Productivity or Skills? Let’s Rest the Agenda

This article is written by David Allison – CEO & Founder of TheTalentPeople.

Labour wasted no time once in office to make clear their views on the failings of many parts of government. Amongst these has been the skills system. The initial announcement made it clear they believe it is broken. The announcement of the new ‘Skills England’ body sets an interesting tone for the debate, but at present, there is little detail behind this headline other than the transfer of IfATE’s responsibilities to a new organisation. Eventually.

For many years, new governments have been quick to announce re-organisations, but in many cases, this has simply resulted in the same people doing the same job in an organisation with a new name.

It has to be hoped that this time it will be different. The focus on ‘Change’ in every area of government and public services makes a great headline. But unless there is an openness to a fundamental rethink of approach, rather than a renaming of an organisation, little ‘Change’ will actually be delivered.

One of the challenges with debate and change in the education and skills system is the way in which it can be dominated by the (vested) interests of providers. It is all too easy for the debate to quickly focus on funding levels and mechanisms rather than the more fundamental questions around the way in which our skills and education systems should be organised.

So, rather than delving into funding structures or the bodies that manage them as the starting point, it surely makes more sense to consider the challenges we face and the most appropriate solutions. Areas of funding and policy like the apprenticeship levy or the way in which IfATE manage particular qualifications are often a red herring that stops us really considering the needs of individuals and organisations in this rapidly changing world.

So what are the problems?

In very simplistic terms there are probably two main issues that UK PLC’s skills and education policy needs to address.

1.      The first is ensuring that those joining the workforce, or in some cases changing occupation mid-career, are able to access a structured training programme which allows them to go from low levels of competence to proficiency in a deliberate and effective way. Traditional apprenticeship models, which predate reliance on government funding, were created to help individuals learn on the job under the supervision of a more experienced and skilled worker. Following their apprenticeship, these individuals would go on to achieve mastery in their chosen skill or profession.

2.      The second challenge we must face is that of productivity or rather lack of it. The increased and rapid adoption of new technology requires new skills. In many cases, these skills are emerging on a week-by-week, or month-by-month basis. Those organisations which are able to ensure they have the right skills at the right time in their workforce are those that are able to benefit the most from these advances in technology, therefore increasing productivity.

So, if we take these two issues as being the focus for which our success should be evaluated,  it does cause a rethink about the very nature of the existing system.

So what is the answer?

Firstly, let’s consider apprenticeships. We would call for a return to apprenticeships which are focused on providing a broad and structured approach to developing the skills knowledge and experience which is required to be proficient when joining the workforce or in some cases starting a new occupation later in life. By their very nature, apprenticeships need to be broad so that they can provide the underpinning knowledge that will allow individuals to create a foundation on which to build their future careers. Too narrow a focus on one job role, and the ability to adapt and change, developing new skills, will be reduced. Too broad, and individuals are not being prepared for a job. Although cumbersome at times the current system does deliver much of this. The ability to complement a core curriculum which accounts for 80% of the apprenticeship, whilst allowing more flexibility for employers to pick and mix the final 20% may be a relatively simple way to allow employers the flexibility to include up-to-date or vendor-specific content within this foundation programme

To have programmes which are a minimum of 12 months in duration also makes complete sense. It is not possible to gain both the experience and the breadth of knowledge and understanding which will underpin future career growth in a shorter period of time.

The principle of an apprenticeship, where you learn on the job, also ensures the currency of those skills. In the vast majority of occupations, it is not simply the knowledge which counts but the ability to apply the knowledge. In fact, I can think of few occupations where knowledge alone is sufficient. From programmer to accountant, and plumber to surgeon, it is the combination of knowledge, skill and experience which is vital. This view of apprenticeships is therefore not about scaling them back, but extending – and being more transparent about their application.

Apprenticeships aren’t for everyone…

On the other hand, the rapid deployment of highly focused knowledge to support skills acquisition where time is critical cannot be served but the same approach. Any organisation which has the need to deploy skills now for new technology cannot possibly agree to a three-year programme where the most important elements will be delivered in 18 months time. Whether you are a surgeon using the latest technology, an engineer applying the latest design techniques, or a plumber installing the latest in air source pumps next week, these are all cases where the specific skills must be learnt in a timely manner.

By separating both the problems and the solution to those problems a number of other benefits become clear. What is equally clear is that forcing everything into an ‘Apprenticeship’ is really not the answer.

