The Summer Budget 2015

Implications for the FE and Skills sector

Beej Kaczmarczyk, Learning Curve Group

The main themes

Eliminate the budget deficit while increasing spending on defence, health and pensionsReductions in other departments’ spending

Reward work and build aspirationsNew national living wage

Back business and make economy more productiveInvestment in skills and apprenticeships

Devolution of powers and budgetsNorthern powerhouse

Importance of Apprenticeships

Type of programme Value per £ of government investmentL3 Apprenticeship 28L2 Apprenticeship 26FT Level 2 21FT Level 3 16

Childcare – From September 2017, the government will extend the free childcare entitlement to 30 hours a week for working parents of 3 and 4 year olds.

Apprenticeships levy – The government will introduce a levy on large UK employers to increase the number of apprenticeship starts. In England, employers will be able to access this funding for apprenticeship training.

The funding will be directly controlled by employers via the digital voucher and firms that are committed to training will be able to get back more than they put in.“There will be formal engagement with business on the implementation of the levy, which will also consider the interaction with existing sector levy boards, and further details will be set out at the spending review.”

Student maintenance – Maintenance loan support will rise for students from low and middle income backgrounds up to £8,200 a year studying away from home, outside London. From the 2016-17 academic year, maintenance grants will be replaced with maintenance loans for new students from England, paid back only when their earnings exceed £21,000 a year.

Student loans – The government will consult on freezing the loan repayment threshold for the next 5 years and review the discount rate applied to student loans and other transactions to bring it more into line with the government’s long-term cost of borrowing.

Teaching quality – The government will allow institutions offering high teaching quality to increase their tuition fees in line with inflation from 2017-18, and consult on the mechanisms to do this.

Youth obligation – From April 2017, 18-21 year olds on Universal Credit will participate in an intensive period of support at the start of their benefit claim. After 6 months they will be expected to apply for an apprenticeship, traineeship, gain work place skills or go on a work placement.

Extending parent conditionality – From April 2017 parents claiming Universal Credit, including lone parents, will be expected to prepare for work from when their youngest child turns 2, and to look for work when their youngest child turns 3, with support from Jobcentre Plus.

Restricting Housing Benefit entitlement for young people – From April 2017, those out of work aged 18 to 21 making new claims to Universal Credit will no longer be automatically entitled to the housing element.

Implications of the Budget

How will the levy work? How bureaucratic? How will employers respond? What about smaller employers?

Lots of details left to Productivity Plan and Spending Review process

Deficit to be cut at same pace as during last Parliament means less reliance on public services cuts

New “earn or learn” obligationsParticipation in HE by low/middle income familiesDevolution of investment and skills budgets to LEPs and City

Regions

Productivity

The budget provided too little detail on what the productivity plan contains, so we must wait for the Treasury’s Friday document for putting some economic flesh on the bones.