Chamber and committees

Scottish Funding Council submission December 2021

Scottish Funding Council submission to Skills alignment to business needs inquiry

Scottish Funding Council

Introduction

Scotland’s universities and colleges are key to delivering the education, skills, research and innovation that support the changing needs of industry and of our economy and society (see Annexe A). This is a time of maximum uncertainty. The labour market is changing rapidly, accelerated by the coronavirus pandemic and Brexit. An aging workforce, technological innovation and the climate emergency are already impacting on the skills needs and challenges of employers and the career choices of individuals.

SFC is working with key partners to understand and respond to the current and prospective skills needs of individuals, industries and regions. Our approach is to empower colleges and universities to respond with maximum flexibility to high quality learning and skills provision needs, and to further stimulate the investment in skills by both individuals and employers.
SFC also plays a broader role in bringing industry and academia together through knowledge exchange and innovation. Scotland’s universities are among the best in the world, undertaking cutting edge research that creates knowledge of immense social, economic and cultural value. From this base, potential knowledge exchange and innovation flows, creating business opportunities and wealth creation. SFC’s core interest is in maximising knowledge exchange between the institutions we fund and companies that can use that knowledge to best effect, through the development of advanced skills and research-based innovation.

Skills alignment

The Enterprise and Skills Strategic Board published its strategic plan in October 2018. In this, SDS and SFC were asked to “fully implement the joint 5 stage skills alignment planning model, aligning provision with industry needs and critical skills as set out in the demand evidence. SFC and SDS will collaborate further to create a seamless, one system approach for learners, employers and the economy.”

Between 2018 and 2020 SFC and SDS worked together to develop a shared understanding and approach to investment in skills in Scotland.

A detailed implementation programme for skills alignment was built around a five-step planning model, with a joint staff post and teams. The programme, which included pilot activity, has helped develop analytical tools and provided publications on skills assessments in sectors and regions. The work of our analysts ensured that we could effectively share data to test the five-step model. The five-step model is relatively simple in its design and approach to analytics. We found that, in practice, the model did not deal effectively with the complexity of the system, and with the competing demands of employers, learners and government policy direction (e.g. social mobility and widening access). Furthermore, since the development of the model in 2017, there have been significant changes in the external operating environment which looks set to deliver even higher levels of uncertainty due to (I) Brexit and changes in the flow of migrant labour; (ii) the transition to net zero and the requirement for green skills; (iii) technological change and digitalisation; and (iv) changing work patterns.

For SFC, skills alignment is about creating the right environment for institutions to plan strategically for this complexity and to work together and with partners deliver a more coherent, responsive and effective system for current and future students, for the skills needs of employers and for wider social and economic goals.

Moving forward, we have agreed a refreshed approach to skills alignment that takes account of the substantially different policy framework now in place. This is about system change as much as it is about specific skills alignment programmes or specific products.

Review of Coherent Provision

Through our Review, respondents were clear that strategic planning for provision and change needs to focus not only on work between two national agencies, but should primarily consider the need for planning at an institutional and regional level, with institutions collaborating and having the capacity to engage with employers and other partners.
Our Review recommended that we build capacity and a more systematic approach to the way we collectively plan coherent tertiary education and skills provision and investment, so that it responds better to current and future needs of pupils, students, employers and broader economic and social drivers, while holding in balance the policy imperatives of promoting fair access and equalities, and the journey to a net zero carbon future. This approach involves taking a view of our entire education and skills system, in genuine partnership with employers, SDS, Scottish Government and other partners, and embedding the structures, systems and processes that will facilitate maximum benefit to the learner and contribution to Scotland’s economy, both now and in the future.

Our Review of Coherent Provision set out our vision for a more responsive skills system. Alongside our work with SDS on apprenticeships, new skills programmes, climate emergency skills planning, and the Education and Skills Impact Framework (ESIF), it incorporates:

1. A new National Impact Framework, which will clearly articulate what we need from Scotland’s colleges and universities

2. A revised approach to our Outcome Agreements with colleges and universities

3. The development of Tertiary Provision Pathfinders to explore better strategic planning and alignment at regional level

4. An enhanced relationship with NES (NHS Education for Scotland) on health and social care workforce planning

5. Investing in relationships between institutions and employers

6. A focus on lifelong learning

The endorsement of our Review’s recommendations by Ministers in October 2021 now mandates us to progress with this programme of work.

