A machinery of government muddle over skills

The price of convincing Pat McFadden to take on the poisoned chalice of benefits reform appears to have been the chance to boast about a souped-up departmental remit – the refreshed Department for Work and Pensions (DWP) has been handed various skills responsibilities and budget lines in one of the few proper machinery of government changes we’ve seen under Labour.

We now have confirmation that this includes both apprenticeship policy and Skills England. The quango has only spent a handful of months as a DfE executive agency, and will now figuratively up sticks, though it remains to be seen how much difference the change makes. It’s particularly odd given that controversies around Skills England’s set-up included its inaugural chief executive being two DfE civil servants on a job share rather than a more independent figure, and said chief executive role reporting into a DfE director general rather than to the quango’s board. The government’s efforts so far have been to make the body fairly indistinguishable from central DfE – until suddenly, on paper at least, it’s now reporting into DWP.

The arbitrariness of the move stands out when you consider that only a few months ago the immigration white paper and the industrial strategy were both boasting of the new Labour Market Evidence Group – formerly the “quad” – which would allow for cross-government work linking up jobs, skills and immigration. This was to be composed of the Industrial Strategy Advisory Council, the Migration Advisory Committee, the Department for Work and Pensions, and Skills England. Two of those bodies have suddenly been fused together.

It also distances the quango from higher education, even though its first ministerial guidance letter asked it to work on joining the landscape up.

The government line will continue to be that Skills England is working across government, and presumably that whatever department it is formally located in will not detract from wider aims. The more telling criticism likely remains that the executive agency is not independent enough from government, rather than that it’s in the wrong place.

Apprenticeships moving over to DWP is a bigger deal, and an enormous budget line. It will be a while until we learn how DfE’s spending review settlement for future years is being divvied up to facilitate this – at least once this has happened the widely predicted future overspends in apprenticeships spending will be harder to cover with cuts to education spending elsewhere.

The move is of a piece with other Labour policy shifts around apprenticeships – foundation level programmes targeted at younger learners, defunding level 7 courses, and moving to be more flexible about entry requirements and longer-term reduce the burdens of end-point assessments.

DWP can easily pick up this mandate and run with it – the idea of using apprenticeships as a tool to get young people out of politically toxic NEET figures seems very appealing, though recent government efforts to directly force the “skills for jobs” pipeline don’t always inspire confidence.

It remains to be seen how DWP reacts when it realises that the initial consequence of defunding level 7 apprenticeships will be a run to generate enrolments before the cut-off, followed by a longer-term shift by employers towards other higher apprenticeships rather than the boom in lower level qualifications for newly hired younger learners that the decision seemed aimed at incentivising. You sense that DWP won’t be particularly enamoured of employers using apprenticeships to train existing staff.

This is a perfectly valid position, of course. But employer flexibility over levy use has been responsible for building up its social licence to operate over the last decade – the effect of turning it into a business tax which needs to be ever more spent on training up brand new hires at lower levels has the potential to generate a slow burn of unpopularity. It also means an uncertain longer-term future for the (more academically rigorous, expensive, and slow) degree apprenticeship provision that many universities have – at the last government’s urging – thrown themselves into.

It’s not where we are yet, but given the targets that DWP is interested in, it could end up being the direction of travel.

Unless, of course, central government suddenly pivots back to worrying about productivity – given the looming OBR downgrade – and we suddenly see a refreshed emphasis on incentivising employers to take flexible approaches to the levy. In which case DWP would be an awkward fit.