This guest blog has been kindly contributed by Mark Corney, who is a post-16 education and labour market consultant.

Recommendations by the Independent Panel on Post-18 Education and Funding are awaiting advice from the Office for National Statistics on how income-contingent loans in higher education and adult further education should be scored in the public finances.

A review of the UK Apprenticeship Levy has also been announced although radical reform will only happen after 2020.

These timings mean Whitehall has an opportunity to assess the Apprenticeship Levy as it operates in England against future HE and adult FE tuition and maintenance entitlements to support up-skilling and re-skilling and to expand the Level 4/5 pipeline.

Up-Skilling Post-18 Entitlements

Possible up-skilling measures include extending entitlement to free tuition for a first full Level 2 and a first full Level 3 for 19-to-23 year olds to adults aged 24 and over, preferably for credits as well as whole qualifications.

An all-age entitlement to free tuition for a first full Level 2 implies the replacement of co-funding – between public grants and private funding – with public grants covering 100% of tuition costs. Meanwhile, an all-age entitlement to free tuition for a first Level 3 implies a shift from fee-loans to public grants for 100% of tuition costs.

First Full Level 3: Access to Higher Education courses

The first full Level 3 entitlement has critical implications for Access to Higher Education courses, which are primarily studied full-time.

In 2016/17, about 17,500 adults aged 25 and over were enrolled on Access to HE courses in England, but only 12,000 19-to-23 year olds resident in England were funded through fee-loans.  Even though the data is not strictly compatible, a plausible assumption is that 5,500 mature adults might be self-funding their Access to Higher Education course.

Clearly, an all-age entitlement to free tuition for a first full Level 3 qualification will require data on whether prospective Access to HE students already have a full Level 3. Many of the 12,000 taking out fee-loans plus some of the 5,500 self-funded learners would be eligible to free tuition.

Even so, not all students in receipt of public funding for Access to Higher Education courses are funded through fee-loans.

In 2016/17, about 19,000 young adults aged below 25 were enrolled on Access to HE courses in England whilst only 5,000 19 to 23 year olds resident in England funded their course through fee-loans. Access to HE courses count as full Level 3 qualifications. Noting again the different definitions, a fair assumption is that about 14,000 younger adults receive free tuition under the current first full Level 3 entitlement.

But the key question to ask about 19 to 23 year olds on Access to HE courses seeking a first full Level 3 is why is the number so low. Fee loans are not needed and so debt aversion is irrelevant, and maintenance support via the £85 million Discretionary Learner Fund takes the form of grants and so, again, debt aversion does not arise.

Part of the answer is that, even though tuition is free, there is no national entitlement to high-value guaranteed maintenance loans for adult FE students studying full-time first full Level 3 qualifications.

Meanwhile, the small number of mature students seeking a first full Level 3 through full-time Access to HE courses can partly be explained by debt aversion to fee-loans and limited private income. But although the shift from fee-loans to free tuition would remove the barriers of debt aversion and limited private income, Access to HE students would only be eligible for low-value and uncertain maintenance grants from the £35 million Learner Loan Bursary Fund.

First Full Level 3: T-Levels, A-Levels and Vocational Qualifications

Increasing participation in A-Level and vocational Level 3 courses to achieve a first Level 3 irrespective of age is another pathway to expanding the Level 4/5 pipeline.  So too are full-time T-Levels for 19-to-23 year olds.

Studying for a first full Level 3 should not, however, imply full-time study. Part-time study should also be encouraged. But free tuition is not enough. Full and part-time maintenance loans will be needed.

English Devolution

Devolution, however, complicates matters. The current entitlement to free tuition for first full Level 3 qualifications for 19 to 23 year olds is housed within the Adult Education Budget (AEB) but the AEB is devolved. Over 50% of the existing £1.5 billion budget is under the control of elected mayors and combined authorities.

An all-age entitlement to free tuition for a first full Level 3 – covering Access to HE courses, A-Levels and 19-23 T-Levels – would also presumably be AEB funded. Devolved authorities would presumably fund these programmes but they would certainly demand a say on the type of courses they fund. 

English Devolution and Level 3 Maintenance Loans

If, however, an all-age entitlement to free tuition for a first full Level 3 is to be effective it must be supported by maintenance loans. And yet, it is students – not elected mayors – who take out maintenance loans. Surely, students rather than regional planners should choose the course they study?

First Level 4 to 6

It is important to know the contribution of fee-loans to up-skilling relative to re-skilling at Levels 4 to 6.  Fee-loan budgets for both full-time and part-time HE and adult FE students supporting first Levels 4 to 6 should be itemised separately alongside maintenance loans for each of these categories.

Re-Skilling Post-18 Entitlements

Arguably more thought needs to be given to publicly funded re-skilling entitlements. Potential options include:

  1. an all-age entitlement to free tuition for a second full Level 2;
  2. positioning fee-loans as the only source of public funding for subsequent Level 3 qualifications;
  3. creating separate part-time HE and adult FE fee-loan budgets for subsequent Levels 4 to 6 qualifications; and
  4. funding short courses through the National Retraining Scheme.

The Apprenticeship Levy

Finally, it is against future up-skilling and re-skilling entitlements that the UK Apprenticeship Levy should be assessed.

The aim of the Levy in England at least is to increase firm-level productivity through apprenticeships. This could mean up-skilling for some workers but re-skilling for many others.

There is nothing intellectually wrong with the current aim of the Apprenticeship Levy. And if extended up-skilling entitlements from Level 2 to Level 5 are phased-in, the present Apprenticeship Levy – reformed here and there – could make a major contribution to re-skilling the workforce.

The problem is that employer choice does not always coincide with guaranteeing every 16 to 24 year old with an apprenticeship especially at Levels 2 and 3. And although the review is designed to consult employers over improvements, elected mayors will certainly make a claim to devolve funding from the Levy to them.