Tag: England

Degree Apprenticeships in England: What Can We Learn from the Experiences of Apprentices, Employers, and Education and Training Providers?

By Josh Patel, Researcher at the Edge Foundation.

Degree Apprenticeships (DAs) were launched in 2015, as a novel work-based learning route to obtaining a degree. On their introduction, then Prime Minister David Cameron said they would ‘give people a great head start, combining a full degree with real practical skills gained from work and the financial security of a regular pay packet’. Since then, they have taken the higher education sector by storm. Their growth has been the key factor in the expansion of higher apprenticeships from 43,800 starts in 2015/16 to 273,700 in 2023/24, a rise from 4.8% to 35% of all apprenticeships. They have stimulated innovative models of delivery and new and productive relationships between employers and providers. Former Skills Minister Robert Halfon remarked that ‘Degree Apprenticeships’ were his ‘two favourite words in the English language’.

DAs have, however, recently come under scrutiny. Concerns persist that the growth of DAs and their high cost – reported in the media as growing from 2% of the apprenticeship budget in 2017/18 to 21% in 2021 – might crowd out opportunities for young entrants to the workforce, as DAs are primarily taken by existing employees. The suitability of DAs as instruments to improve upward social mobility has been contested. Meanwhile, the government is drawing up plans to increase the flexibility of the Apprenticeship Levy through which Degree Apprenticeships can currently be funded, asking employers ‘to rebalance their funding for apprenticeships… to invest in younger workers’.

Our report, ‘Degree Apprenticeships in England: What Can We Learn from the Experiences of Apprentices, Employers, and Education and Training Providers?’, written in collaboration with colleagues from the Universities of Bath, Huddersfield, and Oxford, was published on Tuesday and is a timely intervention into these discussions. Here, we present the evidence for some our policy recommendations, gathered from nearly 100 interviews with stakeholders including large employers and SMEs, providers, degree apprentices, and policymakers.

Engaging employers

The government needs to consider a more systematic approach that serves to rationalise the way that employers are supported to offer a wide range of work-based opportunities. As Edge has identified in other programmes, such as T Levels or plans to provide universal work experience through the government’s Youth Guarantee, DAs are restricted by the number of employers willing to engage. We repeatedly heard evidence of the difficulties ‘resource-poor’ employers had in engaging with the design of apprenticeship standards and participating fully in collaboration with providers. As one SME told us contributing to the design and development of a DA ‘doesn’t give me any benefit now, and I’m impatient’.

The government needs to develop a coherent strategy for DAs with a particular focus on support for SMEs, including improved awareness of levy transfer schemes. Involvement in DAs is often based on being ‘in the know’ and contacts with providers and local authorities. In our ‘Learning from the past’ stream of work, we reviewed Education Business Partnerships, as an example of intermediary organisations, noting both their strengths and shortcomings, which could inform effective initiatives for supporting employers.

Reducing complexity

With the creation of Skills England, the government should take the opportunity to review and simplify the process of design, delivery and quality assurance for DAs, and ensure regulatory elements work together. DAs currently draw in a large number of bodies including the OfS, IfATE, regulatory bodies, professional bodies and Ofsted. Providers told us that this had created a complex landscape of ‘many masters’ where lines of accountability are blurred and innovation is stifled. Providers described ‘overregulation’ as limiting ‘our ability to go off-piste’, and while the process could be constructive, providers were unconvinced of its added value. ‘Does that add to the quality?’ one provider asked. ‘I don’t think it necessarily does’.

Skills England’s remit includes shaping technical education to respond to skills needs, and its incorporation of IfATE has already begun. As a first exercise, it could review the regulatory requirements to remove any duplication and contradictions and then consult with the sector to devise a simpler, clearer mechanism for providers to report.

Increasing flexibility

These difficulties meant that, while we found examples of excellent integration of academic learning and the workplace, concerns persisted as to the vocational relevance and obsolescence of learning, particularly in fast-moving sectors such as IT and mental health provision. One employer involved in delivery said they told their apprentices: ‘we have to teach you this so you get through your apprenticeship, but actually in practice that is not the way it’s done any longer’.

In other countries, such as the Netherlands, a proportion (up to 20-25%) of an apprenticeship standard is kept flexible to be agreed between the employer and provider so that it can take better account of the current and changing situation in that particular industry, location and employer – such flexibility could be piloted in the UK.

