What’s the problem with skills?
Brian Acheson sees the solution in young people educated for the economy, using the block grant to grow the private sector and government trusting colleges to get on with their job.
Here’s an interesting vox pop from some of our brightest 16 and 17-year olds. A fundraising programme from my son’s school features answers to a number of questions. The answers to the question ‘possible career path’ contain no surprises. Out of 46 boys, almost half want to become doctors or lawyers.
But, is this a good thing? How does this unrepresentative picture impact on the need to grow a truly competitive, outward-looking economy here?
Parents and grandparents know where the secure and well-paid jobs are here – within the established professions – and they influence young people accordingly. Both law and medicine are largely dependent on the public purse. Yet with over 50 per cent of the workforce paid out of the public purse, the shape of our economy, and specifically in this case the demand for skills, is within our control. If we really want to get different results then we need to spend public money differently.
To address the ‘problem with skills’ our greatest challenge is on the demand-side – and I don’t mean sector skills councils or workforce development forums. I mean real demand. The sort that parents understand: the skills needed to get well paid and secure jobs. There is a lot that colleges can and are doing on the supply-side, but without a significant boost in real demand we risk failing to achieve the productivity gains our economy needs.
It is now clear that economic growth fuelled by foreign direct investment, or ‘money-from-America’, is not going to materialise to the extent hoped for – and that if we are going to transform our economy then we have to do it ourselves. But how, and what resources are available to us?
I see three opportunities. We need to maximise each of them.
First, our young people. Recent successes (e.g. CitiBank, Northgate IS, GEM, Liberty Mutual, Andor Technologies and Almac) demonstrate that our appetite for solving technical problems and hard work is alive and well. We have the raw talent and, with an education system aligned to economic opportunity, we are capable of nurturing significant numbers of highly skilled people.
Second, we have the block grant. We face big challenges in achieving good outcomes with less resource. To do this we need to think differently. Most public service organisations in here spend between 60 per cent and 70 per cent of their budgets on staff, driven largely by UK-wide pay agreements. This is an unintended consequence of our status quo within the United Kingdom. Our public sector pays significantly more for the same skills as the private sector. This is a direct disincentive to private sector growth. The solution is controversial. In addition to public sector headcount reductions, we need to reset these agreements to achieve, at least, pay parity between public and private sectors. The money saved can then be used to create fiscal differentials and enterprise zones.
Third, we have the six regional colleges with a critical mass – over 40 campuses and almost 4,000 professional staff – to respond to the skills needs of a resurgent enterprise culture. The new coalition government recognises this opportunity.
David Willetts’ vision is for affordable higher education delivered in further education colleges to students living at home, perhaps in part-time work. The policy of half the population going to university, on borrowed money, is over.
Central to policy in Great Britain is the imperative to free colleges to respond to the needs of employers and students. In a dynamic and fit-for-purpose further education sector colleges need control over their capital budgets, a ‘single-line’ funding model (i.e. an end to ring-fencing and bureaucracy) and light-touch regulation. If we are going to seize the opportunity available to us, we need trust and respect between a government, who sets policy and funds outcomes, and colleges who deliver.
