OPEN UNIVERSITY – WRITTEN EVIDENCE (EMP0065)
Employment and COVID-19 inquiry
- The Open University (OU) welcomes this opportunity to contribute to the House of Lords Economic Affairs Committee Inquiry on COVID-19. Our submission focuses on the following question posed by the Committee:
- How should the Government support training and skills development?
- Lifelong learning must be central to any UK government focus to retain key skills, reskill, and upskill. Boosting employment post-pandemic depends on embedding a lifelong learning culture, which rests on three co-equal pillars: flexible lifetime learning opportunities, apprenticeships and full-time study (whether further education (FE) and/or higher education (HE).
- A prosperous ‘learning and earning’ education sector is needed now more than ever. Not only does it increase productivity and regional skills, it also promotes social mobility – giving opportunity to all in terms of reskilling and upskilling. Part-time higher education and distance learning is an essential part of this approach.
- In terms of the policy and funding incentives needed to deliver this, the OU urges the Committee to consider the following inter-related points as part of the inquiry’s findings and recommendations:
- The UK Government should promote and incentivise part time learning to those groups/geographies/skills priorities in post need as part of its levelling up agenda. This can be supported by:
- Reducing the cost of part-time study via fee grants targeted on priority subjects, geographical areas and disadvantaged individuals
- Extending maintenance support to all students regardless of mode of study.
- The recommendations in the independent panel report to the Post-18 Review of education and funding in England (Augar report) around the Lifelong Learning Loan Allowance, extending fee and maintenance loans to high-quality modular study, and relaxing ELQ rules must be adopted.
- England needs a broad approach to lifelong learning and skills with a post-16 skills strategy which includes apprenticeships. This is especially true in a post-pandemic world where retraining and reskilling will play a vital role in helping people access employment in industries outside their existing experience. On apprenticeships specifically:
- It is crucial that the new National Skills Fund is available to fund skills development at all levels, including in areas where there are growing skills gaps such as higher technical, professional and core interpersonal and management skills, guided by employers’ knowledge of where the key skills gaps are. It should also not exclude those already educated to degree level but who are in need of reskilling.
How should the Government support training and skills development?
- From July to September 2020 there was a large increase in the unemployment rate and a record number of redundancies – 314,000. The UK unemployment rate was estimated at 4.8%, 0.9% higher than a year earlier and 0.7% higher than the previous quarter. Whilst the Government has extended the furlough scheme to March 2021, low economic growth means that once this comes to an end it is likely many people will lose their jobs. Whole industries are facing an existential threat; with hospitality and entertainment industries likely to be the worst hit. The ICAEW, for example, predicts that by the end of 2020 year-on-year employment will contract 8.9% for the arts, entertainment, and recreational industries, and accommodation and food service will contract 8.3%.
- Despite the pandemic, however, skills shortages continue to impact organisations across the UK; almost unchanged. The number of business leaders reporting that their organisation is experiencing a skills shortage remains near six out of ten (56%) compared to 62% the year before. 34% of business still struggle to recruit individuals with management skills, 34% for leadership skills, 26% for IT skills, and 24% for technical/operational skills. Even before the pandemic, it was predicted that nine in ten workers will need some form of reskilling by 2030; this includes 26 million workers who will require upskilling as their role evolves, and 5 million who will go through a more fundamental job change and require retraining. Therefore if people can gain the relevant skills, they may be able to access new employment opportunities. The CBI, however, predicts that the UK will need to spend an additional £130bn on training over 10 years to achieve the full potential of this.
- The Chancellor has acknowledged the importance of helping those who lose their jobs as a result of the Covid-19 crisis to reskill; helping them avoid the potential scarring effects from the anticipated recession and associated increase in unemployment:
“Every person who loses their job through this difficult period is a person the Government are determined to stand behind, whether that is with new skills, new training or indeed through supporting businesses to create new jobs. We are determined to make sure this happens”.
- Flexible learning is crucial to achieving this goal as well as for the UK Government’s broader productivity and “levelling up” agendas.
