Category Archives: Education

What does a _review_ of government policy on employer training mean_

What does a “review” of government policy on employer training mean?

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Perspective by David Laws, GK Adviser

Last week the Chancellor, Rishi Sunak, made a few waves in the education sector by announcing in his Spring Statement a “review” of government policy on employer training, including the Apprenticeship Levy. The announcement caught many by surprise, including apparently some of the Chancellor’s colleagues in the Education Department.

By the end of the week, some were suggesting that the “review” was not a formal “Review”, and might not result in much change in the Levy. So, what exactly is going on? Well, the Apprenticeship Levy seems to have strong backing in the government, and indeed across the political parties. Inevitably, there are often calls for tweaks, for more “flexibility” and for a variety of different reforms – not all of which are mutually compatible.

The Chancellor’s “review” could result in looking again at some of these practical issues, which also include the extent to which the existing Levy is being used to support new entrants into the labour market, as opposed to existing staff (some of whom may already have higher level, tax-payer supported, qualifications). But the Chancellor might have something new or “additional” in mind, to work alongside the Levy. In his recent “Mais Lecture” the Chancellor started to set out his vision of a post-pandemic economic strategy, including “investment in people”. Some have speculated that he may want to introduce some sort of discrete tax credit to incentivise training. This would presumably involve reformulating the existing tax relief for training which is available through the corporation tax system. The aim, in any case, seems to be to raise the amount of expenditure by employers on training, and improve its quality and focus. The review will look at whether current incentives are delivering the “right kinds of training”.

What should those interested in the Apprenticeship Levy make of all this? It seems if there is still a strong commitment to the principle of the Levy, and a desire in some parts of government not to rock the boat too much. This could suggest that the review will make small changes to the Levy, while perhaps restructuring other training reliefs.

But it would be unwise to take any review into this area for granted – not least one where the powerful Treasury appears to be in the driving seat. To the extent that the review does look at if “the current tax system is incentivising the right kinds of training”, the review could ask some fundamental questions, which could have both direct and indirect effects on the Levy. This could include looking at issues raised by the Augar Review, around the support for higher level apprenticeships.

Whether this “review” is one with a small “r” or capital “R”, all those interested in the Levy and the future of government policy on training support incentives should be using this as an opportunity to feed into government their views on how the system should evolve. The review is going to need to address some fundamental issues, and what impact this will have on future government policy on training cannot be taken for granted.

David Laws, GK Adviser and Former Minister – Response to Augar

David Laws, GK Adviser and Former Minister – Response to Augar

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The government has today announced its (very!) long awaited response to the Augar Review on post 18 education finance. The announcement will be eclipsed by the dramatic news of Russia’s invasion of Ukraine, but it is of importance for the long-term outlook for post 18 education.

The Augar Review was originally inspired by Theresa May’s desire as PM to offer a reduction in student tuition fees, after this became a major issue in the 2017 General Election.

It is believed that May wanted fees cut to £7,000 or £7,500 – perhaps with higher government grants to protect the more “expensive to deliver” courses. There was also a strong desire to shift financial resources away from “low value” Level 6 HE courses, towards Level 4/5 provision in subject areas of greater relevance to skills shortages and the labour market.

Today’s news indicates how far the government has moved from the initial May/Augar vision. Tuition fees will remain at £9,250 for the rest of this Parliament, and quite possibly beyond. Labour has also, under Keir Starmer, moved away from prioritising lower tuition fees. Instead, policy makers will allow inflation to gradually eat away at the real value of fees, which will over time put greater pressure on university finances.

Not only will students be stuck with £9,250 fees, but future students will be expected to start repaying their loans at a much lower level of real incomes – £25,000, instead of over £27,000 at present. The government and the Treasury have decided that students must pay back a lot more towards their loans, rather than allowing taxpayers to take the strain. As well as repayments starting earlier, payments for many will last much longer – for 40 years (before write-off), rather than the existing 30 years. However, in one piece of good news for students, the interest rate on student loans will be cut, so that it is limited to the RPI measure of inflation.

Overall, the changes to student repayments are regressive – lower earning students will pay a higher proportion of income, while higher earners gain from the lower interest rates. The strongly progressive structure put in place by the Coalition government is being watered down.

