David Sweeney Director (Research, Innovation & Skills) UVAC 12 th November 2010

1. Employer Engagement & Workforce Development after Browne David Sweeney Director (Research, Innovation & Skills) UVAC 12th November 2010

2. The Browne ReviewPrinciples____________________________________________________________________________________________________________________ • more investment for higher education • more student choice • everyone with potential should be able to benefit from higher education • no one pays until they start to work • payments should be affordable • equal treatment for all: part-time students

3. The Spending ReviewHeadlines___________________________________________________________________________________________________________________ • £2.9bn (40%) reduction from £7.1bn Higher Education resource budget by 2014-15 • possibly more substantial cuts in HEFCE teaching funding to meet student support pressures • 44% reduction in capital by 2014-15 • flat cash protection for Science and Research (9% real terms reduction) - awaiting agreed position on QR/RC split • other cuts in public spending that will impact on higher education

4. The Browne Review/Spending ReviewThe new dynamics___________________________________________________________________________________________________________________ • less emphasis on policy supported by funding • more dependence upon the ‘market’ to shape provision • scarcity of ready money to enable changes • movement of student numbers • emphasis on information for prospective students • withdrawal from ‘across the board’ subsidies and regulation: a more targeted approach

5. The Browne Review/Spending ReviewLess policy supported by funding___________________________________________________________________________________________________________________ • available funds already spoken for: priority subjects; WP/Access funds; scholarships; institutional failure - risk that even these are not affordable • very little scope to support new developments with funding • no prospect of using sustained large-scale funding to deliver culture change (as with research selectivity, HEIF, WP) • little scope for risk-sharing to encourage universities to focus on new activities • little scope for initiatives or funding premiums designed to create new incentives

6. HEFCE skills strategy to 2010-11 • Employer engagement and higher level skills: • Enhancing skills of adults in the workforce and addressing immediate skills needs • More vocationally-oriented provision in HE and routes for progression to HE from vocational qualifications and employment • Sustaining key subjects, particularly STEM, when student demand has not matched the nation’s needs • Promoting employability, including through internships and information on employment • Helping HE respond to the recession, particularly unemployed graduates

7. Strengthening links with business and community

8. Workforce Development ‘We need to develop radical approaches that can lead to much higher levels of access to higher education by older people already in the workplace. This means models of HE that make available relevant, flexible and responsive provision that meets the high skill needs of employers and their staff.... ‘I would like you, in consultation with the Department and higher education providers, to develop a new model for funding higher education that is co-financed with employers, achieves sustained growth in employer based student places, and introduces the principle of employer demand-led funding.’ 2007 HEFCE Grant Letter

9. Investing in a new relationship? ‘priority is to continue to accelerate progress towards a new relationship between employers and higher education an ambitious and ground-breaking plan, but even at the end of this CSR period we shall still have a long way to go. We will look for more substantial growth in this [co-funded] kind of provision from 2011, with increasing volumes of employer co-funding being brought to bear to support skills development…. But the need for innovation and cultural change goes well beyond that. Providers will need a growing appreciation of the requirements of employers, and the general employability skills that are increasingly wanted in the workplace; to provide and adapt courses swiftly in response to demand; to offer provision tailored to individual businesses; and make it accessible in ways that suit employers and students. 2008 HEFCE Grant Letter

10. Investing in a new relationship? • State investment in HE and subsidised workforce development • £150M workforce development programme (2008-11) • £350M Strategically Important and Vulnerable Subjects programme (to 2013) • £1bn support for foundation degrees (teaching funding) • Building on investment in CETLs, Lifelong Learning Networks and employability initiatives (TQEF).

11. Activity to 2010-11 • Embedding employability: • HE Academy and its subject centres; DLHE and Long DLHE; Public information review (employability statements in the short term); Graduate and undergraduate internships • Supporting key vulnerable subjects: • Promoting student demand and attainment; securing, growing and re-shaping provision • Supporting Foundation Degrees: • Development costs; fdf; T-funding premium / allocation; ASNs, including to LLNs

12. Achievements so far • 37 universities with new capability for employer-responsive and flexible provision • 93 lead institutions delivering co-funding with employers • 8,000 co-funded entrants in 2008-09 against a target of 5k, and on track to meet 35k co-funded entrants by 2010-11. • Increases of 12%, 5% and 5% in Chemistry, Physics and Maths students during the last three years, higher than the average of other subjects. • On track for 100,000 foundation degree students by 2010 • £32m leveraged from universities and partners to support business in the recession through the Economic Challenge Investment fund • Help for 50,000 individuals and 11,700 businesses • 12,000 graduate and undergraduate internships offered in 2009-10