- Measures to stimulate lifelong learning are therefore crucial. Indeed, speaking pre the pandemic in January 2020, Matthew Fell (chief policy adviser at CBI UK) commented that ‘Lifelong learning will be one of the defining issues of our age – countries who get it right will have an exceptional competitive advantage.’
- Prior to the pandemic, one in eight workers with low or intermediate level qualifications were already at high risk of their jobs being automated within 20 years and virtually everyone at this skill level is considered to be at least at medium risk. With the threat of automation, and the looming threat of unemployment as a result of the pandemic, workers should look to upskill now – whilst still in employment – so that they have the flexibility to move into new roles if necessary.
Part-time higher education and distance learning
- For many who want to upskill or reskill, access to flexible learning options - so they can ‘earn while they learn’ - is the only way. This includes part-time higher education, including via online distance learning, which plays a unique and important role in helping to boost productivity and is a significant agent of social mobility.
- This is evident through the following:
- Addressing skills needs and productivity – For employees (who make up three quarters of the student population at the OU), productivity benefits derived from part-time study are felt as soon as study begins and continue throughout. Their study also not only helps the individual; research suggests that there is both a direct and indirect spill over of skills and productivity, producing a halo education effect where the training of one person boosts the productivity of the whole team.
- Delivering cost effective HE – The part-time model is very cost effective compared to that of full-time, face-to-face provision, with tremendous scale and reach. The UK Government estimated in 2018-19 that the RAB charge for every pound lent for part-time students– the cost to the public purse of part-time loans not being repaid in full – was 6% lower than for full-time students. 45% of part-time learners are also expected to pay off their loans in full, compared with 30% of full-time learners.
- In addition, research from London Economics estimated substantial lifetime earnings benefits from a part-time degree. Looking at those who began their studies without A-levels and complete a part-time degree with at age 37, male graduates are estimated to earn a total of £349,000 more over the rest of their careers and female graduates £191,000 more. This has substantial benefits to both the individual and the Exchequer.
- Flexible, online delivery – It delivers opportunity and access for all with the flexibility and proximity to learning so vital for those learners who, on average, are older (the median age of new OU undergraduates is 28), have caring responsibilities and/or a mental or physical disability (the OU has 27,000 students who declare a disability).
- Open to all who can benefit – The most common access route to higher education for adults from disadvantaged backgrounds is via part-time higher education. For instance, one in ten of all undergraduate entrants in the whole of England from low participation areas study at the OU.
- Innovation – Much innovation in adult learning comes from the part-time higher education sector. There is great potential to further transform adult learning, particularly via digital innovation (not least in response to the current pandemic), and the OU is a cornerstone asset here. Take, for example, its launch of FutureLearn: a leading online social learning platform founded by The Open University and now jointly owned with The SEEK Group. Its purpose is to transform access to education: partnering with over a quarter of the world’s top universities to support over 12 million learners across the globe to develop skills and achieve their personal and professional goals. It offers microcredentials and courses where learners can earn credits to put towards the completion of a degree. Over 3,3000 unique courses have run or are scheduled to run online on FutureLearn since its launch in 2012, and 13m learners across the world have registered on the platform. It is also at the forefront of delivering microcredentials to support upskilling and/reskilling.
- Action to support this part of the earning while learning sector is critical when it is remembered that participation in part-time higher education in England has fallen considerably in recent years (as recognised by the Secretary of State for Education in his speech on 9 July 2020).
- Since 2009/10, the number of people in England accessing part-time undergraduate higher education has fallen dramatically, with a 67% decline in the number of new undergraduate entrants. As this Committee found in 2018, the decline has been caused by multiple funding and policy changes over a decade. Two policies in particular precipitated the falls in part-time and mature numbers; the introduction of an Equivalent or Lower Qualifications rule, and the introduction of higher tuition fees in 2012.
- This has led to:
- A 51% fall in the number of adults aged 21 and over accessing undergraduate higher education.
- A 26% fall in the total number of people in England of all ages accessing undergraduate higher education.
- 1.2 million “lost learners” – this is how many more people in England would have accessed undergraduate higher education between 2009/10 and 2018/19 if numbers had remained constant at 2009/10 levels.
