The rate of economic change in Britain and other advanced western countries is going to pick up over the coming decade. Brexit, net zero, levelling up and new technologies all mean we are going to have to work in new jobs and in new ways. But as we emerge from the pandemic, we have seen how poorly prepared we are for these big changes. Younger workers have piled back into work more quickly than we feared, but they have returned to the same relatively low-paid and low-skilled sectors—leisure, hospitality, retail—which they were in before. The pandemic has not prompted a “jobs and skills reset” for them.
The pandemic has also turned out badly for older workers, some of whom have left the labour force entirely. Resolution Foundation research shows that the employment of men in their fifties fell from 84 per cent before the Covid crisis, bottoming out at 81 per cent in January-March 2021, before rising to 82 per cent in April-June 2021. Women in their fifties did even worse. About 140,000 over-fifties who were working before the pandemic are now unemployed or completely disengaged from the labour market.
Meanwhile, labour shortages have become a real problem, and not only in the case of HGV drivers. There are over 100,000 unfilled vacancies in social care. Successive schemes such as the Green Deal, to help us get to net zero by funding domestic heating initiatives, have failed because of what the Environmental Audit Committee identified as a “chronic shortage of skills in the home retrofit sector.”
The edu-sceptics say we are “over-educated,” but Andreas Schleicher of the OECD takes a very different view. In his analysis we are pretty efficient at using the skills we have got, but we have little spare capacity to draw on if we want to do something different. He warns that “only 5 per cent of the labour force have higher skills than what’s required for their present job. That is a huge threat to productivity.”
We need to be better at training, particularly of young people who do not get decent GCSEs in English and maths. They are shockingly wasted when a less academic approach to teaching literacy and numeracy could yield real benefits. For those who go into higher education, early specialisation is England’s unique extra twist to the skills problem. And too many of us give up maths too soon, missing out on a way of thinking that is fundamental to the modern economy. Amongst all the arguments about returns to education, one clear finding is that a qualification in maths boosts earnings compared with qualifications in other subjects at the same level.
Eighty per cent of people who will be working in 2030 are already in the labour market. We need to do better at retraining and up-skilling them. This is not a new problem. After the First World War the Ministry of Reconstruction produced a report on adult education, which it described as “a permanent national necessity.” It was to be one of the great social policy initiatives, but it has not gone down in history alongside Beveridge or Butler or Robbins—because it was not implemented. Its centenary was marked by another excellent report, but those recommendations were not picked up either.
The problem is exacerbated by popular neuroscience, which claims it is the early years that matter as our brains are so plastic, after which they become increasingly fixed. Too many policymakers have fallen for this fashionable doctrine, which is largely wrong. Old dogs can learn new tricks. One ingenious experiment involved training young and old people how to juggle. The 60-year-olds had the same changes in brain structure as younger jugglers—the only deterioration was in their motor skills.
The balance of education funding is very much away from older adults. An excellent report, “Learning Through Life” by Tom Schuller and the late David Watson, showed the skewed distribution of funding across the four age groups of 0-25; 25-50; 50-75 and 75 plus: 86, 11, 2.5, 0.5. They suggested a new balance of: 80, 15, 4, 1. We are a long way from that.
The prospects for mature adults who return to education and training are good. Workers who lose their jobs but then get more training are more likely to get back into the labour market and to earn more. Research we did at the Resolution Foundation showed that 53 per cent of all 25- to 59-year-olds return to work within two years of becoming workless, absent any training. But 70 per cent do so when they undertake longer training that results in a qualification.
The challenge is to make this happen, which means getting the right financial framework. Successive governments have rightly avoided socialising all the costs, because both employees and employers gain from training. It is right to expect both to contribute. Now the government is proposing a lifelong learning entitlement based on a repayable education loan. It takes the student loan model and tries to use it to fund adult education too, but it may not work so well for older learners. Young people deciding whether to go to university are at a fork in the road and can see good long-run returns to choosing higher education. They know they will only have to repay their loans if they end up in a well-paid job. It is very different for older people, who may be less confident that an adult education course will enable them to change careers: they will be worried about becoming trapped in the same job, but with added loan repayment obligations. Moreover, they may already be earning above the repayment threshold, so may have to start paying back sooner—perhaps even before the course is over. There is a risk that loans are a deterrent for mature learners in a way they are not for younger students. We need alternative approaches.
Employers are expected to contribute to the cost of training through the apprenticeship levy. But apprenticeships are only part of the story, and may not deliver what is hoped—there was an HGV apprenticeship scheme after all. In general, policy can be distorted by focusing exclusively on them. We should reform the levy and broaden the range of training it covers, so it can help up-skill or re-skill workers in an accredited programme, which may not be a full apprenticeship.
Both the lifelong learning entitlement and the apprenticeship levy are national schemes with national criteria. They need to be supplemented with the much more direct encouragement of innovative programmes. For example, the government could create an adult education innovation grant scheme with open competition. It would include programmes that meet particular local needs. And it should explicitly avoid one long-established policy error, which is to focus exclusively on progression, so you only get funded if you move up an education level. The fund should include sideways moves to account for re-skilling, not just up-skilling.
There is one other possible initiative, too. Universities should be able to have a stake in their own graduates’ debt, so if the graduate earns more, the university gets more back. The scheme would need to be designed so that universities do not have an incentive simply to select the students who will earn the most. They would buy the debt after graduation at its market price, after allowing for forecast loan write-offs for that institution and its courses.
Universities would need a substantial financial partner to fund this. But it would create an incentive for a university to develop a lifelong education and training offer, yielding their graduates and the university itself a direct financial—as well as wider economic and social—return. In America, universities stay in touch with their graduates much more because they collect significant funding from them. We need an incentive for British universities to keep in contact with their graduates and help boost their earnings through their careers.
Our problems in adult education and training arise from the cumulative effect of a series of policy mistakes much earlier in the education system. The mistaken belief in early years determinism erodes confidence in later interventions. A very academic approach at school with little functional maths and English leaves too many people entering adulthood ill-equipped and hating conventional education. Apprenticeships are seen as the only model of vocational education, which is reflected in the design of the apprenticeship levy, meaning that alternatives are squeezed out. Because of the success of student loans in funding higher education for young people, we may have an exaggerated faith in the efficacy of loans when it comes to adult education. The time has come to break free from these false assumptions and create a more broad and open adult education system that works. We need it now more than ever.