…without compromise

The government’s commitment to adapting the levy into a ‘Growth and Skills Levy’, offers opportunities to improve DA delivery. Diversification was not a major consideration for the majority of employers when recruiting, though we certainly did hear evidence from those with a strong sense of their social corporate responsibility. As one SME put it:

there are too many people in the IT industry that are like me. So we’re talking middle-aged white guys. […] Now, DAs allow people who don’t necessarily, wouldn’t consider getting into this industry from a variety of backgrounds, creeds, colours…

We recommended in our Flex Without Compromise report that the government should take a measured approach to levy reform to minimise the risk that a broadening of scope diminishes the opportunities available particularly for younger people and newer entrants to the labour market. It should consider modelling the impact of differentiating levy funding available for DAs by either or both age and staff status, and diversification of the workforce. This could be a powerful mechanism to encourage employers to focus DA opportunities on younger people and on new recruits but would need to be considered carefully to allow for continued expansion of DAs.

These initiatives might help address existing challenges and enhance the efficacy of Degree Apprenticeships in fostering equitable access and meeting the needs of learners and employers.

To find out more about Edge and to read the report in full, visit www.edge.co.uk

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January 30, 2025
Is England really the world champion in overqualification?

By Golo Henseke (LinkedIn) Associate Professor in Education, Practice and Society at the Institute of Education (IoE), UCL’s Faculty of Education and Society, and Francis Green, Professor of Work and Education Economics, also at the IOE.

A recent report by the Organisation of Economically Developed Countries (OECD) claims that nearly four in ten employees in England are overqualified for their jobs, the highest rate among OECD countries. If accurate, this statistic seems to reflect a substantial waste of human capital and raises questions about the state of the UK labour market and education system. However, closer scrutiny suggests that the figure may be misleading, stemming from methodological quirks specific to the English data rather than an alarming surge in overqualification.

Dubious Comparisons

The OECD findings are based on a once-in-a-decade survey of adult skills, an ambitious international undertaking aiming for comparability across countries and economies. Yet, qualifications are inherently tricky to standardise internationally. For example, how does an English GCSE compare to a US high school diploma? The nuances of national education systems can render such comparisons tenuous.

England’s reported 37% overqualification rate, up from under 30% a decade earlier, is at odds with other data. Our surveys of the British workforce, which employ similar methodologies, show a modest drop in overqualification rates between 2006 and 2017, from 30% to 26%. If the reported OECD figures are to be believed, the rise would imply an extraordinary shift since 2017: approximately 2.5 million additional workers would have been relegated to roles beneath their qualifications within just a few years. This appears implausible. It is also at odds with a decline in graduate overqualification from 34% in 2012 to 30% in 2023, as our independent analysis of OECD’s data shows.

A more likely explanation lies in changes to the OECD’s survey design for England. In 2012, UK respondents were presented with a comprehensive list of nearly 60 qualifications when reporting job requirements and personal attainment. In 2023, this was reduced to just 19 options, with significant alterations to how response options were presented. The switch to a simplified classification may have skewed the responses, particularly below degree level, contributing to the measured overqualification rates.

This issue is not confined to England. A similar methodological shift occurred in France, where the reported overqualification rate fell from 30% to 19%. Conversely, in the US, where questionnaires remained broadly consistent, the reported increase was a more credible five percentage points.

A Structural Issue, Not a Graduate Problem

Apart from this problem of potentially inconsistent measurement over time, the rush to attribute England’s supposed peculiar problem of overqualification to an oversupply of graduates is misplaced. Our re-examination of OECD’s survey data shows that, in England, graduates face lower risks of overqualification than non-graduates: the overqualification rate among non-graduates is 17 percentage points higher than among those with a degree. This gap between graduates and non-graduates broadly aligns with our own data from the British Skills and Employment Surveys.

The Director for Education and Skills at the OECD, Andreas Schleicher, has been quoted saying that the UK’s higher education sector is “overextending” itself, with universities offering credentials that lack substantive value. However, with this oversimplified reaction, he is surely aiming at the wrong part of our education system.

A Misguided Narrative

In addition, he is almost certainly targeting the wrong side of the labour market. Overqualification in the UK is likely driven, not so much by an oversupply of graduates as by a failure to create enough middle-skill jobs and robust vocational pathways outside universities.

Overqualification is indeed a pressing issue. Even at a rate nearer 3 in 10, overqualification in England is higher than in most other advanced economies in the OECD. Overqualification depresses wages, diminishes job satisfaction, and undermines long-term productivity as underutilised skills atrophy. But this knee-jerk pinning of blame just on education, particularly on higher education, misses the mark, and forgets about the external benefits that education brings for society and the economy. Instead, England’s policymakers must address the structural deficiencies in the labour market, particularly the lack of opportunities for those with intermediate qualifications.

Simplistic diagnoses risk distracting from the real challenges. England’s education system is not producing “too many” graduates. Instead, its economy and further education system fail to provide sufficient opportunities to harness the potential of those not bound for higher education. To strengthen qualification pathways outside universities, a targeted strategy to foster middle-skill employment (while addressing skill shortages) is urgently needed. Without some recognition of these complexities, public discourse about overqualification will continue to generate more heat than light as university fees are set to surpass £10,000.