- A 16% fall since 2011/12 in the total number of people from low participation areas entering higher education, reducing social mobility.
- England now having 40% fewer adults over the age of 21 entering undergraduate higher education each year relative to its working age population than the rest of the UK.
- The main driver for this was the 2012 student funding reforms in England as mature students are substantially more price and debt sensitive than young students. A secondary driver was the decision in 2008 to end public funding, including student loans, for students who already had an equivalent or higher qualification to the one they now wanted to study, even if they were wanting to change career or to reskill in a shortage area.
- This means that far fewer adults are learning new skills and getting the qualifications they need to progress in their careers or to change to a new career.
- But increasingly what is needed is access to and funding support for more bite sized learning to enable people to gain the upskilling or reskilling needed rather than full scale qualifications. The recommendation made by the UK Government’s Review of Post-18 Education and Funding (chaired by Philip Augar) called for a lifelong loan allowance. This would be a universal entitlement of up to four years of full-time equivalent higher education that can be taken up module-by-module over a lifetime. This would be a step in the right direction that would remove some of the barriers to flexible study and a quicker way to support people to upskill/reskill. It would enable students to receive loan funding for modular study rather than commit to the cost of a full qualification (unlike the situation in Scotland). And it would help remove the current rule that, despite some exceptions, generally students cannot access public funding for a course if they are already qualified at that level. It was encouraging to see the Prime Minister acknowledge this in his speech on 29th September with its commitment to a Lifetime Skills Guarantee to help people train and retrain - with the detail to be consulted on in early 2021.
- The vast majority of part-time students are also ineligible for maintenance loans, which are currently restricted to full-time students and part-time students on degree courses at face-to-face providers. For example, the Department for Education estimate that only 9 per cent of part-time students are potentially eligible for loans. This is a significant barrier to many workers accessing higher education and also hinders student success by making it more difficult for students to be able to afford to take time off to focus on their studies when necessary.
- Part-time students are also ineligible for the means-tested support that is provided to full-time students via the Childcare Grant – which funds up to 85% of formal childcare costs up to £300/week for two or more children – and through the Parents Learning Allowance (up to £1,800 per year). This is a barrier to many workers given a large proportion have dependent children.
- Furthermore, the OU recently commissioned a survey exploring the barriers to part-time study which illustrates the impact which supporting part-time students with their living costs could have. The survey found that 14% of respondents were interested in studying a higher education qualification on a part-time basis at some point in the next 5 years. However, only 33% of these students said that they would definitely pursue the idea of studying if financial assistance towards their living costs was not available.
- The Government’s commitment to invest £3bn in a new National Skills Fund, that provides funding for high-quality education for individuals is a positive step towards helping workers upskill and reskill, but it is crucial that it covers all skill levels and is linked to the National Careers Service. Afterall, Government has previously underinvested in adult education – with only 2% of current education spending spending going to adult learning. Furthermore, to allow people to switch careers as necessary – as is set out in the Conservative Party 2019 General Election manifesto – it is vital that people can upskill/reskill in areas with strategic skill shortages regardless of the level of their existing qualifications.
- The UK Government should promote and incentivise part time learning to those groups/geographies/skills priorities in post need. This can be supported by:
- Reducing the cost of part-time study via fee grants targeted on priority subjects, geographical areas and disadvantaged individuals
- Extending maintenance support to all students regardless of mode of study.
- Adopt the Augar recommendations around the Lifelong Learning Loan Allowance, extending fee and maintenance loans to high-quality modular study and relaxing ELQ rules.
- Ensure that the new National Skills Fund is available to fund skills development at all levels, including in areas where there are growing skills gaps such as higher technical, professional and core interpersonal and management skills, guided by employers’ knowledge of where the key skills gaps are. It should also not exclude those already educated to degree level but who are in need of reskilling.
- Apprenticeships are a key element in helping retain key skills, and reskill and upskill the UK workforce to support the recovery and reduce unemployment. Crucially, they are connected to the labour market and job outcomes and have a high return on investment – especially for degree apprenticeships.