Pathfinders

Our national Review recommended the introduction of a revised approach to strategic provision planning and skills alignment. To test this revised approach, SFC will convene Tertiary Provision Pathfinders to better explore strategic planning and partnership working at a regional level, assessing demand and future tertiary and skills provision that balances the needs of students, employers and broader economic and social drivers. This will maintain a focus on widening participation; equality, diversity and inclusion; and the need to tackle the climate emergency. The pathfinders will build on the strong foundations of existing partnerships, and take a practical look at what further needs to be done to make the education and skills system responsive, integrated and supportive of economic recovery and inclusive growth in each region.

Our approach to this work will involve the development of a strong evidence base, including demand, provision, progression and outcome data; agreement on the metrics and interpretation of data; significant partnership working with key stakeholders on economic and social strategies that are relevant for current and future provision; and collaboration to agree a coherent provision plan that provides a route-map for the future across participating institutions and stakeholders.

Our Regional Pathfinder pilots are already under development in the South of Scotland and the North East of Scotland. We are working in close partnership with SDS on the development of our Regional Pathfinders, and on their programme of work for the Climate Emergency Skills Action Plan (CESAP) Pathfinder. These pathfinders are designed to both test and to iterate our revised approach to skills alignment, as outlined in our Review. Lessons learned throughout the development and implementation of the regional pathfinders will inform how we approach skills alignment and regional collaborations across Scotland.

Work-based learning

Work-based learning is a crucial to skills alignment. As we develop and enhance our approach to skills alignment, work-based learning and work-integrated learning are likely to play a key role. There are some existing models and good practice that we should consider.

• More than 20% of all college courses now include a credit-bearing placement.

• Universities are committed to offering all students an opportunity for work-related experience during their degree programme.

• In 2018-19, 16% of all secondary school pupils (S1-S6) were enrolled in a School-College Partnership. This involves a range of learning activities focused on skills for work or life, usually with the involvement of employers. This overall figure for secondary school pupils dipped to 13% in 2019-20 as a result of COVID restrictions, of which Senior Phase enrolments (S4-S6) matched the previous year’s level at 20%. This means that at this key transition phase, a fifth of Senior Phase pupils are engaging in a School-College Partnership which will help prepare them for the labour market.

• There has been significant growth in Senior Phase Vocational Pathways (SPVPs),with average annual increases of 28%, and an overall percentage increase between 2013/14 and 2019/20 of 320%. In 2019-20, 8,884 pupils were enrolled in SPVPs (CDN, 2021).

To support work-based learning in schools we invested £34m during 2019-20 in school level provision, with around £28.5m being delivered to the Senior Phase (32,700 enrolments), including an investment of £7.3m for 8,800 enrolments in Senior Phase vocational pathways pupils.

SFC is committed to work-based learning and supports the development of Foundation Apprenticeships (FA) and Graduate Apprenticeships (GA) as a vehicle for increasing work-based learning pathways. We are invested in the long-term future success of FAs and GAs and will work with others to assess demand in the system for these programmes, to evaluate effective practice, equity of provision, equalities, pedagogy and the development of future provision and delivery.

Significant work has been undertaken since the Scottish Government confirmed its intention of requiring SFC to use Further and Higher Education core teaching budgets to fund FAs and GAs from 2021/22. We continue to work in partnership with SDS and have made considerable progress in what is a complex programme of work. Working with SG we secured additional funding through UK COVID Consequential funding for AY2021-22 to stabilise and safeguard this provision and maintain the financial sustainability of colleges and universities in this transitional year.

In the face of enormous challenges over the past year we have enabled more than 4,000 young people to take up a FA and provided employers with c.1378 Graduate apprentices. We will work with Education Scotland, SDS, colleges and the Scottish Government on recommended improvements in the performance of FAs in response to Education Scotland’s current review of FAs.

