Managing funding locally through devolved budgets has increased scrutiny of how money is being used to meet local skills needs.
The North of Tyne Combined Authority has a population of 880,000. It comprises three constituent local authorities of Northumberland, North Tyneside and the city of Newcastle upon Tyne. There is a large population living in the urban area around Newcastle and North Tyneside, but the Combined Authority also covers a large rural area and coastal fringes. The Combined Authority sits within the Northeast Local Enterprise Partnership (LEP) which covers a wider area.
Each local authority has different issues, but they work together closely on shared challenges of automation, an aging workforce, employer access to highly skilled labour market, and supporting more people into higher paid jobs. Skills shortage vacancies exist across transport, business services, education, health and social work. Learning & Work Institute projections show North of Tyne to be on track for surpluses of both low and intermediate skills and a shortage of high skills by 2030.
Before the coronavirus crisis, the Combined Authority was experiencing strong employment growth. It had seen a 6% rise in the employment rate over the past five years, much of which has been in higher paid sectors such as digital. However, the employment rate was still below the national average and almost one quarter (23%) of the workforce earn less than the living wage. There has been a larger increase in the proportion of people working part-time than seen nationally (from 29% in 2009 to 32% in 2017). Consequently, the Combined Authority are keen to focus on progression and access to better paid work.
All three local authorities contain areas of both deprivation and affluence. The barriers faced by some residents are multiple, persistent and long-term. In all areas these barriers include a lack of access to services, transport and provision.
This case study focuses on the commissioning and place making of the Adult Education Budget (AEB) and the Strategic Skills Plan.
Approaches
The Combined Authority elected its Mayor in May 2019, seven months after the Combined Authority was set up. It has aimed to adopt a collegiate structure to achieve buy-in from all three local authorities. There was immediate alignment with mayoral manifesto commitment to have place-based education and a tighter focus on the area’s skills need. This included a focus on progressing learners onto courses which would increase their chances of finding employment, marrying up the skills needs of the area with provision offered. The Combined Authority are in the early stages of doing this with providers and have been planning an increase in level 2 and level 3 places with them.
The £23 million per annum devolved AEB funding will be allocated to providers from August 2020. The focus in this first year will be on maintaining service coverage and starting to make changes in programmes offered.
There has also been an increase in ESOL provision after a need was identified in the Newcastle City region, and more courses offered in priority sectors. Devolution has allowed a closer relationship with providers, aiming to ensure the funding is adding value.
The Combined Authority has also worked to identify skills gaps and how they can be met with existing provision as well as requirements for new and different provision. This relationship with employers is also allowing North of Tyne to explore broader strategic questions to help with future planning. These include the opportunities to reskill existing workforces and the impact automation will have.
Policy changes
Adult Education Budget (AEB)
In the North of Tyne the AEB devolution is in start-up phase, set to go live in August 2020. It has enabled the Combined Authority to set funding rules, in dialogue with providers, for North of Tyne residents and commission accordingly. In advance of delivery, the Combined Authority have clarified with providers the amount they would be receiving, broadly based on historical allocations. It has put internal systems and procedures in place to administer and monitor the budget, and set up a claims process that mirrors that of the Education and Skills Funding Agency, and financial systems to show how money flows and protect providers’ fiscal solvency.
The success of the AEB will be measured against delivery of North of Tyne economic outcomes:
- Closing the gap on average earnings: increasing earnings, qualifications and progression routes for residents
- Closing the unemployment gap: removing barriers that make it hard for people to take up work or training
- Closing the skills and education gap: focus on schools and colleges to ensure young people have skills and qualifications
- Closing the aspiration and ambition gap
In years two and three, the Combined Authority plan to iterate and adapt rules and commissioning, making it more North of Tyne specific so that it delivers wider devolution and inclusive economy goals.
The Combined Authority have worked with providers to aim to commission new and innovative models that wouldn't have been previously possible. It has also completed a risk profile of the provider base to understand any financial or other challenges which may be potentially faced, given the turbulence of the sector in recent years.
Strategic Skills Plan
The Combined Authority Strategic Skills Plan sets out the skills challenges for the area, and provides strategic direction on how the devolved AEB will be invested. The Combined Authority will build on and update this each year. This includes continuing to question underlying assumptions and taking stock of external changes, such as Brexit. The use of up to date intelligence aims to ensure that commissioning through the AEB meets the needs of the area.
Lessons learned
External events have an impact
Devolution was delayed due to the 2019 General Election. The Combined Authority will need to address significant economic issues as a result of both Brexit, as many employers are reliant on trade with the EU, and coronavirus.
Opportunities for wider alignment
Since devolution the Combined Authority has been keen to explore how AEB can align better with national programmes such as apprenticeships, 16-19 vocational training and the Shared Prosperity Fund. It hopes to help create a fuller picture of interventions and facilitate a skills pipeline.
Increased scrutiny of impact of spending
Managing funding locally through devolved budgets has increased scrutiny of how money is being used to meet local skills needs.
“The biggest risk is in not changing behaviour”
The Combined Authority want to work with providers to ensure that provision meets current and future employer need, supports delivery of their vision for the local economy, and delivers better outcomes for residents. The focus is on ensuring providers support priority sectors identified in the Strategic Skills Plan: “The real difference is the granular focus on ensuring providers are supporting residents to destinations and good outcomes.”