- Apprenticeships are employer-led, which means that they help employers fill the skills gaps that they identify in their businesses, helping to provide targeted and local growth opportunities for small and large businesses alike. For example, the Open University’s degree apprentices represent over 770 individual employers of all sizes, across all industries and from both the private and the public sector. Around 40% of the employers we partner with are small and medium enterprises (SME).
- Higher and degree apprenticeships are still in demand from employers in helping fill skills gaps and the public sector market remains strong. In particular, employers want management, digital and leadership skills (as highlighted earlier in this submission). This is particularly problematic considering these skills are a key part in helping the UK Government achieves its Industrial Strategy ambition and boost productivity. Furthermore, the Industrial Strategy Council chaired by Andy Haldane reported that digital and leadership skills will be most lacking by 2030. Yet apprenticeships can help fill these skill gaps by allowing employees to study in areas where these gaps exist, and instantly apply them to day to day work. For instance, the OU has a strategic partnership with IBM, enrolling their employees on Senior Leadership, Chartered Management, and Digital and Technology Solutions degree apprenticeships to upskill employees in management, leadership, and digital, and target the company’s key skills deficits.
- Apprenticeships can also help support local employment requirements by allowing people to study whilst remaining in work in their local area. In particular, the OU’s distance learning model allows students to undertake a degree apprenticeship anywhere, including in HE and FE cold spots, allowing them to apply their new knowledge and skills in their local economy. For example, the Isle of Wight NHS Trust is collaborating with the OU to deliver a three-year apprenticeship programme to increase the number of registered nurses and nursing associates. With 120 nursing vacancies on the island, the programme will widen access and boost the skills shortage by providing crucial training and employment. This model allows nurses to avoid having to go across to the mainland to study, and allows them to carry on working and contributing to their local area.
- Degree apprenticeships can also boost post-pandemic economic growth by attracting those that wouldn’t have gone into traditional university programmes - enabling a whole segment of the population, who previously did not have access to the education system to reskill, upskill, and improve their productivity – ensuring spare capacity and opportunity in the labour market is utilised. The specific design of the OU’s degree apprenticeships attracts those who have been unable to access education. Our face-to-face support, delivered in apprentices’ workplace, and our provision for 20% off-the-job time, means that workers can study whilst continuing to work and support their families. This makes training more accessible to those with family commitments, or those who could not afford to take the pay cut often associated with working part-time to facilitate their studies.
- The OU’s open access policy also allows people to study without any previous educational qualifications and our apprenticeships offering is based on the same criteria. Our apprentices hold a wide range of previous qualifications, from Level 2 certificates and diplomas, GCSEs, A-levels, foundation courses to degree level qualifications. We also support apprentices with no qualifications but with relevant work experience. Overall, 12% of our apprentices hold their highest qualification at Level 2 or below.
- The apprenticeship levy has allowed many businesses to invest in the apprenticeships they need to promote their own growth. However, given apprenticeships are connected to the local labour market and employer led, they have been hugely affected by the pandemic. During the first lockdown, many apprentices were the first to be made redundant or placed on furlough. The OU’s annual Business Barometer – conducted in Summer 2020 of over 1000 UK Businesses reported that more than half (54%) of the organisations with fewer than 250 people reported that they are unable to commit to apprenticeships in the immediate due to uncertainty about the future, compared to less than half (46%) of larger organisations. It also highlighted that more than two in five (43%) said that they have already made some of their apprentices redundant.
- However, employers remain positive about the role of apprenticeships in the future. Around half (48%) said that apprenticeships and work-based learning would be vital to the recovery of their organisation, although there is significant variation between regions: around three in five organisations in the South East of England (59%) and Cardiff (58%) believe that apprenticeships will be important to their recovery from the pandemic, compared to a third in South West of England (33%) and less than a quarter (23%) in North Wales. Nearly two thirds of those in the pharmaceutical sector (65%) agreed that apprenticeships would play a key role in their future, as did more than half (53%) in the digital sector and a similar number (50%) in the healthcare sector.
