Written submission from the Association of Colleges (IND0076)
About AoC: The Association of Colleges (AoC) represents more than 90 per cent of the 218 colleges in England incorporated under the Further and Higher Education Act 1992. English colleges educate over 1.6 million students every year and employ approximately 97,000 full-time equivalent staff. Further education colleges are an essential part of England’s education system. Whether it’s through top-class technical education, basic skills or lifelong learning, colleges help people of all ages and backgrounds to make the most of their talents and ambitions. Rooted in local communities, they are crucial in driving social mobility and providing the skills to boost local and regional economies.
Our response touches on a few of the inquiry questions through the lens of the current post-16 further education and skills system and items of concern to our members.
Question 1: What Industrial Strategy will maximise economic growth, productivity and good, high-skilled jobs across the UK, how the Government’s plan measures up to this design - and how the Government should best measure progress?
Successful delivery of the Industrial Strategy will rest to a very considerable extent on the capacity and coherence of our post 16 education and skills system, and how people and employers choose to engage with it. This requires us having a strong understanding of current and anticipated future skills needs, including the basic skills required and their regional and demographic distribution. It also requires that the system is set up to deliver on skills needs – including through ongoing review of the capacity of the post 16 system - and where delivery challenges exist. A key element will ultimately be whether there is the funding available to put on provision to meet demand in the growth-driving sectors. It also requires that we address demand-side challenges too – that people want to take up education and training in these priority areas, and that there are employers ready to employ them.
The role of employers and how they will interact with the skills system is another key element, in addition to expectations of the role of employers in supporting their employees to train, reskill and upskill. Current employer investment in the skills system is very low compared to other OECD comparator countries, and a 2023 government employer skills survey found that employer spending on workforce training per employee is falling and is skewed towards better qualified staff[1].
Redressing low levels of employer investment is a complex challenge with no simple answers but stronger coordination and coherence across the post 16 education and skills system would help, making it easier for employers to find the ‘front door’, with more efficient and effective join-up of employer engagement functions. We also need to make more targeted use of the apprenticeship (soon to be Skills and Growth) levy – which analysis commissioned from AoC and undertaken by London Economics[2] has shown to have been very poorly focussed – on those already relatively highly qualified, in more affluent parts of the country, and with very poor alignment to national and regional skills gaps.
Colleges should also be part of the UK’s inward investment offer given their expertise in skills training, employer partnerships and locations across English cities, towns, and rural areas. For example, Bridgwater and Taunton College had a big role to play in securing the investment of Tata Group’s new gigafactory in Somerset which will be Britain’s biggest electric vehicle battery manufacturing facility, by ensuring that they had the expertise and ability to train the workforce needed for this facility.
The Government’s plan highlights some of the current problems in our skills system, including our lack of technical skills, an ageing population in need of reskilling, and a lack of basic skills. It places a body that is currently still being legislated, Skills England, at its heart. The plan states that the Office for Investment and Skills England will implement a skills triage service, providing bespoke guidance for strategically important investments, however how they will work together is unclear, and notice about this work has not been referenced by DfE in its draft framework documents. Furthermore, the plan does not mention the upcoming post-16 strategy and how this will relate to both the Industrial Strategy and the Industrial Strategy Council: it will be critical that there is alignment between the two strategies and between Skills England and the Industrial Strategy Council.
In terms of how to measure progress, some key indicators from a skills perspective could include.
However, it is also important to note that for all the above progress indicators across the 10-year horizon of the planned industrial strategy, additional investment in the college workforce and college estate will be needed, alongside adequate funding for study and training programmes. This is especially vital for adults looking to reskill as the Adult Skills Fund (ASF) has been decimated over the last 10 years and Strategic Authorities have been told to expect another 3.3% cut in their allocations next academic year, stretching already thin budgets.
Question 4. Whether the Government should prioritise economic sectors or ‘grand challenges’? If sectors are the right focus, has the government prioritised the right growth-driving sectors of the economy? What is the best design of industrial strategy for these sectors? How should Government identify and invest in the sectors of the future?
As outlined above, a strong industrial strategy that seeks to maximise economic growth, productivity and the potential of the existing population, must give a central focus to the role of further education and skills.
The identified growth sectors are undoubtedly key, although as has been widely noted, health and construction are also critical. A key priority now is in developing a focus on the skills needed to deliver in these sectors and colleges should be a key partner in the development of any sector-specific plans.
The creation of Technical Excellence Colleges (TECs) as referenced in the Labour manifesto could be a powerful opportunity to link to the priority sectors and ensure we have the vital skills needed at the higher technical levels at 4 and 5, if developed appropriately and with the requisite investment. There is currently no mention of TECs in the plan as possible pipelines to develop the skills needed.