Responding to the economic recovery

Our colleges and universities play a key role locally, nationally and internationally in supporting communities and society, driving Scotland's economic recovery, working with industry and employers to address labour market needs, create innovative solutions, and fostering entrepreneurship. This section provides an overview of the key programmes and bespoke funding streams we are delivering as a sector.

National Transition Training Fund

The National Transition Training Fund (NTTF) was designed to support people who have lost their jobs or who are at risk of redundancy as a result of COVID-19 to retrain or upskill. In AY 2021-22, £30 million NTTF aims to continue to tackle the rise in unemployment in adults aged 25+ by offering short sharp training opportunities for people to learn in-demand skills however the eligibility criteria have been broadened to include those in work with an identified, strategic skills gap specifically targeting skills gaps around the transition towards Net Zero.

NTTF College Courses delivered

Colleges are playing a key role in delivering learning and training opportunities supported by the NTTF:

• ·A total of 1,942 students were recorded as having enrolled in NTTF courses

• 52.6% of enrolments were from the 4 most deprived SIMD deciles with 17.2% from the most deprived decile.

• Of the 16 subject areas taught, courses in Care, Computing and ICT and Business, Management and administration were the most popular, accounting for 54.2% of all enrolments

Micro credential courses

Universities were allocated £1.5 million in 2020/21 to provide up to 1,000 places for delivery of micro credential training focused on areas of the Scottish economy with most potential for growth. The programmes also supported career transitions and responded to local and national economic recovery. Universities rapidly adapted provision to meet need and have reported that up to 1,800 individuals have benefited from university level training in a wide range of subject areas including Decommissioning of Offshore Installations, Cybersecurity, Climate Change, Sustainability and Adaptation from March - Sept 2021

Of the £30 million NTTF for AY 2021/22, £2million has been allocated to the University sector in to deliver short training opportunities to meet economic need.

SFC is well-placed to facilitate a collaborative approach to delivering the fund between key partners. For example, the NTTF supports the National Manufacturing Institute for Scotland (NMIS) Supporting Skills 4.0 - Aircraft decommissioning and electrification and Advanced Manufacturing short courses developed by NMIS, University of Strathclyde working closely with a wide range of employers and industry bodies and delivered to employers in the Scottish engineering sector including Spirit AeroSystems, Airbus UK, Raytheon and Chevron Aircraft Maintenance. Courses range from three days to two weeks and are developed to support existing workforces, employees at risk of redundancy or current engineering students.

A summary of the collaborative projects between industry and college and university partners is provided in Annex B.

The Young Persons’ Guarantee

The Young Persons Guarantee (£60m in 2020-21 and £70m in 2021-22) aims to ensure that every young person has access to a job, education, training or development programme. SFC secured £10m from the fund in 2020-21 to work with colleges and universities to develop proposals to meet the aims of the fund. This collaboration resulted in a series of interventions, linked to key priority sectors, which included courses to increase the employability skills of those furthest from the job market; higher level skills interventions with fast track HNC’s to help learners move into new areas of employment more quickly; and micro credential courses to support a greater number of recent graduates or those in insecure employment, on furlough or who are unemployed.

In 2021-22 £10million has been allocated to colleges, with an additional £3.5 million allocated for a University Graduate Internship Programme targeted at recent graduates who are likely to be disadvantaged or discriminated against in the labour market and an additional £135k for HE-level digital internships.

YPG College Courses delivered

Roughly 240 courses were offered as part of the YPG offer in colleges in the second half of academic year 2020/21.

• A total of 2,438 students were recorded as having enrolled in YPG courses.

• 53.6% of enrolments were from the 4 most deprived SIMD deciles with 18.2% from the most deprived decile.

• Of the 18 subject areas taught, courses in Special programmes, Computing and ICT and Business, Management and administration were the most popular, accounting for 48.1% of all enrolments.

Flexible Workforce Development Fund

SFC is now in its fifth year of delivering the Flexible Workforce Development Fund (FWDF) through Scotland’s colleges. The central purpose of this fund is to support the skills needs of apprenticeship levy paying employers. The FWDF provides an opportunity for colleges, the Open University and independent training providers to engage with local employers to develop a deeper understanding of the skills needs in their regional economies. By engaging with this initiative, colleges, the Open University and independent training providers play a vital role in supporting economic recovery and growth.

