Skills are the missing piece from the devolution puzzle

17 Jan 18

Local areas should have the powers and funds to shape bespoke plans that meet specific skills gaps, says Anna Round of IPPR North. 

Skills are crucial to the prosperity of England’s regions, and to enabling individuals and communities to share the benefits of economic growth. Yet while policy for economic development and transport is gradually being devolved, the skills system remains stubbornly centralised.

Devolution deals signed since 2015 include provision for combined authorities to commission the adult skills budget in their area. This represents a welcome recognition of the potential for devolution to transform the ways in which skills policy supports social and economic development.

But England’s regions need far more extensive powers if this is to become a reality – as well as greater financial and institutional resource. Our report, Skills for the North, sets out proposals for a fresh approach to devolution and skills. Opportunities for people to train and learn must become as prominent in the debate about regional powers and investment as transport and infrastructure have been in discussions of the Northern Powerhouse to date.

The logic of devolving powers to shape skills provision is clear. Demand for skills from employers must be a key factor in designing programmes and commissioning budgets and is highly local. The latest Employer Skills Survey found that the distribution of skills shortage vacancies and skills gaps among current staff varied greatly between LEP regions – as well as between the north of England and the country as a whole.

Similarly, across the north of England the proportion of people with a higher level qualification, such as a degree or a certificate at NVQ Level 4 or above, is five percentage points lower than for England as a whole, while the proportion with no qualifications or none above NVQ Level 1 is over one percentage point higher. But within the north differences between LEP areas are also pronounced.

And skills supply depends on recruitment from communities in particular places. Local actors are best placed to develop sensitive and responsive policy that reflects local access to and relationships with the skills system, and the ways in which people in an area connect to and progress through their learning and work.

Devolution fosters collaboration between local government, employers and providers to shape effective specialised vocational education and training. In our project we found that partnership working is well developed in many regions, with highly effective results. But without real devolved powers its potential to effect substantial change, or to be sustained over the longer term is limited.

Several national policies are moving into alignment to make this a good moment for skills devolution. The Industrial Strategy includes both a commitment to ‘place-based’ working and a focus on skills. This is positive but it must be accompanied by real investment in skills, possibly as part of the Sector Deals.

In addition, the new Skills Plan offers an increased status and a more coherent approach to technical education, with a framework of technical education routes associated with different occupations. These programmes, from Level 3 to Level 5, will play a key part in meeting the forecast needs of the future workforce in the UK. They will also help to increase the relatively low proportion of UK workers who hold a higher-level vocational qualification.

To make the most of this context, local areas need more devolved powers and greater resources. This should include a role in coordinating and shaping apprenticeship provision, building on a strong track record in many areas of work under the city and growth deals. This will undoubtedly happen in practice on the ground, but it needs to be resourced and recognised if it is to be sustainable in the long term and to have maximum benefit for local economies and people.

More broadly, the remit to use outcome agreements (or similar instruments) as the basis for commissioning provision should be broadened beyond the adult education budget, so that local areas can focus on both meeting specific needs and developing skills ecosystems to support priorities including work progression and productivity in the local economy.

And at the local level this more extensive skills devolution should be integrated with other policy areas, including business support, transport, health, and commissioning of services and capital projects. Again there is already good practice and ambition for this in parts of the north.

As in other areas of devolution, skills policy demands innovative approaches to data collection and analysis to support new frameworks and priorities. For example, local commissioning should reflect a robust assessment of current employer needs and - where possible - forecasts of future trends. Innovations could also include the development of local skills priority lists for use in shaping and commissioning provision. Building on work which is already ongoing at the ONS and elsewhere, local areas need access to the right data and the most effective and timely analysis.

The LEP area is a highly effective scale for devolution of much skills policy. But the north also needs a clear strategic vision to coordinate the potential of skills powers and investment to boost growth, productivity, and their benefits for individuals and communities. A new ‘Skills for the North’ body would support work on issues that cross LEP borders and provide a unified voice for stakeholders in discussions with national government and others.

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