What devolution deals will mean for the skills system

We’ve now seen significant devolution deals that include devolving skills powers to Greater Manchester, West Yorkshire, Sheffield, Cornwall, Tees Valley, the North East Combined Authority, the West Midlands Combined Authority and Liverpool City Region.

In the July Budget, local areas were invited to submit their proposals for new devolution deals with the Government. By the September deadline, 38 submissions had been received – of the thirty bids where we know the detail, 80% asked for greater powers over the skills system. In practice, this means the ability to restructure the further education system and training provision in order to provide courses more in line with the needs of local employers. The skills system is, therefore, an interesting case to help identify what is needed to support central government and local areas to work together effectively in the devolution deals process.

Research on skills devolution

Over the summer, in partnership with the Gatsby Charitable Foundation, we conducted over thirty interviews: with policy makers from across Whitehall departments and national skills bodies, and with key players in the skills system and devolution process in three cities at different stages of their devolution lifecycles: Greater Manchester, the Sheffield City-Region, and Bristol/West of England.

We used what we heard, along with a review of the literature on the skills system and the devolution deals process, to identify what an effective model for joint local and national stewardship of the skills system might look like; and to learn wider lessons about how to make the devolution deals process as a whole work effectively.

What’s good and bad about the current skills system?

Our interviewees and the literature identified a number of key problems with the current skills system in England.

There seems to be little clear and shared sense of who the skills system is for. One view puts employers centre-stage, emphasising the role of the skills system in boosting economic growth and productivity, while another view sees learners at the centre of the system, arguing for the importance of learning as a way of achieving personal and social goals.

In addition, there are differing views on how funding should operate in the system; some argue that the funding model is currently learner-driven and should remain so, whilst others take a more municipal approach, arguing that funding should be tailored to local needs and that local bodies should have a say in how funding is allocated.

There is, however, widespread agreement among those we interviewed and in the literature that the current skills system is too complicated, making it difficult to navigate for both employers and learners. The quality of relationships between central government and local areas is perceived to vary considerably, with inconsistency of engagement from different Whitehall departments over devolution. This links to our interviewees’ final concern – the challenging fiscal environment, which is likely to get more challenging in the Spending Review settlement, and how this is leading to uncertainty in medium-term funding horizons and budgeting cycles, and preventing long-term planning.

Alongside these perceived weaknesses, our interviewees also highlighted two successes of the current skills system: the clarity in apprenticeships policy, which interviewees argued had successfully engaged businesses; and the pockets of excellence that exist within the system. The latter included pilots and projects that have emerged from earlier efforts to give more local control over skills – the Employer Ownership of Skills pilot, the Skills Funding Incentive pilots, Skills Made Easy in Sheffield, and Working Well in Greater Manchester.

Five key opportunities for skills devolution

There is a great deal of consensus on what this means for the opportunities that skills devolution brings:

1. The opportunity for increased economic growth, by linking skills with the labour market needs of local economies.
2. The opportunity to boost productivity through improving skills levels, as outlined in the Government’s July 2015 Productivity Plan.
3. The opportunity for employer engagement, with devolution offering the chance for the system to become more responsive to local economic needs.
4. The opportunity to join up public services, as devolution enables the better local integration of skills with other public services such as employment and health.
5. The opportunity for innovation, as devolved systems offer greater scope for local areas to innovate and experiment, creating what in the US are referred to as ‘laboratories of democracy’.

Realising these opportunities through the devolution deals

So how can central government and local areas realise these opportunities as more devolution deals are announced in the Spending Review and beyond?

We have produced a draft framework for skills devolution, which we are sharing with those who took part in our research. This is designed to allow local areas and those in Whitehall to think through their role in the skills system in the future, and to prompt them to ask a number of key questions when developing or assessing the skills parts of devolution bids. We will be building on this draft to develop a broader devolution framework that can be applied to other policy areas, which we hope will help central government and local areas to realise the opportunities that devolution brings, whilst mitigating some of the risks. We will be publishing this early in the New Year – if you’re interested in hearing more please get in touch.