic status helps account for successive administrations’ chronic neglect. Government spending on adult education halved between 2011 and 12 and 2019 and 2020. It then recovered somewhat as the worst years of austerity came to an end, but by last year it was still £1bn down in real terms.
Meanwhile, despite endless speeches by politicians of all stripes about how vocational skills should have the same status as university (I have sat through quite a few: it is compulsory to mention Germany), the numbers completing apprenticeships have collapsed.
Official figures show that 178,220 people earned an apprenticeship in England in 2023-24 – down by more than a third on 2017-18, when the Apprenticeship Levy was introduced.
Recently rebranded as the Skills and Growth levy, this is charged at 0.5% of the payroll of larger firms. It was meant to encourage a flowering of workplace training, although employers have long complained that it is too rigid.
Since Labour came to power, Phillipson has made some changes, cutting the minimum duration of an apprenticeship to eight months.
Enrolment in apprenticeships has risen this year, by just over 2% but business groups are still hoping for a more substantial shake-up.
Companies have their own significant part to play, too. It must surely be a piece of the UK’s productivity “puzzle,” that according to the Learning and Work Institute, employers’ annual spending on training for each member of staff has fallen by 28% in real terms since 2005, to £1,530, a level less than half the EU average.
Longtime education expert Sir Philip Augur put it well in a recent Institute for Fiscal Studies podcast about post-16 education.
Welcoming the changes to the apprenticeship levy, Augur said: “Employers have to step up to the plate here. For employers, ‘I can’t get the staff,’ is quite often an excuse for bad management. Now on this occasion, they can’t get the staff because the skills aren’t there. But there needs to be honesty and self-appraisal on the part of employers.”
Augure called for the levy to rise “very slightly”, to free up more resources for expanding apprenticeships.
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McFadden is, say his team, keen to ensure that young people get the skills they need to benefit from the jobs scheduled to be created by new government investment in defence and green energy. That will mean working with firms and unions to get the training landscape right.
There is plenty of innovative thinking going on at local level. The West Yorkshire mayor, Tracy Brabin, announced plans last week for what she called “skills-led growth”, in Wakefield, the UK’s largest city without a university.
She hopes to establish a new Wakefield Futures Centre, led by employers, where local people can do courses directly linked to finding work in the fastest-growing sectors in the surrounding economy.
The idea is to make the courses flexible so that adults with caring responsibilities, for example, can take up the offer.
This kind of relatively fluid, employer-connected approach might allow mums to pick up new skills, or older workers to switch sector or dip their toe in the market after a period off sick, for example.
It might also be used to tempt young people to think about a wider set of options: in Manchester, Andy Burnham is pushing to set up an MBacc – an EBacc equivalent, a qualification intended to be an alternative to GCSEs, which is tailored to local jobs.
Jobcentres, which are getting a rejig under Labour to present a more encouraging face, can then signpost to local opportunities such as these.
Getting the skills offer right will have to form one crucial part of any genuine effort to bring down the UK’s unusually high economic inactivity rates, and therefore, ultimately, the welfare bill.
Last year’s crass attempt at cuts failed because Labour could not justify to its own MPs the crude way in which it planned to cut eligibility for the personal independence payment (Pip).
If the government wants to have another go – as McFadden certainly does – then a fresh skills and training offer could be part of the package for the hard-to-reach claimants Labour said it had a “moral case” to help last time – but for whom across-the-board Pip cuts would have done nothing.
It’s not a quick fiscal fix by any means, but get it right and the upside, for individuals, employers and the economy, would be significant and long-lasting. The sooner ministers can clear up who takes on which bits of the task, and crack on with it, the better.
