What is skills policy and what has it got to do with HE

It’s that time of year when careers services are seeing stressed students juggling last minute job applications with deadlines for coursework. I spent 12 years running employability services at Aston University and remember this point in the autumn term as the time when I would usually give up hope of catching up on my reading.

As HEFCE’s new Head of Skills, I’ve been reviewing what’s going with the key skills issues that will be landing on the doorstep of higher education over the coming year. So, if you’re surfing a wave of invitations to forums on degree apprenticeships, heard about the Shadbolt and Wakeham reviews, or noticed the words ‘Apprenticeship Levy’, then let this become your shortcut to current skills policy and its potential impact on higher education.

The reason careers services are so busy right now is that they are facing two competing demands:  thousands of current students making applications, and the added pressure from graduates who haven’t yet found their first graduate job. Perhaps everyone should relax in the knowledge that the appetite for graduate recruits is bigger, better and bolder than at any time since the recession, with a 13.2 per cent increase in the number of graduate vacancies and a 3.7 per cent increase in median salaries (Association of Graduate Recruiters Annual Survey, September 2015).

As any Head of Careers, Head of Graduate Talent or recruiter will tell you, vacancies may be up but supply and demand are never in balance. More than ever, universities need to understand and influence these forces on graduate skills relative to the programmes they run, and keep tabs on the changing needs of the labour market.


Supply and demand is also occupying Jo Johnson. In his recent appearance on Newsnight, he talked about the ‘skills mismatch’ facing the UK and this is the nub of The Productivity Challenge.  In the Green Paper, Fulfilling our Potential: Teaching Excellence, Social Mobility and Student Choice, productivity is the first topic, and signals the Government’s intentions and priorities for skills.

Evidence from the Department for Business, Innovation and Skills (BIS) suggests that a 1 per cent increase in the share of the workforce with a graduate qualification raises long-run productivity by 0.2 – 0.5 per cent. Increasing the stock of graduates in the economy added 20 per cent to GDP between 1982 and 2005.

For those at the sharp end of getting graduates into positive destinations, the issues now being hailed as ‘productivity challenges’ are the bread-and-butter work. Three questions asked by the Green Paper are daily fodder to those working in the sector: How do you make graduates work-ready? How do you reduce the proportion of under-employed graduates? And how can you satisfy employer demand for STEM graduates?

I picked out three challenges for HE arising from the Government’s direction of travel:

1.‘A highly skilled workforce, with employers in the driving seat.’ Employer-led higher education … hmmm so how are we going to make this work? Employers expect a quick turnaround, have needs that do not always translate into three terms or traditional timetable arrangements, and require academics to make compromises on content. If this is a potential funding source in future, universities are going to have to confront new ways of designing and approving programmes.

2. Apprenticeships aren’t going away. In the Spending Review, George Osborne calls apprenticeships ‘his flagship commitment to skills’ and the Productivity Plan confirms the Government’s intention that they are the main solution for skills gaps, and this applies to high-skilled areas as well as those at the lower end. But how much notice is the HE sector taking of apprenticeships? The Skills Funding Agency holds the Register of Approved Providers for Higher and Degree Apprenticeships. Universities on the register confirmed starts for 2,142 learners in this academic year. See more information on setting up these advanced forms of apprenticeship.

Even with these green shoots of interest, understanding and accessing the new system of apprenticeships is already frustrating employers and potential learners. The lack of clear signposting was criticised roundly by Sir Michael Wilshaw in his recent OFSTED report into Apprenticeships which concluded that vocational routes ‘need parity of esteem’ with A-Levels for the UK to address the skills shortages and productivity issues we face.

Accessibility of apprenticeships also came under the spotlight in a recent House of Lords debate led by Lady Prosser, former deputy general secretary of the Transport and General Workers’ Union, who opened a debate looking at the importance of apprenticeships to the UK labour market. Lady Prosser focussed on the issue of supply and demand and insisted that ‘the mismatch of skills to future jobs needs to be addressed’.

3. In the Spending Review, George Osborne confirmed the introduction of an Apprenticeships Levy on large employers to help fund 3 million apprenticeships in the current Parliament:

‘To ensure large businesses share the cost of training the workforce, I announced at the Budget that we will introduce a new apprenticeship levy from April 2017. Today I am setting the rate at 0.5 per cent of an employer’s paybill. Every employer will receive a £15,000 allowance to offset against the levy – which means over 98 per cent of all employers – and all businesses with paybills of less than £3 million – will pay no levy at all…. With those paying it able to get out more than they put in. It’s a huge reform to raise the skills of the nation and address one of the enduring weaknesses of the British economy.

If the intention is to stimulate large-scale demand, how will this impact on HE? Furthermore, it is widely expected that universities will be subject to the levy themselves.

According to commentators such as the CIPD and CBI, businesses are divided over the levy and some voices are calling for a broader review of higher and further education funding to ensure that the further and vocational education is not treated as a poor relation.

Skills and devolution

On the regional front, skills is one of the policy areas to be handed over as part of local devolution agreements. This becomes important if your institution hopes to benefit from new devolved funding streams.

For a look at what this might mean for HE, Sheffield has led the way and their agreement says, ‘Sheffield City Region will work with government to deliver an integrated skills and training system… led by the private sector… giving local business the skills they need to grow.’

A key feature of their devolved policy and budget seem to be a proposed joint venture between the LEP, combined authority and the Skills Funding Agency, to deliver adult skills and apprenticeships grants for employers. Expect to see some cut and paste from this document if your region is embarking on its own deal.

STEM and computer science reviews

This is the first January in over a decade when I won’t have that familiar DLHE anxiety around the survey census date, yet I may still get a flutter from some heavy-duty graduate employability recommendations arising out of two independent reviews commissioned by BIS.

The Government are due to report on the Wakeham Review into STEM degree provision and how accreditation supports graduate employability, and the Shadbolt Review asks the same in relation to computer science. I hear there has been strong engagement with over 400 employers, universities and policy-makers taking part in the consultation phase for each review.

If we follow the Government’s lead on productivity, then it makes sense to learn from where we have most evidence that graduate skills can positively stimulate it. Guess what? That’s STEM and computer science. So we eagerly anticipate the recommendations from Shadbolt and Wakeham.

As I contemplate my own productivity over the festive season, I know the team at HEFCE will be hard at work reviewing applications for the new Engineering Conversion Course pilots. These packages should revive flagging employer talent pipelines and play into the heart of the productivity challenge. We can also expect them to generate positive destinations for graduates and universities.

Now there’s a seasonal gift for everyone.