Skills policy is failing – it’s time for a new approach

John Denham, former secretary of state for universities, innovation and skills, on the case for rethinking the supply-side strategy

August 3, 2016
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For decades now, ministers in all parties have wanted more employers to support employees and apprentices to gain higher-level skills and higher education. With strong bi-partisan support in a relatively non-ideological area of policy, then, it seems odd that employer-supported higher skills have not become a more important part of the skills and education system.

In a recent short project for the Institute of Public Affairs I wanted to examine why public policy had apparently failed in this area. I have an interest: I was secretary of state at the Department for Innovation and Skills from 2007 to 2009 and, more recently, had proposed radical reforms to higher education finance that depended heavily on the expansion of employer supported degrees.

The research, involving policymakers, stakeholders, employers and academics, revealed a number of weaknesses that have led to similar mistakes being made repeatedly. It also shed light on an ad hoc and inadequate relationship between academia and the public-policy machine.

It’s self-evident that employee skills development will only take place if an employer takes a positive decision to support it. Despite this, public policy has consistently lacked any real insight into how employers take these decisions. And nor has this important area been the subject of much detailed academic examination. It is not surprising that policies that depend on employer engagement fail when so little is known about why employers become engaged.

That’s not to say that no relevant research exists, and that which does should have been enough to alert policymakers of problems that failed to force their way on to the agenda.

Some very basic misconceptions have persisted for too long. It’s assumed, for example, that employers support training to meet skills gaps. In fact, most employer support for training – at all levels – is driven by company business strategies not skills shortages, and specific skills are much more likely to be met by short, in-house and unaccredited training. The result is a tension between the qualifications that public policy is prepared to support and the support that employers really value.

The disparity reflects a more fundamental unsolved debate in skills policy. Are skills a supply-side problem to be met by increasing the numbers of qualified people, or are skills a derived demand, more likely to be stimulated by successful economic and industrial strategies?

Without ever being explicitly addressed by government ministers, it is the supply-side model that has been pursued persistently. The effects are widely observed, but have not influenced new policies.

Targets, supported by financial incentives, have produced all sorts of perverse and unintended consequences. These include relatively worthless but target-hitting qualifications, and the narrowing of the range of public support needed to ensure that targets are met.

It’s also clear that the rhetorical support of ministers for higher-level skills has not been reflected in the actual priority given to the issue. Often sitting unhappily across different ministers’ desks, support for higher-level skills and education has always come after other major financial and policy decisions (like higher tuition fees, for example) have been taken.

In consequence, much more powerful incentives were created, for example, to recruit young undergraduates than to do the time-consuming work of engaging with employers.

The poor quality of public data on higher-level skills is a sure indicator of its practical second-order priority. Some of the findings – interference and micro-management by the Treasury and Downing Street, the temptations of high-profile but ill-judged ministerial announcements – will be familiar from other descriptions of poor public policymaking. But in this case, it is also clear that policy could have been better if there had been a stronger, well-structured relationship between the evidence, academia and policymakers.

My report ends by proposing a standing Academic and Policy Council to advise ministers, anticipate future policy questions, and influence research commissioning. One of the early priorities of such a body might have been to ensure sound academic studies of employer responses to the new apprenticeship levy, one of the biggest disruptions the skills system has ever seen.

Based on past experience, it might have noted that the policy has been driven by the Treasury for financial, not skills, needs, with no understanding of how employers will respond, creating huge financial incentives for employers and providers to collaborate on what might well be perverse outcomes.

John Denham is a professorial research fellow in the Institute of Public Affairs at the LSE. He served as secretary of state for innovation, universities and skills, and then communities and local government, between 2007 and 2009. His research was supported by the Institute of Public Affairs and the Association of Colleges.

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Reader's comments (1)

John, I'm surprised to find myself in broad agreement with everything that has been written as a synopsis of your report 'Employer Support for Higher Education Skills', but I'm also genuinely excited with the view that we should shift emphasis away from a supply determined preparation of graduates in favour of a demand determined preparation of graduates. There are some caveats to this excitement however. My views on making young people 'work ready' have always been shaped by comments from those with direct responsibility for recruits at the graduate level. Let's, for simplicity, label these the Sergeant Majors (SMs) of the regiments which make up the fighting forces of those 'Employers' taking the fight to other forces in the business battles of the world. It's the SMs who take responsibility for the development of those 'regiment specific skills' required for the regiment and those generic skills which are (relatively) transferable across regiments. What they experience is much different from the experiences of their Generals but, as with all SMs, they obey orders and deliver the General staff policy. So if Generals, invariably, only mix with the hierarchy of the British establishment, including government, and take those actions which they feel will maintain or enhance their position(s), particularly if such actions are linked to finance, they will, invariably, help determine policy on something they may know very little about. A general policy which may subsequently commit legions of young people to parlous activity. From my experience most SM's continually maintain that it is indeed THEIR training and THEIR development that makes THEIR troops ready for THEIR battle; NOT anybody elses. They don't seem to trust what we do and certainly don't trust our claims of what we have achieved; perhaps as a result of their experience with our graduates. In all honesty it's debatable whether anybody involved in shaping young people at University have any idea what Higher Education Skills are. For example nobody, despite personal challenges laid before my colleagues, has ever been able to define what a skill actually is, and I would have thought that without that definition there is no point in trying to develop any skills at ANY level. It's not good enough to give examples of skills because the examples obfuscate what specifically needs to be developed in a person. Additionally, examples only lend themselves to invention as people struggle to deal with the definition; so for example we endlessly make reference to 'enterprise skills' without anybody having the faintest idea of what they are; despite suppliers charging you a fortune to get them!! For the sake of the future of actual skill development please stop talking to the generals and start talking to the SMs.

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