Every college faces severe difficulty in competing with schools and industry to recruit and retain staff, particularly in the growth-driving sectors and subjects that are necessary to deliver the government’s Plan for Change. For instance, colleges train two-thirds of construction apprentices but if they cannot recruit teaching staff to train more, it will be nearly impossible for the UK to build 1.5 million homes. The AoC enrolment survey found that of the 118 colleges that responded to the survey, over half (57%) have waiting lists for full-time construction courses and 40% have waiting lists for engineering courses. Around a third of colleges (29%) have waiting lists for health and social care and 16% for digital courses[3]. This highlights the importance of sustainable college funding to deliver the skills pipeline for the growth sectors.
Similar issues and challenges arise in the NHS and in the growth-driving sectors which will provide the resources the UK needs to prosper. With the population of 16-18-year-olds due to grow by 9% in the five years from 2023 to 2028, the need to provide upskilling and reskilling opportunities for older workers as the world of work changes, and the Government’s aim of increasing the UK employment rate to 80%, long-term planning and funding stability are essential to enable colleges to deliver training to meet skills shortages.
In terms of how best to identify and invest in sectors of the future, Skills England will be able to provide labour market intelligence, facilitate employer networks and provide regional information from Strategic Authorities and their Local Growth Plans, in addition to Local Skills Improvement Plans to help facilitate intelligence. This intelligence and any intervention by Skills England also needs to ensure a fair balance of opportunities across regions and that no part of the population is cut off from opportunities to access these sectors (i.e. marginalised groups in the economy).
Question 6. What is the right balance of investment in ‘horizontal’ policy, such as skills, infrastructure, clean energy, and transport, and sector-specific investment?
Skills are the foundation upon which innovation, growth and productivity are built and without key investment in the foundational skills the economy needs, any Industrial Strategy will only go so far. The Government has said that it has placed skills at the heart of its agenda, but long-term investment is needed to develop the skills we need to deliver other policy priorities such as improved infrastructure, clean energy and transport.
Colleges in England are place-based leaders, partners and stakeholders with the simple ambition to help people and employers succeed and their community and local economy flourish. By supporting young people and adults to realise their ambitions and talents, employers to innovate and have skilled workers, and communities to come together they contribute so much to our society and our economy.
The UK is faced with low productivity, being in the bottom half of the Organisation for Economic Co-operation and Development (OECD) rankings for productivity growth. In addition, the UK experiences a large number of skills shortage vacancies with the government’s employer skills survey finding that the number of skills shortage vacancies has risen from 22% five years ago to 36% in 2022[4]. We also have a high number of adults with low levels of basic skills, with analysis from the Learning and Work Institute finding that nine million people have poor literacy, numeracy and digital skills[5]. English and maths are some of the biggest obstacles to progression to high-quality Level 3 and above education and training, with 408,000 (65%) 16-year-olds achieving GCSE grade 4 or better in both English and Maths in 2023-24 but 216,000 (35%) failing to achieve.
Colleges are also strategic partners to employers, galvanising inward investment and supporting innovation. They will be vital for every priority sector in the industrial strategy, and for local growth plans, as well as for the workforce needed in the transition to net zero, building infrastructure and houses, and for the NHS and social care.
Finally, colleges are well placed to support people into good jobs, no matter what their starting point. They have a long track record in attracting people who are unemployed or out of work back into education and training, have the support services to keep them on track, have good relationships with local Job Centres and other stakeholders, and have the staff and facilities to equip them with the skills and qualifications that employers need. This also includes recent arrivals to the UK and learners of ESOL, with a recent paper AoC conducted with the Bell Foundation[6] finding that that 48% of new arrivals are educated to tertiary level, meaning that that adults who are speakers of English as a second or additional language are a great asset if their current English language skills can meet the language demands for the jobs on offer and colleges are well placed to meet this need.
Question 8. How should government modernise key institutions and ‘levers’ to support its industrial strategy, in particular to:
For this answer, we will focus on how to support higher levels of innovation which diffuse more effectively through the economy.
The UK is not as effective at transferring groundbreaking innovations in process, design and technology into routine day-to-day use by small and medium-sized enterprises (SMEs) and microbusinesses, even though SMEs represent 99% of businesses. Colleges are key drivers of innovation in SME’s and the average college works with hundreds of employers, this could be to help facilitate work placements, apprenticeships, help with a skills or training needs analysis or give advice on how to grow their business.
Colleges must be able to respond with agility, flexibility and creativity to the needs of employers and industry. There is already excellent business innovation work taking place in the sector, an area traditionally the reserve of universities and FE colleges are increasing being encouraged to take part in KTP’s (Knowledge Transfer Partnerships). Additionally, UKRI funding support via Innovate UK and the Further Education Innovation Fund pilots have demonstrated a positive impact on local business innovation and growth. For example, Greater Manchester colleges have worked collaboratively across the city region to support the adoption and diffusion of innovation with local employer partners in key areas of health and life sciences, net zero, sustainable advanced manufacturing and digital, creative and media. With continued funding and support to work with employers, colleges can expand their business innovation activity across the growth-driving sectors.
