At a time of intense economic upheaval, further education has a vital role to play in London:

• Creating opportunities for young people: one in six Londoners aged between 20-24 is not in education, employment or training – and this share is as high as in the rest of England. ¹
• Tackling low pay: people without qualifications are at a significant disadvantage in the capital. Their pay is only three per cent higher than in the rest of country, compared to 24 per cent for Londoners with level 3 qualifications.
• Responding to the 2020 coronavirus pandemic: unemployment levels have been rising sharply over just a few months, and casual workers and young people looking to enter the labour market for the first time are likely to face higher barriers to employment in times of crisis.
• Adapting to automation: London’s economy is likely to be disrupted in coming years, with routine administrative and manual jobs replaced by growth in areas such as health, hospitality and sports, placing a premium on retraining and lifelong learning.

But London’s further education provision struggles to meet these challenges:

1. Further education is underfunded, and participation has fallen as a result:

• Overall spending on adult education and apprenticeships and other work-based learning for adults fell by 37 per cent in real terms between 2009/10 and 2018/19. ²
• Adult participation in learning is at its lowest in 20 years: 28 per cent of Londoners say they have engaged in some form of learning in the last three years, down from an average of 45 per cent in the 2000s.
• Participation specifically in further education among those of working age (16-64) has fallen from 13.6 per cent to 7.5 per cent since 2014/15. ³

2. Opportunities for progression between lower and higher-level learning are relatively rare:

• London’s abundant supply of graduates makes the labour market highly competitive, with many graduates occupying ‘non-graduate’ jobs.
• Meanwhile, most funded learners are in lower level courses, rather than intermediate or higher technical qualifications.
• Apprenticeships can offer pathways for progression, but London’s apprenticeship offer has historically been poor, with half as many apprenticeship starts per 1,000 jobs as in the rest of the UK.
• Recent evidence suggests that apprenticeships are increasingly used for career development, rather than for access to employment.

3. The further education sector struggles to respond to current and future skills needs:

• The number of learners and apprentices in sectors with skill shortages has barely grown since 2014/15. And and in subject areas for which provision has grown, the increase has been modest in comparison to employer needs.
• Current funding rules for further education create uncertainty for providers, and discourage innovative or strategic approaches to provision.

This neglect of further education means that the system is not well positioned to support Londoners through the coronavirus crisis, or in facing the challenges of economic restructuring in coming decades. From our review, we suggest the following principles for reform:

Principle 1: Resource London’s further education sector

• The government should introduce a support package for the further education sector, to level the playing field with higher education. This should include boosting teaching grants for subjects relevant to skills shortages, higher capital funding for further education institutions, free tuition for learners studying for their first level 2 or level 3 qualification, and a lifelong learning loan allowance for higher-level courses, available for adults without a publicly-funded degree.

Principle 2: Create pathways for progression

• The Mayor of London, with support from the Department for Education and its regulators, should map the routes available for learners’ progression, evaluate the effectiveness of different courses, and research the barriers facing young people who are not in education, employment or training in accessing qualification opportunities.
• The government should evaluate whether apprenticeships are succeeding in bringing about genuinely new opportunities for learners.

Principle 3: Take a strategic approach to London’s vocational offer

• The Mayor of London should revise the rules under which the Adult Education Budget is spent, to encourage course innovation and expansion in areas of skills shortages.
• The government should devolve the further education budget in full to London government, including funding for apprenticeships and 16-18 learning.