Memorandum to the Work and Pensions Select Committee from NIACE

Published: September 2006

Summary

Introduction

1. The National Institute of Adult Continuing Education (NIACE) is an independent non-governmental organisation and charity. Its corporate and individual members come from a range of places where adults learn: in further education colleges and local community settings; in universities, workplaces and prisons as well as in their homes through the media and information technology. NIACE's work is supported by a wide range of bodies including the DfES (with which it has a formal voluntary sector compact) and other departments of state, by the Local Government Association and by the Learning and Skills Council. The ends to which NIACE activities are directed can be summarised as being to secure more, different and better opportunities for adult learners, especially those who benefited least from their initial education.

The UK’S Ageing Demographic Profile

2. The number of young people aged between 16 and 24 is projected to fall from 6.9 million in 2005 to 6.6 million in 2020, equivalent to a fall of 4.9%. This creates a potential ‘demographic dividend’ which has implications for public spending. With 60,000 fewer people per year in the 15-24 age cohort between 2010 and 2020, a changing profile might, firstly, be used to reduce overall levels of public spending on education and training. Secondly it might be retained to ‘goldplate’ provision for children and young people – increasing per capita spending on a smaller cohort. Thirdly it provides an opportunity to re-balance spending to support policies for lifelong learning, to promote an 80% employment rate and to benefit adults aged 25-65 learning for extended engagement in work. This note from NIACE advocates such a third way.

3. At the same time as the absolute number of young people is set to decline, life expectancy continues to rise, thus amplifying the ageing demographic profile and making the dependency ratio more challenging. It is surprising therefore, that the Government’s white paper of March 2006 (Further Education: Raising Skills, Improving Life Chances (Cm6768) gives attention to the phenomenon in just one paragraph (2.38). The scale of the challenge does not seem to be recognised. Learning in later life is about extended working as much as it is about opportunities for pensioners to remain active.

4. There is a growing awareness that 2 in 3 of the new jobs to be created in the next decade will be filled not by new young labour market entrants but by adults The consequences of this have, however, yet to be appreciated. The quality of labour market oversight nationally was not enhanced when Government and the Sector Skills Development Agency approved the first four of 25 Sector Skills Agreements that assumed collectively, the recruitment of more than twice as many young people as actually exist in the UK!

5. Although some concerned with policy formation appear relaxed that market forces will find solutions to skills and labour shortages resulting from the demographic changes underway, NIACE does not share their confidence. In the short run the evidence is that firms are responding by recruiting massively from EU accession states and by outsourcing jobs outside the UK. Although the UK may continue to benefit in the short-term from a flow of well-trained and skilled craftspeople and of low waged labour, NIACE considers that the belief in a market-driven solution is a complacent alternative to overhauling post-school education and training policy. As Lord Leitch’s review of skills for HM Treasury is widely expected to note, looking at labour market ‘flow’ is only one part of the equation – there is also a need to consider ‘stock’ and capacity. Skill acquisition is not a one-off event – skills also decay, whether through under-use or through obsolescence as a result of changing technologies, regulation and innovation.

Turning The Margins Into The Mainstream

6. If the aspiration to an 80% employment rate in the UK is to be achieved, the balance of focus of government’s active labour market policy must shift away from young entrants to the workforce to adults. Many of those adults will come from groups consigned in the past to the margins of labour market policy.

7. Although benefit claimants are likely to be the centrepiece of the Committee’s inquiry, other groups are also significant. In a response to the Further Education white paper earlier this year, NIACE suggested that attention to the needs of eight groups would provide a helpful benchmark against which to assess the responsiveness of policy initiatives. The groups are:

8. Each of these groups will experience different barriers to full engagement in the labour market that must be overcome if they are to enter, re-enter or realise their potential within the waged economy. The extent to which current policy initiatives and publicly-funded provision can meet particular needs with sensitivity and flexibility is however questionable: The Education and Skills Select Committee report into Further Education (HC 649, September 2006, paragraph 91), for example, concludes that “…the dividing line between what is of value – to individuals and to the economy – and what is less so, is nowhere as clear as is currently implied in government rhetoric”.

