Big changes ahead for adult education funding? Definitely maybe

Institute for Fiscal Studies (April 2021)

The UK is widely recognised to have a significant problem with adult skills. A range of recent government reports and reviews have emphasised the extent of skills shortages, particularly in technical areas, and the lack of responsiveness of the current system to labour market demand. This problem could be exacerbated by any increase in the pace of technological change, such as automation of particular jobs, or negative trade shocks to particular industries. Economic change following on from the pandemic could also lead to a shift in the demand for different types of skills.

The DfE’s ‘Skills for Jobs’ White Paper (Department for Education, January 2021) was eagerly anticipated as a means for the government to communicate its plan to transform adult education and skills policy, and as a fuller response to the recommendations in the Augar Review. In this briefing note, we assess the key policy announcements made in the White Paper around the funding of post-18 education. The White Paper itself is broad in scope and includes discussions of many potential areas of reform.

The main policy initiative the White Paper introduces is the Lifelong Loan Entitlement, which (like the lifelong learning loan allowance proposed in the Augar Review) aims to give everyone access to funding for the equivalent of four years of post-18 education. Another significant set of reforms signalled by the White Paper are potential changes to the adult education funding system. However, many key details that would determine the overall effects of these changes are either missing, due to go out for consultation, or put off until 2024.

In the remainder of this note, we begin by providing some background context for these changes by setting out current spending levels on adult education and the numbers of adult learners studying different qualifications. We then analyse the spending commitments outlined in the White Paper, and consider the potential implications of changing the existing adult education funding system. Lastly, we discuss the proposed Lifelong Loan Entitlement.