Post-18 Education and Funding Review

Lord Layard Excerpts

Tuesday 2nd July 2019 Lords Chamber

[Lord Layard (Lab)]

My Lords, many years ago I worked on the Robbins report, and I believe that the Augar review could well turn out to be at least as important. Robbins unleashed the expansion of HE and I hope that the Augar report will unleash the expansion of FE. That is what I want to talk about.

The question is how to unleash such an expansion. I will focus my remarks on levels 2 and 3, which is where we are signally failing. We are producing lots of graduates, and the entitlement we have talked about might produce some more, but we are not producing enough well-trained non-graduates. This is where we differ from our competitors, and it is the source of our low productivity and our great income inequality.

How are we to unleash an energy of expansion at levels 2 and 3? Augar proposes an entitlement to free level 2 and level 3 education. When I heard Mr Augar present his report, that was his number one proposal. I was really excited by it, but I asked him how he would deliver it on the ground. I then read the Augar review and I could not find any explanation of how the places would be generated that would enable young people to feel that they had an entitlement, just as young people going up the academic route feel that there is an entitlement there: if they pass at one level, they know that they can automatically go to the next level. It is completely clear to them what the system is like and what the entitlement means. However, if you are going through FE, you do not know what will be available; it is not quite clear, and what you want might not be available. So how will we get a system like that?

We have to learn to apply the same principles to the non-academic route as we apply to the academic route. The fundamental solution to the problem in FE is to organise it as we organise sixth-form colleges and universities: to make it the same system with the same clarity of progression. How does that progression work in the case of sixth-forms and universities? It works because there is per capita funding. If a provider wants to put on a course, either at sixth-form level or in a university, they simply put it on and the money arrives with the student—it is per capita funding. We will never unleash the energy and dynamism that we see in HE in FE unless we have the same mechanism. It has to be per capita funding: automatically, the money has to follow the student. At the moment it follows the student only up to the age of 19. If you go down the non-university route, it then stops, so that age limit has to be extended to provide uncapped funding right through for all ages. That is my main point: you will not have any of this happening unless you uncap the funding of FE and apprenticeships—it really is quite simple.

There are problems, of course, with demand-led funding. We have seen some disasters in the past with individual learning accounts. There has to be a well-established system through which this uncapped funding is going. The funders have to know the institutions, have a proper list of approved institutions that they know and understand and have criteria for what courses can attract what amount of funding. That takes time to establish.

The main task over the next five years in FE and in apprenticeships is to develop this concept of a clear register of institutions and courses for which funding then becomes automatic: if a student goes there, they bring the money with them. That is a total contrast to the present system—perpetuated in Augar—in which we have ex ante contracting. The Education and Skills Funding Agency says to a provider, in response to a request, “Yes, you can have so many places, with so much money”. It is severely rationed and probably will go on being rationed. There is some extra money in Augar, but nothing like enough to produce an explosion or revitalisation of that sector.

I will say a bit about when that could happen. A five-year programme could lead to an uncapped system—within 3 years for people up to the age of 24, and for all ages at the end of a five-year period. Then you would have the elements of a system outside universities that worked in the same way as the system inside universities. Anything else would just not live up to the language of establishing equality between one sector and another.

I will say a bit about apprenticeships. We have a debate on apprenticeships the day after tomorrow, so I will not deal with the subject quite as fully as I will then, but obviously we want most of the people who are not going to university to go into an apprenticeship—it should be the main alternative to university. It has to have demand-led funding. In particular, that applies to the non-levy paying employers, because the system is somewhat different when you are paying the levy. What we have at the moment is an extraordinary system of funding for non-levy paying employers where the total amount is an unpredictable residual—it has been cut severely over the last year two years—and that really is an outrage.

Even if we have uncapped funding for apprenticeships, we cannot be sure that the number of places will match the demand. There is huge excess demand at the moment, but you have to persuade not only the training providers to come in on the apprenticeship system but also the employers. This is a further task and somebody has to be put in charge of it. We have a National Apprenticeship Service, but its mission is not to make sure that every young person who wants an apprenticeship can find one. That has to become its mission. We have to have a body whose duty is to persuade employers to provide enough apprenticeships—in particular for people who are under 25 who are looking to get off to a good start in life. We have to make apprenticeships the natural route that a person can expect to be able to progress along in the early part of their life if they are not going to university.

We had in the 2009 Act a guarantee of an apprenticeship, which was repealed when the coalition Government came in. Let us not have a legal guarantee, but we should have a policy guarantee that every young person outside university who is qualified at one level can find a place at the next level up. That has to be the objective, and it requires the uncapping of expenditure. Quite honestly, we have been playing the Robbins principle for nearly 50 years for the privileged group, where places are available for everybody who is qualified for one. We have just not begun to think about how to do that for the other 50%. Uncapping is the main channel.

I have one other point: this sector will not flourish without a champion. The Economic Affairs Committee of this House recommended that there should be a funding agency, as there once was at the time of the last Labour Government, to champion this sector. It cannot be left to a lone Minister and civil servants; there has to be a structure championing it. There are two acid tests of whether one is really serious about this. First, are we willing to work towards an uncapped system for outside the universities, as there is for inside them? Secondly, are we willing to establish a champion who will push for that sector? I consider those questions to be the acid test and I hope the Minister can comment on both of them.