9. There are two of the above groups though, for which Government has acknowledged the need for a more tightly targeted approach. The first is for women, the second for ex-offenders. The 2006 Budget announced a £40 million package in response to the Women and Work Commission, to help lower-skilled women with skills training and career advice, recognising the bluntness of the key approaches of the Skills Strategy. Research undertaken for the Department of Work and Pensions also suggests that the Department is seeking to understand the cultural barriers faced by women from certain minority communities (see section 5.3.1 of Barriers to Employment for Pakistanis and Bangladeshis in Britain. DWP Research Report 360, 2006) and work to meet resultant need, starting from where individuals are rather than where the state would like them to be. In a similar fashion, the Government’s welfare reform proposals acknowledge that the barriers faced by women who are lone parents may be as much around support issues as skills issues.

10. In a similarly nuanced fashion, the Green paper Reducing Re-Offending through Skills and Employment (Cm 6702, December 2005), set out a coherent strategy, led by the Department for Education and Skills, to help reduce re-offending by improving skills and employment opportunities for offenders. Both of the approaches are welcome in appreciating the complexity of some adults’ journeys to work – but NIACE suggests that similar bottom-up sophistication is needed in respect of six other groups, as suggested below.

Older Workers

11. As noted above, extending working life is an increasingly important contributor to a higher employment rate. Older people are disproportionately likely to be lower-qualified and have declining prospects of labour market mobility as they age. Training and education can help them to remain in full or part-time work or to return to work as well as being more productive. The public policy implications of this have been analysed by NIACE and Age Concern England in a recent paper (Learning in Later Life: A Public Spending Challenge (September 2006) attached with this memorandum.

12. Although older workers have the potential to fill the 2.2 million new jobs that the Leitch Review has projected will be created over the next 15 years, if employment rates for over-50s do not improve, the number of workers over 50 will grow by only 1 million up to 2020 (the number of workers under this age will, other things being equal, remain static) - insufficient to meet predicted demand. For a sustained growth in the proportion of older people in work to happen, they will not only need to have appropriate skills but they (and their employers) will need to have positive attitudes to working in later life. The Government’s Opportunity Age strategy for an ageing society was launched shortly before the 2005 general election and widely welcomed - yet to date progress has been disappointing (indeed the New Deal 50+ has declined). NIACE believes that Government needs to give urgent consideration to specific programmes targeting older people that motivate and skill them to extend engagement in the labour market - or better “age proof” existing policies.

13. The economics of training older workers differs from that of younger workers. For employers, there is a strong disincentive in training workers approaching their final years in the labour market when compared to younger people with greater potential over time to show a return in investment. For the public purse though, there is a strong incentive to keep people in the labour market and deferring full retirement – contributing to tax revenues and not drawing pensions. Publicly-funded training opportunities have a potentially important role to play here – but it is one that current skills policies have yet to address fully.

Part-Time Workers, Temporary Workers and Employees in ‘Cool to Training’ Businesses

14. It can be argued that people in employment, however marginal, are contributing already to the achievement of a high employment rate and that no further attention is required by the Select Committee’s inquiry. However a counter-argument is given in a report for the Trades Union Congress by the Policy Studies Institute (The Hidden One-in-Five: Winning a fair deal for Britain’s Vulnerable Workers, September 2006). This outlines how such groups as agency workers, migrant workers, informal workers, and home workers are particularly vulnerable in labour market terms to exploitation, poverty and repeated unemployment. Although NIACE’s concern with part-time and temporary workers and those employed in businesses resistant to training is not exactly the same as the TUC’s, a common argument holds: both groups share a disproportionate number of low-skilled under-qualified workers who are in such posts not through choice but because they are unable to secure sustainable full-time work and are caught in a ‘revolving door’, swinging between insecure, low skill jobs and periods on benefit. Reducing the amount of ‘churn’ in the system should be a stronger priority for government.