For AY 2020-21 (Year 4) SG increased the FWDF budget to £20 million and the Fund was opened up to Small and Medium Enterprise (SME) employers who do not pay the UK Apprenticeship Levy. At this point The Open University in Scotland (OUiS) was included as a learning provider for SME employers, alongside the colleges. £2 million of the £20 million FWDF budget was allocated to Skills Development Scotland (SDS) to administer to employers as grant funding that could be used with independent training providers where there were specialised training needs that could not be met via a college. The overall FWDF budget of £20 million was maintained for AY 2021-22 (Year 5).

The £20 million FWDF for AYs 2020-21 and 2021-22 is distributed as follows:

• For UK Levy-paying employers
• c.£13m to colleges
• £2m to SDS
• SME employers
• c.£4m to colleges
• £1m to OUiS

Since the FWDF began in 2017-18 over 1300 Levy paying companies have accessed the fund, with many employers returning each year to upskill their employees. The number of employers accessing the fund each year is in Annexe A.

Upskilling Fund

SFC’s Upskilling Fund for Universities provides upskilling and reskilling opportunities for employers and employees. The Upskilling Fund develops the capacity of universities to provide more agile support for employees and employers to upskill and reskill. Now in its third year, with a budget of £6.5 million in academic year 2020-21, it enables the universities to be more responsive to local and national economic challenges. The fund supports the provision of short courses that are strategically aligned to a key current and emerging economic needs, or other evidenced unmet skills need related to either an identified skills gap, or a blockage to individuals progressing in their careers, or meeting the needs of their existing employer.

Despite challenges associated with delivering this fund in AY 2020-21, universities delivered a range of upskilling programmes to just under 6,700 learners. Courses delivered included data analytics and other digital skills, programmes focussed at the care workforce such as Infection Prevention and Control for all Health and Social Care Settings, and a range of business strategy and leadership courses.

Research & Innovation

Universities and colleges also support the skills and other needs of businesses through research and innovation.

Innovation and skills are deeply linked. Universities and colleges develop skilled and flexible people who are high-level contributors to advanced jobs, bringing benefit by operating new systems, designing new products and understanding new opportunities as well as many other contributions. This has direct links to industry being encouraged to invest in their own futures by developing innovative products, services or processes in collaboration with our academic base. The net result is an innovative economy that builds on and takes forward new ideas, including those from research. If we want an innovative economy then we also need a flow of skilled and flexible people from universities, colleges and apprenticeships. This requires long term commitment and investment.

Knowledge Exchange

Scottish institutions have a deep history of research partnership with industry which supports innovation, the development of new skills and ultimately economic development. SFC have been funding Interface since its inception in 2005 to help connect businesses with academia often for the first time. Interface helps companies find the most suitable academic partner to help advance their business. Interface also administer SFC’s Innovation Voucher scheme which has connected over 1600 businesses to academia since 2009, this includes a Student Placement offering helping students gain real life business experience.

Scotland’s universities:

• Produce around 3,000 PhD students every year, over half of whom are from outside the UK, stoking the skills pipeline with highly skilled researchers who contribute to academia, industry and society.

• Generate over £450m each year through collaboration with industry and Scotland is the most successful part of the UK for spin-out company formation.

• Create 14,483 consultancy engagements with SMEs with a total income value of over £18 million (19/20 KE metrics data)

Innovation Centres

The importance of investment in skills for business innovation can be illustrated by SFC’s Innovation Centre programme. Our seven Innovation Centres work closely with industry and our universities and colleges in developing their skills programmes. They are helping grow an environment that supports the development of the next generation of business innovators, academics and entrepreneurs in Scotland and which promotes the value of collaborative working. See the Low Carbon Learning Training Programme case study below.

College Innovation

Colleges provide education and skills that address business needs by ensuring relevant provision is taught to students, making them industry ready. SFC supports this core function of colleges with strategic investments in key priority areas to support pilots in emerging areas that establish practice and shape future provision, both at a college and sector level, allowing colleges to play both nuanced regional roles and be part of a national infrastructure of provision. See the Dundee & Angus College case study below.

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