13. Statistics • Initial progress (2008-09): • Average recruitment across the sector 59% • 8,000 additional entrants against 5,000 target • Employer co-funding of 30% relative to HEFCE funding of 70% • Private sector 46% of activity and more likely to be cash • Public sector 54% of activity and more likely to be in-kind • HESA data 2008-09 • Over half of learners on short courses • 41% credit; 26% UG cert; 17% FD; 8% PG • 51% of entrants already qualified up to level 3 • Low intensity of learning (2/3 of learners on 29% or less intensity) • Some institutions operating outside their own region

14. Workforce development: challenges and lessons • Some challenges: • Recession and impending public sector cuts • SME market particularly difficult and taking longer to commit • Volatility of short course provision and uncertainty about progression • Scalability and scope for full employer funding • Impact and value for money is largely unknown • Lessons to be learned from 2008-11 pilot (HEFCE evaluations): • Business models that work in particular contexts • Costing and pricing mechanisms • Quantifying co-funding contributions • Identifying viable activities that can be sustained and grown • Disseminating good practice and innovations • Impact on employers and employees

15. New funding and policy environment • Reduction in state funding for HE (HEFCE and others) • Browne Review and the Government’s response, including changes to HEFCE teaching funding method • Future role of regional partners in supporting HE on skills • Short term strong demand for traditional full time HE • New government priorities on skills • Employability, employment outcomes and public information • Apprenticeships and work-based alternatives to three year degrees.

16. Graduate employability • Building on a decade of substantial investment in employability activity after the Dearing Report • Focus on improved information for students to inform choice • Unistats employability statements • Reviewing destinations surveys • Improving ways of measuring employment outcomes • HE Academy support • Learning from the employability and enterprise CETLs report • Repository of tools, resources and cutting edge practice • Support for HEIs’ strategies • Employability part of broader graduate attributes that equip individuals for their lives and to make an impact in society. • Making a case for the value of HE and graduates in growing the jobs, and solving the problems of the future

17. Sustaining the relationship • How do we secure the value of our investment in institutions? • What should be a higher priority for public funds: adults in the workforce or school and college leavers? • Should public funds be used to subsidise training by employers? • Can the market meet the needs of the economy and society? • Are there learners or businesses who need additional support? • What is the role of HEFCE in supporting employability and in specific higher level skills or priority subjects? • How do we adapt our policy and funding for higher level skills to a post-Browne world, short term, and long-term?

18. New factors • Reduction in state funding (HEFCE and others) • Future role of regional partners in supporting HE on skills • Excess demand for FT ug provision • Browne review and the Government’s response, including changes to HEFCE T-funding • Changing government policy on skills • HEFCE’s review of the teaching funding method

19. Key questions • What should be a higher priority for public funds: adults in the workforce or school and college leavers? • Should public funds be used to subsidise training by private sector employers? • Should HEFCE funds be used to subsidise training by public sector employers? • Should we continue to seek employer contributions to the HEFCE component, or focus on fees and student support? • If we should: • could we embed it within our core T-funding or must it be ring-fenced? • could there be a lower burden model like HEIF? • should we support a wider range of activities than currently? • What should we do in 2011-12, given major change in 2012-13?

20. We could... • Grow co-funded provision on the current model and in line with initial aspirations, drawing upon lessons of first phase. • Continue at 2010-11 levels of support (27k co-funded FTEs), either as a niche activity or bridging to a new model from 2012-13. • In either case: • Any investment will be at the expense of fully funded provision; • We will need to target our investment to ensure the most impact on employers and employees, and a viable business within the participating institutions; • We will need to adapt our approach to the post-Browne world.

21. Or we could... • abandon co-funded workforce development as an experiment of the previous government; • focus on the employability of all graduates, and... • promote other forms of employer collaboration and financing.

22. Co-funding post-Browne? To 2011-12 - funded and monitored outside of mainstream From 2012-13 - funded and monitored within mainstream Tuition fee Tuition fee (Full or part employer financed) Tuition fee (Full or part employer financed) Employer co-funding HEFCE co-funding HEFCE co-funding