“We find that our most formidable assailants are the best educated peoples . . . For some time past, whilst we have advanced, they have advanced faster still.” Now read this: “To achieve world class prosperity and fairness in the new global economy, the UK must achieve world class skills. Without world class skills, UK businesses will find it increasingly difficult to compete and innovate.”
The first quotation comes from a report published in 1884. The second comes from the report by Lord Leitch published this week.* Both reports were produced under the direction of practical businessmen. Both worried about new threats: the former about Germany and the US; the latter about China and India. I owe the first quote to the best discussion I know of the ancient British panic over skills. But I may be biased: its author, Professor Alison Wolf of King’s College London, is my wife.**
Does Lord Leitch’s report add anything to this debate? Not much.
The existence of a long tail in British skills is long-standing and well-documented. Yet note that the country with the smallest proportion of its labour force with “low skills”, as defined by the Organisation for Economic Co-operation and Development, is the impoverished Czech Republic. Ireland, the most dynamic European economy of recent times, has a higher proportion of such people than the UK.
Despite this ancient concern, the UK remains among the richest countries in the world. The Leitch review’s estimate of the contribution of radical increases in the measured skill level to overall economic performance is also modest: £2.5bn a year, which is 0.2 per cent of gross domestic product. This is not to argue that a better educated population is not worth having. Yet far more worrying for the overall economy than lack of skills at the bottom is the collapse in rigorous education at the top: the number of pupils studying physics at A-level has fallen by 56 per cent in 20 years.
The report also notionally eschews supply side planning, only to recommend quantitative targets for functional literacy and numeracy and for the proportion of the adult population with formal qualifications at “level 2” (notionally equivalent to the general certificate of secondary education), “level 3” (notionally equivalent to A-levels) and “level 4” (equivalent to degrees), all to be delivered by 2020. If this is not supply-side planning, what is it? Moreover, these aims ignore evidence that the lower level qualifications, at least, do not deliver to adults higher pay or greater productivity. Too often, they are pieces of worthless paper.
If an organisation is not delivering, the answer is too often to change its name. The Leitch report falls into this pattern: a new Commission for Employment and Skills will, it says, “rationalise the existing system by merging and streamlining the Sector Skill Development Agency and the National Employment Panel”. Hope – or euphemism – springs eternal.
What seems significant, however, is the emphasis on the idea that the new commission is to be employer-led. This is a central idea. That would, says the report, “help to ‘depoliticise’ the skills agenda by securing a broad political and stakeholder consensus for the UK’s world-class ambitions for 2020 and beyond”.
The new system is also to be built on already existing “employment training pilots”. The Institute of Fiscal Studies assessed those pilots and concluded that about 85 per cent to 95 per cent of the training is deadweight: it would have happened anyway.***
Even if that were not the case, it is not obvious why the state should subsidise the job-specific training that employers desire. Far more important are general skills. These are hard to acquire after someone leaves school. But if this is to happen at all, it is through individual effort. It makes sense, therefore, for any subsidy to go to individuals rather than employers. The market failures in education also suggest that this makes sense.
In short, the Leitch report looks like just another in a series of proposals to remedy the failures of schooling. If that were the aim, it would surely be better to extend the student loans being offered to the lucky few going to university to all those seeking further education. Moreover, why should taxpayer money subsidise businesses into doing what they either are, or should be, doing anyway? I understand why the CBI would be in favour. But whether the sums expended offer a good return to the taxpayer is quite another matter.
Yet, what would one expect from a report that says “for skills to benefit the economy, they must be economically valuable”? A few years hence it will surely have joined the other unremembered flops of the past one and a quarter centuries.
*Prosperity for all in the global economy – world class skills, www.hm-treasury.gov.uk; **Does Education Matter? Penguin, 2002; *** The Impact of the Employer Training Pilots on the Take-up of Training among Employers and Employees, December 2005, www.ifs.org.uk.
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