The cost of living crisis cannot be addressed without recognizing the double whammy of tight labor market conditions and stagnating economic growth. Low productivity and low education combined with sluggish growth mean wages have stagnated. There are currently 1.2 million vacancies and more and more employers are struggling to find the right people with the right expertise.
A strong economy relies on a strong skills sector. Closing the country’s skills gap will be critical. There is a need to refocus on lifelong learning, while ensuring that accessible and affordable training is available for people of all ages and levels. Independent Training Providers (ITPs) stand ready to play a central role in any strategy to address the country’s skills gap, but they will need support to help them through a particularly difficult set of circumstances.
Support for ITPs as businesses
Training providers, like other businesses, are facing inflation rates not seen in a generation. Being able to meet these rising costs is a major concern for ITPs and this is compounded by problems recruiting and retaining staff. Support will be needed to ensure providers can weather the storm and continue to deliver a wide range of high quality skills.
The global energy crisis threatens to undermine the significant progress the country has made in building a skills system fit for the 21st century – at a time when we need to do even more to close the skills gap. New Chancellor Jeremy Hunt’s decision to stick with reversing the increase in employers’ National Insurance contributions to the Health and Social Care Tax and continuing with the relief package energy bill will help ITPs for the time being.
However, ICPs will need longer-term assurances that support will be in place while the energy crisis continues to drive up costs. Failure to do so will mean that employer and learner choice will be significantly affected.
Review funding rates for benefits after age 16
Currently, funding rates for many qualifications are not reviewed regularly, again threatening availability and learner choice. For example, funding for delivering functional skills qualifications in English and maths as part of an apprenticeship has remained the same since 2014. Earlier this summer, a study by the Institute of Learning and Work laid out the impact – with high inflation rates threatening to wipe out £850m of skills funding. This is very much in line with the experiences of many AELP members.
The amount providers receive for each qualification should reflect the true cost of providing it and all skills program funding rates should be reviewed and adjusted at least every two years. Priority should be given to accelerating decision-making for qualifications in areas that are under most immediate pressure. However, this requires that government departments and agencies have the resources and powers to do so. With the government seeking to cut the public service workforce by 91,000, this could lead to band funding decisions taking even longer than they currently do.
Helping Employers Hire Apprentices
There are also steps the government could take to reduce the costs of delivering high-quality workplace learning. Bureaucracy is a huge barrier for small and medium-sized businesses hiring apprentices. The Department for Education (DfE) clearly recognizes the scale of the problem and has committed to undertaking a simplification project, which is welcome.
The government could increase the number of employers committed to skills without committing significant new funds, simply by making the existing system much more accessible.
For example, having a self-enrolling learning system for employers who could activate their account when needed would save time and money. Apprenticeship funding rules also need to be addressed, as they have become too bureaucratic. While we clearly need adequate measures to ensure accountability, providers must be allowed to continue doing what they do best, which is delivering high quality skills.
Full support coming soon
Although our economy is going through tough times, ITPs are ready to meet the needs of employers and fill the skills gaps in our country. This will increase productivity and stimulate our economy, which we desperately need. However, providers need support to get them through the cost of living crisis and are hoping that support will arrive soon.
The government should extend the Energy Bill Relief Scheme and make it more generous if gas prices on world markets remain volatile and high. If ITPs want to continue to support the growth of the economy by addressing skills shortages, they will need certainty about future energy bills.
Funding councils in England should be given the resources and powers to allow regular reviews of funding rates.
The DfE, ESFA and IFATE need to further simplify the rules around funding and assessment of workplace training to reduce the running costs of skills providers.
By Jane Hickie, Executive Director, AELP
friday 21 october
- Louise Murphy, Economist, Resolution Foundation: The cost of living and the energy crisis for households
- James Kewin, Deputy CEO, Sixth Form Colleges Association: The cost of living crisis and 16-19 year olds in full-time continuing education
Saturday October 22
- Becci Newton, Director of Public Policy Research, Institute for Employment Studies: The cost of living crisis and 16-18 year olds in employment with apprenticeship
- Zach Wilson, Senior Analytics Officer and Andrea Barry, Analytics Manager, Youth Futures Foundation: The cost of living crisis and 16-24 year olds “not in full-time education”
monday october 24
- Nick Hillman, Director, Higher Education Policy Institute: The cost of living crisis and full-time higher and postgraduate education
- Liz Marr, Pro-Vice-Chancellor – Students, The Open University: The cost of living crisis and part-time higher education in England
tuesday october 25
- Steve Hewitt, Continuing Education Consultant: The Cost of Living Crisis: Access to Higher Education and Foundation Year Programs
- Sophia Warren, Senior Policy Analyst, Policy in Practice: The cost of living crisis, universal credit, jobs and vocational training
Wednesday October 26
- Paul Bivand, Independent Labor Market Analyst: Economic inactivity of the over 50s, cost of living crisis and adult education
- Aidan Relf, Skills Consultant: The Cost of Living Crisis and Employer Demand for Level 2-7 Apprenticeships
Thursday October 27
- Mandy Crawford-Lee, Executive Director, UVAC: The cost of living crisis and employer demand for 4+ level apprenticeships and part-time technical training
- Simon Parkinson, Managing Director, WEA: The Cost of Living Crisis and Adult Community Learning
friday october 28
- David Hughes, Managing Director, AoC: The Cost of Living Crisis and FE Colleges
- Jane Hickie, Executive Director, AELP: The Cost of Living Crisis and Independent Training Providers
Saturday October 29
- Susan Pember, Director of Policy, HOLEX: The Cost of Living Crisis and Adult Education Providers
- Martin Jones, Vice-Chancellor and David Etherington, Professor of Local and Regional Economic Development, University of Staffordshire: The Cost of Living Crisis – Staffordshire University’s Response
- Chris Hale, Policy Director, Universities UK: The cost of living crisis and universities
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