Chapter 2: Lessons for the future

City skills: Strengthening London’s further education offer

Chapter 2: Lessons for the future

We have focused on three key challenges facing further education in London: firstly, low funding and investment; secondly, whether further education provision enables access and progression; and thirdly, whether the sector is able to address current and future skills gaps, and changing labour market needs.

We found that, although further education still plays an essential role in London, its relative decline is a weakness at a time of significant economic turmoil. Participation in adult learning is lower than it has been in 20 years, as both the government and employers have reduced their investment. There are fewer pathways for progression within the vocational education system, and the system is not geared to respond to present or future skills shortages. We propose three principles for reform.

Principle 1

Resource London’s further education sector

Public sector funding has fallen sharply in recent years, putting a strain on staffing, course quality and the sector’s ability to respond to the demands of a changing labour market. At the same time, the onus is being placed on large employers to deliver investment in training. However, this is mainly benefitting those who are currently employed, rather than new labour market entrants, and is failing to provide broader opportunities for continuous training.

We therefore recommend that the government should introduce a comprehensive support package for the further education sector and for learners, in line with the recommendations of the Augar Review. This should include:

  • Increased teaching grants, with a particular focus on subject areas linked to the greatest skills shortages or labour market needs, to ensure that schools and colleges have appropriate funding to deliver high quality education and training.
  • Increased capital grants for investment in college infrastructure.
  • 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.

These recommendations have been costed in the Augar Review, and we support their application in London, where increased funding for colleges should be devolved to the Mayor.

Under the most conservative assumptions, the government estimates that each pound invested in the further education system as a whole generates nine pounds of net present value. 55 With productivity growth a central objective of government policy, 56 greater investments in further education could be a cost-effective way to boost stalled productivity.

We also think it is unreasonable to expect that learners without level 2 or 3 should self-fund their first qualification, for three reasons. Firstly, low-skilled Londoners are more likely to miss out on education and training opportunities in adult life than their highly-qualified counterparts. 57 Secondly, further education students do not benefit from the same advantageous loan offer that helps higher education students to pay their fees and maintenance costs. Thirdly, recent survey data suggest that 33 per cent of Londoners do not have financial savings above £1,500, and this figure rises to 43 per cent among those without a university degree. 58 Without more generous entitlements, it is hard to see how the capital’s further education offer can support Londoners who are most exposed to the job losses in times of economic turmoil.

Principle 2

Create pathways for progression

There are many basic skill courses being delivered at colleges, and current data is inconclusive about the opportunities for progression that these courses provide (especially for people with limited employment or training history). At the other end of the scale, London’s apprenticeship offer has been very limited and increasingly aimed at career development.

The Mayor of London has already taken important steps to increase course accessibility for low-income earners since taking control of the Adult Education Budget in 2019. The current Mayor extended eligibility for fully funded adult education courses to all Londoners earning below the London Living Wage (£10.75 per hour in 2020), instead of the national minimum wage (£8.72 per hour) in other regions, to reflect the higher cost of living in London and ensure a broader access to adult learning. 59 This is a welcome move, showing how devolution can make the system more responsive to local needs.

But specific work will be required to support people who are less likely to access or remain in adult learning, for example, young people who are not in education, employment and training. This will be particularly important at a time of economic crisis, when competition to enter the labour market is even tougher and employers have lower training budgets. We therefore recommend that:

  • 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. This would inform a greater outcome focus in commissioning courses, and ways to support them into education or training.
  • Further research must be conducted to evaluate whether apprenticeships are succeeding in bringing about genuinely new opportunities for learners, rather than replacing existing training opportunities. Over time, rules around levy spending may need to be reviewed to ensure that apprenticeships are delivering opportunities to help young people break into London’s competitive labour market.

Principle 3

Take a strategic approach to London’s vocational offer

Currently, there are substantial skills gaps in some sectors, and it is likely that these gaps will grow as employment needs change, and workers will need to upskill and reskill to adapt to disruption in the market.

  • 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, and to support colleges to work with employers to plug skills gaps. This should increase the responsiveness of London’s further education to future skills needs.

There have already been some significant steps in this space, such as the Mayor’s Construction Academies, which are designed to connect employers, providers and learners and facilitate the creation of employer-led curriculums, the communication of employer skills needs and the delivery of support to learners looking to enter employment. Initial reports are positive, 60 and the potential to expand this model should be explored. We also welcome the Mayor’s upcoming Skills and Employment knowledge hub, which should help further education providers coordinate their offer, and should highlight strategic gaps.

While the devolution of the Adult Education Budget is a good start for the capital, the Mayor should continue to lobby for further skills devolution. This would allow a better strategic overview of skills policy and would allow London government to set priorities that match up to London’s economic needs. Indeed, we have seen how skills policy influences the behaviour of training providers, learners and employers – incentivising one type or one level of provision over another.

Recovering from the coronavirus crisis and addressing the long-term inequalities specific to London’s labour market will require strategic oversight of the city’s skills provision. We therefore recommend that:

  • The government should devolve the further education budget in full to London government, including 16-18 study, and apprenticeships funding for small businesses.

The Learning and Work institute has offered a framework for how devolution of skills policy to local government could be implemented across the UK. 61 They recommend that agreements covering several years could be drawn up between central and local government. These agreements would be based on jointly defined outcomes and would enable to monitor the effectiveness of changes to provision locally. This type of solution would meet several of the challenges highlighted in this report, from the lack of ability to think strategically, to the need for local variation.

The city’s future prosperity will require a further education system that is as strong as its schools and universities. London’s further education offer will be essential to respond to the deepest challenges facing the capital, notably economic restructuring, and social inclusion. It will also be part of the response to the threats arising from the coronavirus crisis and Brexit. London can no longer afford to neglect it.

  • 55 Independent panel report to the Review of Post-18 Education and Funding (2019).
  • 56 UK Government. The UK’s Industrial Strategy.
  • 57 Traditionally, people who would be most in need of upskilling have been also those least likely to receive it. This is because people who are out of work logically don’t receive any employer training, and for those who are in work, the propensity to receive training varies by occupation. In London in 2018, 30 per cent of people in work with qualifications at or above level 4 had received training in the previous quarter, compared to 20 per cent of those with qualifications at or below level 3.
  • 58 Greater London Authority. 2019 Survey of Londoners
  • 59 Mayor of London. Skills for Londoners Framework AEB Consultation Year 2 (2020/21)
  • 60 Interview with a further education college.
  • 61 Wilson T. Crews A. Mirza K (2017). Work Local: Report to the Local Government Association on developing a modern, local, public employment and skills service. Learning and Work Institute.