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December 23, 2024
Connect more: creating the conditions for a more resilient and sustainable HE sector in England

Despite it being the season of cheer, higher education in England isn’t facing the merriest of Christmases.

Notwithstanding the recent inflationary uplift to the undergraduate fee cap, the financial headwinds in higher education remain extremely challenging. Somehow, in the spring/summer of next year, the Secretary of State for Education is going to have to set out not only what the government expects from the sector in terms of meeting the core priority areas of access, quality and contribution to economic growth, but how it will deliver on its promise to put the sector on a long-term sustainable financial footing.

The overall structure of the sector in terms of the total number of providers of higher education and their relationships to each other might arguably be considered a second-order question, subject to the specifics of the government’s plans. But thinking that way would be a mistake.

The cusp of change

There are real and present concerns right now about the short term financial stability of a number of providers, with the continued increased risk that a provider exits the market in an unplanned way through liquidation, making the continued absence of a regime for administering distressed providers ever more stark.

But on a larger scale, if, as some believe, the sector is on the cusp of entering into a new phase of higher education, a much more connected and networked system, tied more closely into regional development agendas, and more oriented to the collective public value that higher education creates, then the thinking needs to start now about how to enable providers to take part in the strategic discussions and scenario plans that can help them to imagine that kind of future, and develop the skills to operate in the new ways that a different HE landscape could require. It is these discussions that need to inform the development of the HE strategy.

The Office for Students (OfS) has signalled that it considers more structural collaboration to be likely as a response to financial challenge:

Where necessary, providers will need to prepare for, and deliver in practice, the transformation needed to address the challenges they face. In some cases, this is likely to include looking externally for solutions to secure their financial future, including working with other organisations to reduce costs or identifying potential merger partners or other structural changes.

Financial challenge may be the backdrop to some of this thinking; it should not be the sole rationale. Looking ahead, the sector would be planning change even if it were in good financial health: preparing for demographic shifts and the challenge of lifelong learning, the rise of AI, and the volatile context for international education and research. Strategic collaboration is rarely an end in itself – it’s nice to work together but ultimately there has to be a clear strategic rationale that two or more providers can realise greater value and hedge more readily against future risks, than each working individually.

There’s no roadmap

In the autumn of 2024, Wonkhe and Mills & Reeve convened a number of private and confidential conversations with heads of institution, stakeholders from the sector’s representative bodies, mission groups, and regional networks, Board chairs, and a lender to the sector. We wanted to test the sector’s appetite for structural change; in the first instance assessing providers’ appetite for stepping in to support another provider struggling, but also attitudes to merger and other forms of strategic collaboration short of full merger. Our report, Connect more: creating the conditions for a more resilient and sustainable higher education system in England sets out our full findings and recommendations.

There is a startling dearth of law and policy around structural collaboration for HE; some issues such as the VAT rules on shared services, are well established, while others are more speculative. What would the regulatory approach be to a “federated” group of HE providers? What are merging providers’ legal responsibilities to students? What data and evidence might providers draw on to inform their planning?

We found a very similar set of concerns, whether we were discussing a scenario in which a provider is approached by DfE or OfS to acquire another distressed provider, or the wider strategic possibilities afforded by structural collaboration.

All felt strongly that the driving rationale behind any such structural change – which takes considerable time and effort to achieve – should be strategic, rather than purely financial. Heads of institution could readily imagine the possibilities for widening access to HE, protecting at-risk subjects; boosting research opportunities, and generally realising value through the pooling of expertise, infrastructure and procurement power. The regional devolution and regional economic growth agendas were widely considered to be valued enablers for realising the opportunities for a more networked approach.

But the hurdles to overcome are also significant. Interviewees gave examples of failed collaboration attempts in other sectors and the negative cultural perceptions attached to measures like mergers. There was a nervousness about competition law and more specifically OfS’ attitude to structural change, the implications for key institutional performance metrics, and a general sense that no quarter would be given in accommodating a period of adjustment following significant structural change. The risks involved were very obvious and immediate, while the benefits were more speculative and would take time to realise.

Creating conditions

We have arrived at two broad conclusions: the first being that government and OfS, in tandem with other interested parties such as the Competition and Markets Authority could adopt a number of measures to reduce the risks for providers entering into discussions about strategic collaboration.

This would not involve steering particular providers or taking a formal view about what forms of collaboration will best serve public policy ends, but would signal a broadly supportive and facilitative attitude on the part of government and the regulator. As one head of institution observed, a positive agenda around the sector’s collaborative activity would be much more galvanising than the continued focus on financial distress.

The second is that institutions themselves may need to consider their approach to these challenges and think through whether they have the right mix of skills and knowledge within the executive team and on the Board to do scenario planning and strategic thinking around structural change.