However, within the current system governing English further education, bureaucracy and practice can make it hard for colleges to meet business needs: short-term/one-year funding cycles, regulation by multiple regulators, excessively complicated funding rules and prior approval rules which require colleges to wait for DfE sign-off before doing anything novel. DfE's Skills for Jobs white paper correctly analysed many of these issues and ‘Project S’ (currently underway) is testing alternatives to current approaches. Colleges need to be equipped to lead and allowed to act as trusted partners in the system.
Question 9. How will the Government devolve economic power (e.g. to support regional growth and reach areas that have been left behind) and re-organise Whitehall to ensure the requisite degree of policy coordination and delivery?
The Government has set out a clear commitment to devolution, with the Devolution White Paper published in December 2024 and accompanying legislation expected later this year. Devolution is a fast-moving and fluid policy landscape, even in areas with existing devolution.
Ministers will need to work out how to make progress on the ten priority sectors in a skills system with a growing number of mayoral strategic authorities. Mayors have responsibility for the adult skills fund (ASF) and will be drawing up Local Growth Plans. Ten mayoral authorities control 70% of the adult skills fund in 2024-25. This rises to 13 in 2025-26, to at least 15 in 2026-27 and more than 20 in 2027-28[7]. Given this, the interaction of a sector-based industrial strategy and the English devolution framework could, in the worst case, lead to the Government creating and managing hundreds of local programmes and budgets which would be complex, administratively expensive, and ineffective. Given the geographical variations in priority sectors such as defence and life sciences, it could also be wasteful.
The Industrial Strategy must clearly link and balance national sector priorities with regional priorities, such as those identified in Local Skills Improvement Plans (LSIPs). The interplay between centralisation and localisation will also be key as Local Growth Plans are introduced, requiring careful alignment to LSIPs and continued join-up between Chambers of Commerce, MCAs, and colleges amongst other stakeholders. Colleges need greater funding flexibility and modularity (particularly for adult learners) to tailor delivery to local needs. The Industrial Strategy should explore the potential to enhance growth sector clusters and develop new clusters, maximising the co-location of industry and education providers – and give colleges agency to work with employers, Strategic Authorities and others to drive regional economic growth, with context appropriate provision and interventions.
The Industrial Strategy should naturally leverage existing regional specialisms and consider giving local areas the ability to set 30% of a qualification to meet local employer needs (with 70% remaining a national standard). It also should consider the distribution of opportunity, for example in areas where apprenticeship starts have declined.
Question 10. What duties, powers and resources does the Industrial Strategy Council need to effectively oversee the Industrial Strategy?
As outlined in our response to question one, the Industrial Strategy Council must closely interact and align with Skills England as part of a cohesive skills sector supporting the growth and opportunity missions. In turn, the Industrial Strategy itself must link to other key government strategies and initiatives, in particular the post-16 skills strategy, the Curriculum and Assessment Review, the ‘Back to Work’ plan and the Youth Guarantee. Ensuring these basic structures and interfaces are in place will be critical to inject more certainty into the system, to reverse underinvestment in skills and to deliver the ambitions of the industrial strategy. Additionally, the forthcoming Infrastructure Strategy must align with the Industrial Strategy to ensure that adequate transport and facilities are in place to allow young people and adults to access training and employment.
The Industrial Strategy Council will also need to interact with the Council of the Nations and Regions and the Inter-Ministerial Group on Business and Industry to ensure national and regional skills needs can be met. There should also be consideration given to college representation on the Council itself. The FE sector is a skills pipeline for the eight growth-driving sectors and representation on the Council would provide a direct line of sight to delivery.
The Industrial Strategy Council should set up a skills and education stakeholder group to ensure that skills planning and training align with the Industrial Strategy and employer needs. The skills and education stakeholder group could troubleshoot barriers to delivery and support the development of workforce plans for each of the eight sectors and future sub-sectors.
Over and above the establishment of a specific skills and education group, it will be important at key intervals for the Industrial Strategy Council to bring together all major stakeholders (employers, colleges, skills providers, universities) to review the progress of the Industrial Strategy.
The Council should consider conducting site visits to colleges both as the strategy is developed and during its lifecycle. This will enable the Council to view delivery on the ground and the opportunities and challenges within the wider skills system.
Association of Colleges
February 2025
[1] DfE Employer Skills Survey 2023
[2] Investigating the impact of the apprenticeship levy on training outcomes, AoC and London Economics (2024)
[3] AoC Autumn 2024 enrolment survey
[4] DfE Employer Skills Survey 2023
[5] Learning and Work Institute “Modelling Essential Skills Needs Across England” 2023
[6] AoC and Bell Foundation report on Supporting ESOL in Devolved Authorities
[7] Devolution of adult skills happens in East Midlands, York, North Yorkshire & Cornwall in 2025-6, in Greater Lincolnshire & Hull East Yorkshire in 2026-7 & to as many as seven areas in the Devolution Priority Programme in 2027-8.