Gissa training scheme

12 Jun 09
As the recession hits home, training and reskilling schemes are being used to ease the impact of soaring unemployment
By Stephen Court

6 February 2009

As the recession hits home, training and reskilling schemes are being used to ease the impact of soaring unemployment

The recession might be bad for jobs and businesses, but the fight against it is putting further education centre stage. The government is pumping additional funds into the sector, and colleges are being given more freedom in how they provide courses to meet the challenge. This is even more imperative as, despite pleas from Prime Minister Gordon Brown, businesses appear to be cutting their training budgets.

As thousands of workers lose their jobs, colleges are moving quickly to help. The closure of Woolworths has put its 27,000 employees out of work. In London, Waltham Forest College set up a help desk offering advice to local Woolworths employees and encouraging them to consider taking up a training programme.

Kevin Grindley, head of student services at the college, told Public Finance that about 30 former Woolworths employees were attending the college and there had been a large number of telephone enquiries. However, he estimated that the stores had employed around 1,500 people in the borough, underlining the scale of the task facing the sector.

Another London college, City and Islington, sent a rapid response team to several Woolworths stores, offering an intensive two-week course on job hunting, and set up a helpline.

With unemployment at almost 2 million, and forecast to reach 3 million by the end of the year, the government has put further education initiatives at the heart of its strategy for dealing with the impact of the recession.

In December, ministers announced the creation of at least 10,000 apprenticeships, the majority in construction – despite the contraction in the building industry – and others at Sainsbury’s, Tesco, Superdrug and Phones 4u. In January, Brown announced that a further 35,000 apprenticeships would be funded in 2009/10 at a cost of £140m, taking the total to more than a quarter of a million.

Skills Secretary John Denham has announced £83m for 75,000 additional training places in colleges and with other training providers, to allow people to train while they are looking for a job and carry on with their course once they get into work. The announcement was coupled with the use of job-finding incentives for training providers. The Department for Innovation, Universities and Skills said payments to colleges and other training providers would be linked to helping learners get back into work as quickly as possible, as well as for actually providing the training.

The government has also said it would provide ‘golden hellos’ of up to £2,500 for employers to recruit and train unemployed people.

Even before this latest range of incentives, the government announced in October that £350m of the Train to Gain skills programme would be made available for small and medium-sized enterprises. This included provision of ‘bite-sized’ chunks of training in small units or modules of qualifications in subjects known to be important to SMEs, such as business improvement, team-working, and customer service.

But will these measures be sufficient – or even workable? Julian Gravatt, director of research at the Association of Colleges, says: ‘The current initiatives will help but I’d expect we’ll need further work, in particular to review the suitability of the 2007 Spending Review targets in current circumstances and to remove other barriers which make it harder for colleges to meet local people’s needs.’

Alongside the incentives for business, the government has provided a boost to trainees and the institutions themselves. Denham relaxed the rules to allow workers to get training up to NVQ level 2 – the equivalent of GCSEs at grades A*–C – even if they already had a previous qualification at this level. This was particularly significant because government policy had previously been to give free tuition only for a first level 2 qualification – the so-called ‘firstness’ rule.

In November, the annual grant letter to the Learning and Skills Council from the government said that funding allocated by the LSC to the further education sector in 2009/10 would rise by 4.5% to £12.2bn – above the forecast level of the gross domestic product deflator. It also called on the LSC to continue to work towards established targets for increasing the numbers of people with qualifications at levels 1, 2 and 3, but acknowledged that relaxing the ‘firstness’ rule would make targets ‘more challenging to achieve’.

Gravatt welcomes the relaxation. ‘Colleges clearly have a role in helping people get back into work quickly and it’s important to remove unnecessary obstacles to them doing this,’ he says. ‘Removing the firstness requirement could make it more difficult for the LSC to meet all its targets but the priority in current circumstances has to be flexible training for jobs rather than training to meet full qualifications.’