- There are also encouraging signs that employers will kick start their recruitment of apprentices in the medium-term. Nearly six in ten (58%) expect to be hiring more apprentices in the next 12 months, with a greater number of large organisations (63%) than small ones (59%) planning to do so in England, while there are more small businesses (54%) than large ones (50%) planning to do so in Wales.
- Senior leaders in some regions are especially enthusiastic about hiring more apprentices in the year ahead: more than three quarters (77%) of those in the North West of England plan to increase their recruitment of apprentices, as do around two thirds of those in the West Midlands (67%) and London (63%).
- There are also several sectors that have a very optimistic outlook for the next 12 months, reflecting both their growth prospects in the post-crisis economy and the demonstrable value that they get from apprenticeships. More than nine in ten employers in the pharmaceutical sector (94%) and the scientific and technical sector (91%), plan to hire more apprentices, as do more than two thirds of those in the healthcare (68%) and digital (67%) sectors. As we would expect, those sectors most affected by the pandemic have a negative outlook about hiring apprentices in the months ahead. For example, less than a third of organisations in the hospitality sector (32%) and the arts and entertainment sector (31%) plan to increase their intake of apprentices in the next 12 months.
- Keep the apprenticeship levy employer led, enabling apprenticeships to be delivered in key areas of skills shortages – digital, management and public sector courses with nursing, social work and policing as particular priorities.
- Ensure apprenticeship standards have clear progression pathways to enable people to move around the system and progress
- Ensure sustainable and accessible SME funding for apprenticeships
Levelling – up and lifelong learning
- Encouraging adults with low and medium skills to take up learning opportunities throughout their working lives, there is a need for a nationally recognised and easily accessible ‘place’ to start wherever they live and work in England.
- There is a lack of an overarching strategy for lifelong learning in England. This is in part due to the following barriers:
- Individual expectations. Many adults experience a lack of confidence if they did not do well at school, believe that they are too old to learn and lack awareness of the job-related benefits of further learning.
- Inadequate signposting. There are several conflicting and overlapping sources of Information, Advice and Guidance for adults wanting to learn to improve their job prospects none of which address all the questions which potential adult learners have.
- Limited learning routes with poorly designed online options. Low skilled adults need flexible learning options. This means blended learning including online options they can access 24/7. There is no such flexibility at present. Face-to-face FE colleges have not had enough support and guidance to design high-quality and innovative learning materials for effective online delivery.
- These barriers for the adult learner must be tackled if the desired culture change is to happen. We advocate a coherent national strategy designed around the person that builds on the best existing practice through collaboration and partnership.
- Long before COVID-19 the decline in lifelong learning (as illustrated previously) has had a detrimental social impact as the number of adults accessing higher education – including many students from disadvantaged backgrounds – has fallen by a fifth overall.
- Part-time higher education - including flexible forms such as online distance learning - plays a particularly crucial role in allowing people in harder to reach areas and communities to access higher education and the skills benefits it brings. For instance, analysis presented to the House of Lords committee on regenerating seaside towns and communities by the OU in 2018 demonstrated that seaside towns and coastal communities in England have seen significantly bigger declines in the numbers of people accessing higher education since the 2012 higher education funding reforms than elsewhere.
- Again, significantly lower tuition fees could make a big difference in encouraging more disadvantaged students to study as part-time students are substantially more price sensitive and debt averse than young full-time students. This could be introduced in a targeted way; looking at those geographical areas and/or communities that have been hardest hit by the economic impact of COVID-19.
- Research also shows that those without a university degree will be hardest hit by the COVID-19 crisis, with nearly 80% of those workers facing job insecurity not having a degree Identifying and promoting initiatives that deliver support to this group, helping them with core skills as well as rebuilding confidence and resilience, are critical.
- Partnerships and progression across the post-18 skills sector are also critical for widening access to disadvantaged adults following the pandemic. For instance, the OU partners with further education colleges to licence and validate courses across the range of OU curriculum including apprenticeships. This means that apprentices’ study at their local colleges, supported by local employers. Equally following the successful DfE funded Flexible Learning project between the OU and local FE colleges to deliver functional maths and English, longer-term funding commitments should be given to support partnerships across the post-18 sector.
