Experiences of employment and skills devolution: Tees Valley Combined Authority

The combined authority argue that devolving the skills revenue and capital funding in the UK Shared Prosperity Fund would better allow it to align all funding streams and produce a linear model which would offer support to people from transitions into work to progression in the labour market.


Tees Valley Combined Authority has five constituent local authorities: Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland and Stockton-on-Tees. It covers the same area as the Local Enterprise Partnership (LEP) and undertakes the functions of both the Combined Authority and the LEP.

It has a population of 680,000 people. There are two large towns within the Combined Authority, Middlesbrough and Stockton, and the major cities of Newcastle, Sunderland, York and Durham are within commutable distance.

Industry within established sectors includes chemical processing, energy and advanced manufacturing. Emerging sectors include clean energy, digital, business and professional services and logistics.

Historically Tees Valley had a number of traditional industries, which have been in decline for some time. This has presented a number of skills and employment challenges: the employment rate in Tees Valley is 69%, some way below the national rate of 76%.

Key challenges include an aging workforce, low qualification levels, and high youth unemployment (3.9% compared to 2.6% nationally). Whilst many of the primary schools in Tees Valley Combined Authority are excellent, performance of secondary schools in some areas is below average. Many Tees Valley employers report skills shortages.

There is a wide range of private and public sector funded providers, including Teeside University and five general further education (FE) colleges as well as a specialist college of art and design.

This case study focuses on the Combined Authority’s experience of influencing stakeholders and policy through the Adult Education Budget (AEB) and the Routes to Work programme.


Approaches

Tees Valley secured a devolution deal in 2015 and has had an elected mayor since 2017. The Mayor and the Combined Authority have devolved responsibility for some of the region’s post-19 education delivery and controls the AEB, with the amount agreed on an annual basis. Devolved powers include managing this budget along with adult education delivery, funding, and performance management.

The Combined Authority has invested in a wider Education, Employment and Skills programme, which has seen the Education, Employment and Skills Partnership Board taking on the role of the Skills Advisory Panel. The devolution deal, combined with the introduction of a Mayor, has provided a platform to build strategic conversations with government departments to shape policy, although the experience has been mixed. In addition, devolution has allowed the local industrial strategy to be co-produced with the government. It has also provided the opportunity to develop much closer working relationships with their key partners and stakeholders, including providers.

Working with partners and stakeholders and keeping them engaged through the process has been a priority. Central to this has been openness and transparency when developing and implementing systems, process and information sharing. Tees Valley argue that strong stakeholder governance in place before devolution and the profile and role of the Mayor have played an important part in ensuring that key messages are shared.


Changes

Adult Education Budget

The AEB is an annualised budget with the value for for 2019/20 standing at £29.5million. It provides the Combined Authority with powers and responsibility to fundamentally change the way adult education and skills is commissioned and funded.

In common with other areas, a key challenge was limited data about previous provision, which led the Combined Authority to undertake analysis of the 2016/7 academic year. In this first year of delivery decisions were taken with a view to ensuring that existing infrastructure was not destabilised. This has meant adopting and adapting Education and Skills Funding Agency (ESFA) policies where appropriate, in order to build a local offer that aims to be responsive to what skills businesses need, prioritising providers who could demonstrate a track record of high quality and performance as well as identifying provision that contributes to local strategic and economic priorities. It has been a big shift and raised some challenges, which at times have required difficult decisions to be made.

The Combined Authority are cautious about making changes, although it wants to use data collected to support more significant evolution in the future. Access to data is key: ‘we understand what actually is being delivered now and we never understood that before.’ This knowledge is enabling the Combined Authority to plan for the future. Its focus is on ‘seeing people progressing, getting better employment outcomes and learning.’

The biggest change in Tees Valley can be seen in the commissioning of skills activity. This has included funding all providers on a grant basis for the first time. This new offer, available as a result of the AEB, has been designed to focus more heavily on the needs of local employers. It is described as: ‘built on relationships of providers, understanding ways of working, trying to be more responsive to the ways of the market, in terms of what businesses need, in terms of skills.’