For Dan Taubman, senior national official at the University and College Union, the recent government announcements might not go far enough. ‘Colleges can and will respond to the new challenges of the recession, and are in a better position to do so, especially with many of them having new buildings. But the new initiatives so far are a drop in the ocean of what could well be 3 million unemployed,’ he says.

UCU policy researcher John Offord, however, raises doubts about incentives for colleges to get learners into work. ‘I do not see how, given the nature of the economic crisis, this is a practical demand or one that colleges can reasonably be expected to put into contracts with either employers or learners,’ he says.

And John Cridland, deputy director general of the CBI, adds: ‘These measures to help the unemployed are welcome and important, but we also need initiatives that will stop people becoming unemployed in the first place. The best way to protect jobs and the economy is to target the credit crunch. If we do not get credit flowing through the economy again, good businesses will fail, causing more job losses and lasting damage to the economy.’

Despite the recent increases in funding, there are worries about long-term financial stability in further education. Next year, funding and responsibility for providing education and training for 16–18-year-olds in England is set to transfer from the LSC to local authorities, and the Skills Funding Agency is to replace the LSC’s role in funding post-19 education. This shifting of the furniture could disrupt college income.

Although the economic downturn has so far benefited the sector, funding for 2010/11 is not yet set in stone, and analysts such as the Institute of Fiscal Studies are predicting a three-year squeeze on public sector spending. What’s more, the full impact on public spending of the government’s massive financial aid to the banking sector is unknown, and colleges have been shocked by the LSC’s announcement of a three-month moratorium on spending on some building projects.

There are also concerns from the demand side, with employers indicating that they are or will be cutting their training budgets as the recession bites. Although Brown said last month that ‘now more than ever is the time to invest in our young people, their skills and their talents in training them for the future’, a survey of major UK businesses published on January 27 shows that half of training managers in large companies say their budgets have been or will be cut.

On January 16, the Commons’ innovation, universities, science and skills select committee published a report on progress since Lord Leitch’s 2006 review of skills provision in the UK. The MPs said: ‘Reskilling, rather than upskilling, is increasingly becoming the norm and it is our view that targets and the government’s allocation of resources must change to reflect that. The current economic situation has raised the stakes: skills policy could be the key factor which determines how and when the UK economy recovers and grows. Government must accept this and drive the agenda forward... FE colleges should be accorded sufficient ability and autonomy within Train to Gain to devise the courses needed in their areas and should be encouraged to develop a truly responsive employer engagement process.’

Other parts of the UK have also been looking to further education to provide help for jobless people and a boost to spending. For example, in November a £50m programme was launched in southwest Wales to assist 9,000 economically inactive people back into work.

This was followed in December by a similar scheme, worth £19m, for unemployed people in south east Wales. Deputy skills minister John Griffiths comments: ‘Better training and skills are more important than ever in the current economic climate and through this project individuals will be equipped with the necessary skills to enter or re-enter the workplace.’ In Scotland, the government’s budget for 2009/10 included £13m of accelerated spending to be invested in college and university facilities. The Scottish Parliament voted on February 4 whether to accept the budget.

Meanwhile, Education and Lifelong Learning Secretary Fiona Hyslop has called on the Scottish Funding Council and the FE and higher education institutions it funds to demonstrate ‘the significant contribution that they can make to help meet these current economic challenges’, as well as thinking of initiatives to support economic recovery plans.

In response, the council has announced £7m as additional support as part of the Partnership Action for Continuing Education to enable colleges to respond quickly to major redundancies. The council says this is ‘the first of a number of actions that the council will be announcing in the months ahead to assist universities and colleges to respond to the economic situation’. It is clear that the UK’s further education sector is at the front line in responding to the recession. Funding for FE is growing, and the sector is getting a high political profile. But with so many people under threat of losing their jobs, the concern is that colleges might struggle to meet all the new demands they are facing.

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