In the last decade, the goal for Boards has been all about making their institution stronger, and more competitive. While that core purpose hasn’t gone away, it could be time to temper it with a closer attention to the ways that working in a more collective way could help higher education prepare itself for whatever the future throws at it.

This article is published in association with Mills & Reeve. View and download Connect more: creating the conditions for a more resilient and sustainable higher education system in England here.

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December 16, 2024
Higher education in England needs a special administration regime

Extra government funding for the higher education sector in England means the debate about the prospect of an HE provider facing insolvency and a special administration regime has gone away, right?

Unfortunately not. There is no additional government funding; in fact the additional financial support facilitated by the new Labour government so far is an increase to tuition fees for the next academic year for those students that universities can apply this to. It is estimated that the tuition cost per student is in excess of £14K per year, so the funding gap has not been closed. Add in increased National Insurance contributions and many HE providers will find themselves back where they are right now.

It is a problem that there is no viable insolvency process for universities. But a special administration regime is not solely about “universities going bust.” In fact, such a regime, based on the existing FE special administration legislation, is much more about providing legal clarity for providers, stakeholders and students, than it is about an insolvency process for universities.

Managing insolvency and market exit

The vast majority of HE providers are not companies. This means that there is a lack of clarity as to whether current Companies and Insolvency legislation applies to those providers. For providers, that means that they cannot avail themselves of many insolvency processes that companies can, namely administration, company voluntary arrangements and voluntary liquidation. It is debatable whether they can propose a restructuring plan or be wound up by the court, but a fixed charge holder can appoint receivers over assets.

Of these processes, the one most likely to assist a provider is administration, as it allows insolvency practitioners to trade an entity to maximise recoveries from creditors, usually through a business and asset sale.

At best therefore, an HE provider might be able to be wound up by the court or have receivers appointed over its buildings. Neither of these two processes allows continued trading. Unlike administration, neither of these processes provides moratorium protection against creditor enforcement either. They are not therefore conducive to a distressed merger, teach out or transfer of students on an orderly basis.

Whilst it is unlikely that special administration would enable survival of an institution, due to adverse PR in the market, it would provide a structure for a more orderly market exit, that does not currently exist for most providers.

Protections for lenders

In addition to there being no viable insolvency process for the majority of HE providers, there is also no viable enforcement route for secured lenders. That is a bad thing because if secured lenders have no route to recovering their money, then they are not going to be incentivised to lend more into the sector.

If government funding is insufficient to plug funding gaps, providers will need alternative sources of finance. The most logical starting point is to ask their existing lenders. Yes, giving lenders more enforcement rights could lead to more enforcements, but those high street lenders in the sector are broadly supportive of the sector, and giving lenders the right to do something is empowering and does not necessarily mean that they will action this right.

Lenders are not courting the negative press that would be generated by enforcing against a provider and most probably forcing a disorderly market exit. They are however looking for a clearer line to recovery, which, in turn, will hopefully result in a clearer line to funding for providers.

Protections for students

Students are obviously what HE providers are all about, but, if you are short of sleep and scour the Companies and Insolvency legislation, you will find no mention of them. If an HE provider gets into financial distress, then our advice is that the trustees should act in the best interest of all creditors. Students may well be creditors in respect of claims relating to potential termination of courses and/or having to move to another provider, potentially missing a year and waiting longer to enter the job market.

However, the duty is to all creditors, not just some, and under the insolvency legislation, students have no better protection than any other creditor. Special administration would change that. The regime in the FE sector specifically provides for a predominant duty to act in the best interest of students and would enable the trustees to put students at the forefront of their minds in a time of financial distress.

A special administration regime would therefore help trustees focus on the interest of students in a financially distressed situation, aligning them with the purposes of the OfS and charitable objects, where relevant.

Protections for trustees

Lastly, and probably most forcefully, a special administration regime would assist trustees of an HE provider in navigating a path for their institution in financial distress. As touched on above, it is not clear, for the vast majority of HE providers, whether the Companies and Insolvency legislation applies.

It is possible that a university could be wound up by the court as an unregistered company. If it were, then the Companies and Insolvency legislation would apply. In those circumstances, the trustees could be personally liable if they fail to act in the best interest of creditors and/or do not have a reasonable belief that the HE provider could avoid an insolvency process.

Joining a meeting of trustees to tell them that they could be personally liable, but it is not legally clear, is a very unsatisfactory experience; trust me, this is not a message they want to hear from their advisors.

A special administration regime, applying the Companies and Insolvency legislation to all HE providers, regardless of their constitution or whether they are incorporated, would allow trustees to have a much clearer idea of the risks that they are taking and the approach that they should follow to protect stakeholders.

In the event a special administration was to be brought in, we would hope it would not need to be applied to a market exit situation. Its real value, however, is in bringing greater legal clarity for lenders and trustees and more protection for students, in the current financial circumstances that HE providers find themselves in.

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December 16, 2024