Problem Register - #9 · Education; Employment & Workers' Rights
Skills and further education
Priority Score
- Scale4/5
- Severity3/5
- Cost of inaction4/5
- Tractability4/5
- Deliverability3/5
- Cross-partisan viability4/5
- Time-criticality3/5
Seven dimensions, each scored 1-5 and summed to a total out of 35. It is a triage and communication tool to compare problems - not a measure of truth. How it is derived is set out in The Method.
The problem
The UK under-trains its workforce. Further education - the route for the majority who do not take an academic degree - has been squeezed for years; employer investment in training has fallen; and the system meant to match skills to the economy's needs is unstable and hard to navigate. This sits directly behind the productivity problem, and behind the seed proposal in this project for a National Employment Service.
The evidence
Further education college funding per student remains around 11% below its 2010-11 level in real terms, and total adult skills and apprenticeship spending is well below its level of fifteen years ago. Employer investment in training is at or near its lowest since records began, with spend per employee down sharply in real terms over the decade. Apprenticeship starts have drifted toward older and already-qualified workers, away from young entrants.
Why the market fails
The central failure is a coordination failure with an externality - the "poaching" problem. A firm that trains a worker cannot capture the full return, because a rival can hire that worker away; so each firm rationally under-invests in transferable skills, and collectively the economy under-trains. Further education itself is a quasi-public good that the market will not fund at the socially optimal level.
Why it has persisted
Skills policy has been subject to near-constant churn - a long series of qualifications, funding mechanisms and institutions introduced and withdrawn - which deters employers and learners from committing. Further education has consistently lost the funding argument to schools and universities, both with more organised constituencies. The apprenticeship levy has not solved the underlying coordination problem.
Who bears the cost
The workers - especially the non-graduate majority - whose earnings and security suffer; employers facing skills shortages; and the wider economy (entry 8).
Policy direction - outline only
Proposed mechanism
A multi-year further education funding settlement that ends the per-student real-terms decline; a reformed, broader skills levy that pools and co-funds training so no individual firm carries the full poaching risk; and a stable, simplified qualifications framework with a moratorium on further structural churn.
Must resolve
The levy design in detail; the further education workforce, whose pay has fallen behind schoolteachers'; and integration with any National Employment Service.
Main risks
Further churn undermining confidence; levy funds displaced to training that would have happened anyway; insufficient provider capacity.