About The Open University
- The OU’s mission is to be Open to people, places, methods and ideas. For most of our undergraduate qualifications there are no academic entry requirements. We believe students should have the opportunity to succeed irrespective of their previous experiences of education.
- The OU is the largest university in the UK with 175,000, including 126,000 directly-registered students, and operates across all four nations. We teach four in ten part-time UK undergraduates (41%). There are OU students in every single local area in the UK – we are among the five biggest providers in nine out of ten Parliamentary constituencies in England – and tend to be stronger in higher education “cold spots” with limited face-to-face provision and/or low young HE participation rates.
- The OU is a world leader in distance learning. Our undergraduates do not attend a campus; they live in their own homes throughout the UK. Our students study flexibly and value the ability to fit their study around the demands of their home and work lives.
- The OU’s curriculum is comprehensive. We provide courses across the full breadth of science and technology, arts and social sciences and business and law. We have specialist capabilities to teach science and technology using digital media and our award-winning OpenSTEM labs. We also have over 2,700 students on our apprenticeship programme at over 770 employers, making us one of the largest degree apprenticeship providers in England.
- The OU works with a range of employers from the public and private sector and from SMEs to large multinationals to support their skills needs. 77 companies from the FTSE 100 have sponsored staff on OU courses in 2018/19.
- The OU is crucial to social mobility – one in ten of all undergraduate entrants from disadvantaged areas study at the OU and we are the 11th biggest provider for disadvantaged young people.
- There is no typical OU student. People of all ages and backgrounds study with us and for many reasons – to update their skills, get a qualification, boost their career, change direction, prove themselves or keep mentally active.
- 76% of our directly-registered students work full or part-time
- 22% of our undergraduates live in disadvantaged areas.
- Over 26,000 students with disabilities studied with us in 2018/19.
- Almost two thirds of OU students begin their studies without holding the traditional entry qualifications demanded by most universities of three or more A-levels.
- The average age of OU undergraduates is 28.
3 December 2020
 Employment in the UK. ONS. November 2020.
 Employment prospects by sector and by region. ICAEW. September 2020.
 Open University Business Barometer 2020.
 Learning for Life: Funding a world-class adult education system. CBI. October 2020.
 House of Commons Hansard, Covid-19: Economic Debate (Column 130), 12 May 2020
 Office for National Statistics, The probability of automation in England: 2011 and 2017, 2019
 BIS Research Paper No.75. The Impact of Investment in Intangible Assets on Productivity Spillovers. Department for Business, Innovation & Skills. 2012.
 Resource And Accounting Budgetary Charge
 Student Loan forecasts, England. 2018-19.
-  London Economics, Estimating the return to part-time undergraduate degrees, 2020. This is the estimated undiscounted real gross earnings premium of a representative part-time student who graduates at age 37. The net graduate premium for these individuals is estimated to be on average £148,000 in real terms (NPV of £83,000), with return to the Exchequer estimated to be on average £104,000 (NPV of £52,000)
 HESA Student Record 2018/19
 All data in this section comes from OU analysis of HESA, Student Record 2009/10 to 2018/19, various years, unless otherwise stated
 Treating Students Fairly: The Economics of Post-School Education. House of Lords Economic Affairs Committee. 2018.
 WonkHE, Is there really a record number of disadvantaged students in HE, Mark Leach, 20 November 2017
 See House of Commons, Innovation, Universities and Skills Committee, Withdrawal of funding for equivalent or lower level qualifications (ELQs), 2008 for a good overview of the ELQ policy
 Department for Education, Student Loan Forecasts England: 2018 to 2019 – Quality and Methodology Information, 2019
 See https://www.gov.uk/childcare-grant
 See https://www.gov.uk/parents-learning-allowance
 The OU commissioned a survey of 5,216 adults aged 18+ in England, of whom 1,205 were considering HE study in the next 5 years (716 on a part-time basis). Fieldwork was conducted online, 19th – 27th August 2020.
 As set out in the 2019 Conservative manifesto
 Learning for Life: Funding a world-class adult education system. CBI. October 2020.
 Young Workers in the Coronavirus Crisis (May 2020). Resolution Foundation.