Practicalities

By their very nature, the education and skills associated with new technology are often best understood by the creators of that technology. Constraining training programmes to content which has been pre-approved by the government more than two years in advance is, by its very definition, going to delay those skills critical to productivity and therefore reduce the UK’s ability to respond to the productivity challenge.

The delivery of these training programmes is also problematic. Whilst it is admirable to embed the very latest cutting-edge technology in an apprenticeship route, it creates a number of challenges. Firstly it requires training providers to have access to this very latest and often very expensive technology. Secondly, those who are teaching it must be experts in its use as well as being expert educators. By definition, this is an almost impossible task which at best creates massive recruitment, pay and retention problems for the education system and employers alike.

And of course, there is funding. We have evolved to a place where the incentives in the education system are often working to diametrically oppose outcomes that Society should be striving to achieve. The apprenticeship levy led to the direct withdrawal, or significant reduction, of many large organisations’ training budgets. Removing these budgets from local training departments or line managers also directly reduces the ability to react to training needs in the moment. This becomes a brake on skills acquisition which is directly related to productivity. In many organisations, the only answer is apprenticeship no matter what the problem.

The whole arena of Higher Education Funding is, of course, a different matter. There are many challenges with current funding system. The intention to create a market within higher education institutions through the use of variable student fees has singularly failed. Every institution appears to be charging the maximum allowable amount no matter the quality of education (however it is measured) or outcome. Given the fact fees have not been increased in line with inflation, this is left many institutions with no alternative other than to recruit more students onto their most popular programmes thereby reducing choice and increasing the oversupply of workers into some areas of the market where their skills are simply not required. The system of student loans is also unhelpful at best. Whilst in reality, this is a graduate tax and therefore the headlines of £60,000 of debt ds to the confusion rather than aiding understanding, the reality is that much of this debt will never be repaid. Debt which is not repaid by students must be paid for by the government. The lack of transparency in this system is again hindering our ability to evaluate the efficiency and effectiveness of higher education.

So, Where do we go from here?

If we return to the original objectives set out above, it is possible to create a road map to ensure clarity and simplicity. Forcing both of these challenges into one framework as is currently the case with apprenticeships, is doomed to fail.

So whilst not letting funding drive the discussion it is obviously a very important part of any solution. And in doing so requires the application of realpolitik. The apprenticeship levy, whilst in theory aimed at driving employer engagement, also allowed the government of the day to significantly increase tax on business and create this hypothecated skills tax. It is therefore likely that the apprenticeship levy is now so embedded in our education system that too fundamental a shift would do more harm than good. In the run-up to the general election, there was much talk of relaxing the regulations on the apprenticeship levy to allow for the delivery of more flexible learning. However as the apprenticeship levy creates a finite amount of money and in recent years this has been fully deployed, any ‘enhanced flexibility’ will come at the cost of apprenticeships. Those talking of the billions of underspent apprenticeship funding are often referring to the time when the levy was first introduced; their comments do not reflect the current reality.

As noted above, the apprentice levy also caused many organisations to slash their own training budgets thereby limiting their ability to create and deliver short ‘unaccredited’ modules of training which are so important to productivity.

Previous administrations have used financial incentives within the apprenticeship funding system to incentivise the delivery of apprenticeships to target groups. We would therefore call for this approach to be reapplied providing additional funding to providers and employers to support individuals as they leave school or start a new career.

This would be funded by a reduction in funding for those who are over 25 and progressing within an existing role. This is surely not the role of the state education system.

However, financial incentives are required to encourage investment in skills, particularly highly focused programmes which support the rapid adoption of new techniques or technologies. In this case, we would look to another route – and tax credits are a useful potential model. R and D Tax Credits have been available to support organisations’ investment in novel technologies – those focused on innovation which may (yes may) lead to productivity or wider commercial benefit. This is surely the exact same focus we require of ‘upskilling’. In recent years, the rules of this programme have become more cumbersome – probably to reduce the amount being claimed, rather than address some abuses which undoubtedly existed in the system. Rather than disincentivising investment in innovation, we would call for this to be extended, providing a tax benefit to those organisations that do invest in skills.

This (relatively) simple, straightforward approach, would ensure we do not confuse the two problems of initial development and competency with the ongoing development of skills to increase productivity. The challenges associated with both are very different. By forcing a ‘1 Size Fits All’ solution to programme design, programme management and funding we miss out on the opportunity to refocus on the issues which matter – providing a structured education and training system which will deliver a workforce for the future as well as providing flexible education and training which is required to help the UK re-established its position as a leader in innovation and productivity.