Where the conclusions of the review do still follow some of the Augar agenda are around the more generous Lifelong Loan Entitlement for both HE and other technical post 18 courses, at Levels 4/5/6. And the two consultations on minimum entry grades for post 18 study and around student numbers control are very important shifts towards potentially restricting access to university courses to those with higher attainment, and to courses with higher labour market returns. This is another major shift away from Coalition policy, which allowed for sector and student led increases in HE places.

The reviews will be controversial, and could make a major difference to the final policy proposals. Disadvantaged students could be big losers from any attempt to restrict university places to those with higher grades, while those delivering courses that lead to typically lower paying jobs will worry that they could face new restrictions on student places. By establishing reviews into both these issues, the government is accepting that change is highly controversial and needs much further thought.

If you would like to discuss the landscape for education policy in the UK, please email louise@gkstrategy.com

Education Analysis- Autumn Budget

Education Analysis: Autumn Budget

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The Chancellor of the Exchequer, Rishi Sunak, delivered his Autumn Budget and Spending Review to Parliament on 27 October. Set against a backdrop of labour shortages, a supply crisis, soaring energy bills and the spectre of inflation, the Chancellor struck an upbeat tone as he heralded an ‘economy for a new age of optimism’.

For the education sector, the Chancellor revealed a Budget and Spending Review stuffed with apparent good news – with headline announcements including £4.bn extra schools funding and £1.8bn for catch-up. However, following a closer examination of the detail, is the Budget and Spending Review all quite as good as it seems?

Core Schools Budget

Treasury documents confirm that the spending review allocates an additional £4.7bn for the core schools budget in England. This announcement will provide £2.6bn to increase school places for SEND pupils, funding 300,000 more places alongside £1.4bn to deliver six million tutoring courses for disadvantaged pupils, and train 500,000 teachers over three academic years.

This is above the spending commitments made in 2019, with the Treasury stating that this would be “broadly equivalent to a cash increase of over £1,500 per pupil by 2024-25 compared to 2019-20”.

However, with the Chancellor confirming the end of the public sector pay freeze, Treasury documents reveal that the extra funding will go towards “supporting delivery” of its pledge to raise new teacher starting salaries to £30,000, rather than directly to pupils. The small print of the document also outlines that the £4.7bn funding increase “includes public sector compensation for employer costs of Health and Social Care Levy”.

Schools Catch-up

The Spending Review confirms an additional £1.8bn for education recovery – on top of the £3.1bn already announced. The new commitment includes a £1bn “recovery premium” for the next two academic years, with primary schools benefiting from an additional £145 per eligible pupil, while the amount for secondary schools will “nearly double”.

While this additional funding is no doubt welcome, it remains a meagre figure compared to former education recovery tsar Sir Kevan Collins proposal for a £15bn long-term programme. Indeed, the UK continues to lag behind comparatively, with less than £500 of funding available for each child in the UK, compared with £1,800 in the US and £2,100 in the Netherlands.

Furthermore, when the government released its initial catch-up package in June 2021, included was a commitment to review time spent in school, amid calls to aid recovery by extending the school day. Ministers said that findings would be set out “later in the year to inform the spending review”. So far, no findings have been released, and there was no mention of any such plans in the Chancellor’s speech or Treasury documents.

Departmental funding

Analysis by the Institute for Fiscal Studies has shown that the increases in education spending in England is lower than the increases seen in other departments. While the Department for Education’s budget has swelled by 2.2.% in real terms, the average increase across government is higher at 3.3%, with the Department for Health and Social Care receiving a 4% increase.

A new age of optimism?

To engage with the government’s Autumn Budget and Sending Review effectively, organisations will need to understand the wider direction of education policy. GK Strategy are specialists in education and are experts at supporting organisations who are operating in highly regulated sectors and helping them to navigate complex markets and build relationships with key decision makers.

With the Government outlining its long-term spending plans, there are plenty of opportunities for education providers to benefit.

For more information or if you would like to speak to the GK team, please contact Jack Sansum on jack@gkstrategy.com or Nicole Wyatt on nicole@gkstrategy.com.