15. It is here, particularly in respect of the ’16-hour rule’ concerning study while claiming benefit, that a tension between the agendas of different Departments of State becomes apparent. The PSA targets for which DWP is responsible result in systems designed overwhelmingly to get people, including those with low levels of skills, into employment of any kind. Other things being equal, this will swell the proportion of people in the workforce without qualifications. The DfES, in contrast, is tasked with raising the numbers of people in the workforce (not necessarily in employment) with Level 2 qualifications - risking the creation of a perverse incentive to keep learners economically inactive until qualified. In practice, this can result in learners being required to abandon training in mid-course for temporary work only to repeat the cycle.

Migrants

16. Migration impacts on many dimensions of public policy but is undoubtedly a major consideration when assessing whether an 80% employment rate can be achieved. As mentioned in paragraph 5 (above), migrant labour especially from within the EU is a palliative rather than a cure for skills gaps. After other EU members open their doors to migrant labour in three years time, the UK may not be able to rely on the same level of supply.

17. Asylum seekers and refugees add a further dimension to the migration picture in which delays in dealing with asylum claims waste the potential refugees have in contributing to the UK economy. Overall employment rates among refugees are, however low (of the order of 30%). A particular difficulty here lies with the practice of giving refugees a fixed time leave to remain which acts as a disincentive to employers.

18. Other issues impacting significantly upon the ability of migrants to contribute to the labour market are the recognition of overseas qualification and the provision of courses in English for Speakers of Other Languages (ESOL). The latter issue has been the subject of an independent inquiry, led by NIACE which concluded that a shortage of teachers coupled with inadequate provision that is not well planned and is of patchy quality are all contributing to the enormous problems facing adult ESOL. The government’s response to these findings is to be made public on Tuesday 3rd October 2006.

People On Welfare Benefits

19. NIACE acknowledges the care taken by Government in the introduction of proposals for reform made in A new deal for welfare: Empowering people to work (Cmd 6730). This sensitivity is welcome and will make it easier to attract a million people off benefit and into employment. We believe that the pathway back to work for people who are overcoming mental illness is a particularly important exemplar of the need for a highly targeted and personalized approach and a powerful argument to reform the skills strategy. The process of recovering mental health is enhanced by education and training in small incremental steps which restore confidence and engagement – the acquisition of a first full Level 2 qualification (or basic skills) is simply not always appropriate, not least for people who may have been well-qualified earlier in their lives but who have a long journey to undertake before becoming fully employable again. The same is true for adults with learning difficulties and/or disabilities who may require highly individualised support arrangements rather than a ‘one-size fits all’ strategy.

20. It appears increasingly likely that the Leitch review will recognise the value of an holistic approach to assist those with fewest skills and qualifications and also multiple needs resulting from chaotic lives. NIACE will welcome any proposals that introduce greater flexibility and cross-departmental co-operation into assisting them into sustainable employment as a means of combating poverty and social exclusion.

21. The analysis of youth cohort data by Professor John Bynner and Samantha Parson has established a clear inter-generational effect whereby the children of parents with literacy skills below entry level 2, not just those without qualifications, are demonstrably more likely to be poor, unemployed and in poor health when they reach adulthood. Neither the additional benefits nor the costs of not investing enough in adult learning are yet captured in headline PSA targets for Government departments and their agencies. The Department for Education and Skills’ targets do not measure where it is that public investment would have the greatest impact.

22. NIACE believes strongly that the significance of adult learning lies not only in the arenas of personal development and fulfilment on one hand and the demands of the skills agenda and labour market policy on the other. It contributes in cross-cutting ways to different economic and social policy agendas (see for example the ODPM/SEU report Improving Services, Improving Lives, October 2005, which recognises the economic values of personal capacity-building and the well-researched positive link between adult learning and social capital, health and family life).

23. NIACE would be pleased to provide the Committee with further information about anything in this note. Please contact Alastair Thomson, Senior Policy Officer in the first instance ( alastair.thomson@niace.org.uk ).

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