Moving to this more local model has been a big shift and required, at times, difficult decisions, including a different approach to commissioning. The Combined Authority have developed more dialogue and openness with their providers, but are also performance managing them more intensively. Prior to devolution there were over 270 providers and sub-contractors delivering skills. As a result of devolution, which involved an open, transparent,  commissioning process that considered the economic and strategic existence of provision, and some strong performance management, there are now 32 providers and 11 of these providers sub-contracting. The Combined Authority argue this reduction has not had a negative impact on the breadth of provision that residents can access. It believes that, while initially this caused some shock through the sector, there is a sense of respect for this new approach to commissioning, which places all providers on an equal footing.

Routes to Work (RTW)

Tees Valley Routes to Work (RTW) is one of five national DWP Innovation Pilots, developed to reduce worklessness. Tees Valley were able to bid for innovation funding to pilot a ‘major new approach’ to support those furthest from the labour market. DWP awarded the Combined Authority £6m to deliver the pilot, further matched by £1.5m agreed by the Combined Authority Cabinet.

RTW is managed by Tees Valley Combined Authority and delivered by the five Tees Valley local authorities. It is aimed at people aged over 30 who are long-term unemployed or economically inactive and need help and support to return to work. They can access holistic support from a range of service providers aimed at addressing multiple barriers, as well as skills training where a need is identified. Participants have an allocated key worker who works with them throughout the programme.

The Combined Authority argue that devolution has allowed it to think strategically about its work with DWP, Jobcentre Plus and the local authorities to design a programme that is more flexible and responsive to local needs and demands. This would enable it to take into account issues which are significant locally but may not affect other parts of the country to the same extent. Ten key measurables were defined by a local working group to understand the specific issues and measure progress on a numerical scale. Included are transport issues and a lack of alignment with workplace starting times, for example.

The design process included a wide range of stakeholders, all five Tees Valley local authorities, and both national and local DWP officers. The Tees Valley Education, Employment and Skills Partnership Board, which has representation from businesses, politicians, local authorities, Jobcentre Plus and DWP, also fed into the development of the programme. The partnership approach was key to developing a level of flexibility that had not been possible when delivering national programmes locally.

Changes in personnel in central government departments can affect the nature of the relationship with the Combined Authority, which can be on a scale from traditional contract management to genuine partnership working. Communication with both local and national DWP colleagues throughout the pilot is considered by Tees Valley as key to its success.

The programme has been been running for two years and the final evaluation will be conducted upon its completion in 2021. To date, projected outcomes for engaging with customers and moving them into work have been exceeded. The initial targets were to engage 2,500 people and move 15% (375) into work, with 38% (938 people) making significant improvements towards gaining work. So far over 2,500 have engaged with the Pilot and 394 have been supported into employment.

Tees Valley belive that the true impact of its devolution deal and the changing delivery of adult education and skills will be seen longer-term. The aims of RTW are to address challenges that have been in place for decades, and will consequently take time to tackle.


Lessons learned

Success requires a shared commitment and partnership

Partnership working and visions for change and flexibility vary over time and, to an extent, can depend on relationships with officials. It is important to ensure commitment is consistent on both sides and there is clarity and agreement about what can and cannot be devolved.

Access to data is key to making significant change

Access to data is important to help understand current delivery and build a coherent and consistent plan for future change.

The Shared Prosperity Fund offers further opportunities for devolution

The Combined Authority argue that devolving the skills revenue and capital funding in the UK Shared Prosperity Fund would better allow it to align all funding streams and produce a linear model which would offer support to people from transitions into work to progression in the labour market.

Scale

The Combined Authority consider the level of integration and definition of the local labour market as crucial in building its model for skills devolution. It sees the Combined Authority as an optimum size, concerned that working within a wider labour market would limit the opportunity for change and success.

Real change takes time

In order to achieve real impact, sufficient time needs to be built in for programmes and approaches to become embedded.

Stakeholder engagement is vital

Key to success is stakeholder engagement, ensuring local ownership in order to ‘deliver faster and better results’. This is required from the outset so that the design phase reflects the needs of local businesses and residents.