The gloves are off in the fight for the skills budget

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Skills, skills, skills – a hot topic at the moment with a half of our members surveyed recently saying the availability of skills was their main business concern.

Whilst businesses fight for scarce skills, another battle appears to be emerging as policy-makers debate how best to allocate the skills budget. In the ring two radical approaches have been warming up and now it's up to judges (government) to crown their champion.

The Contenders

In the (non-political) blue corner we have Lord Heseltine proposing what he has called a ‘Single Pot' – an idea to bring together separate funding streams (include the £17.4bn skills budget) into a competitive funding pot for local areas, recommending that LEPs develop skills strategies and then bid for growth funds (including skills) from central government.

Whilst for manufacturers this seems to be case of deja-vu with members citing experiences of engaging with Learning and Skills Councils, Regional Skills Partnerships and many other bodies set up to achieve the same thing (but failing), Lord Heseltine is not without his supporters – behind him in the crowd are LEPs as well as other local bodies and providers.

And in the (non-political) red corner, Doug Richard, with his Richard Review of Apprenticeships, concluding that the Apprenticeship funding model is not delivering the results businesses, and the wider economy needs, instead proposing a model of routing Apprenticeship funding through the employer via the national insurance or tax system, arguing that such an approach would drive demand, quality and investment.

Cheers from crowd, in particular from manufacturers. In our Skills for Growth report we too had suggested routing funding through the employer, to give them greater purchasing power, driving providers to be more responsive to their needs and delivering the skills they need. Other likely supports include UKCES and without doubt the business community.

Round 1: Government responds to the Richard Review of Apprenticeships

The bell sounds, and out comes a clear commitment to accept all the recommendations but to consult further on how the new proposals would work in practice. But just when Doug Richard is about to score his first point in a ring, he suffers a blow, with the government stating that instead of exploring Richard's new model of funding, it will instead assess the outcomes of the Employer Ownership of Skills Pilot. Down but not quite out.

Round 2: Government responds to Heseltine Review

Ding ding, Round 2 kicks off which the long-awaiting response to the Heseltine Review. Manufacturers in the crowd remain anxious and tensions are high, as the possibility of skills funding being devolved to local bodies fills the room.A jab from the left to the Doug Richard camp as government says it accepts 81 of the 89 recommendations, including creating a single pot of funding. A reactive boo can be heard from the business crowd with EEF arguing that we will get the best bang for our buck by giving employers, who invest in training, control of skills budgets rather than parcelling them out to local bodies.

With Richard on the ropes and employers about to throw in the towel, businesses are saved by the bell with a response that reads “It is important to continue the focus on transferring control to employers and maintain a nationally funded apprenticeship system”. A sound point for employers.

Time out

A quick break to see where we are – so no signs to route funding through employers, a firm commitment to create a Single Pot but for Apprenticeship funding to remain at a national level.

Round 3: The Budget

It was everything to play for during yesterday's Budget but with the expectation that the Budget would focus on issues such as infrastructure, fuel duty and working families – would we see the Chancellor entering into the skills budget ring?Yes, but only momentarily. He delivers a right hook at the Richard's camp accepting ‘Heseltine's excellent idea of a single competitive pot of funding' but then comes a counter-punch as he ‘endorses the report of Doug Richard to make the most of apprenticeships'. Both sides suffer a knock from their opponent but neither comes out victorious.

The Verdict

The fight for the skills budget is no walkover and the judges (government) have yet to come to come to a unanimous decision. This fight then is far from over so tune in on 26th June for the grand finale – the Spending Round…

Author

Head of Education & Skills Policy

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