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What Did The Spring Budget 2024 Mean For The Skills Sector?

It has been a week since the Spring Budget, and now that the dust has settled and the numbers have been crunched, it feels like a good time to analyse the budget and think about what it means for our sector.

It will likely come as no news to you that there wasn’t much for skills in the Budget. In fact the Chancellor, presenting the Budget to the House of Commons, failed to mention skills once. At a time when we have 851,000 young people not in education, employment or training, sluggish economic growth and a chronic skills shortage, this feels like a rejection of the scale of the challenge we face.

The Office for Budget Responsibility's modest projection of a 0.8% growth this year could have been an opportunity to underline the importance of skills development as a cornerstone for sustainable economic growth. What we got instead was a holding pattern, with deep dark clouds on the horizon in the shape of potential funding cuts.

Ironically the Prime Minister said it best when in 2022 when he said education is the ‘best economic policy, the best social policy and the best moral policy’, so we are right to wonder why skills isn’t getting the focus it needs.

Overhanging the policies announced was the gloomy news about impending cuts to certain non protected government budgets, such as further education. These cuts have been calculated as a result of the spending projections the government laid out. The government projects it will raise public spending by 1% per year above inflation. Once commitments on childcare, health, defence and schools are taken into consideration, all other budgets (non-protected departments) will be subject to around 3.4% cuts. What's worse is that the government doesn’t need to detail where these cuts are coming from, and the opposition has largely signed up to this.

However, don’t assume this will definitely happen. Even the head of the OBR, the government fiscal watchdog, called this ‘fiction’. What it does reveal though is a fiscal position that cannot hold.

Thankfully the budget wasn’t a complete black hole for the sector. We did get more clarity on the £50 million Apprenticeship Growth Pilot, which AELP had a strong hand in shaping. It should be warmly welcomed that this funding is directed to overcoming one of the big challenges independent training providers face – access to capital funding. AELP constantly bangs the drum on this to officials and ministers, and this policy shows that the message is trickling through.

The Chancellor also outlined more new devolution deals, with a new deal for the North East Mayoral Combined Authority, giving it powers over non-apprenticeship skills funding. At the same time, Surrey, Buckinghamshire and Warwickshire are the recipients of devolution deals, meaning adult education budgets will be coming their way. England could be reaching a point where apprenticeships will be the only demand-led, non-devolved skills policy.

We also received an update on the apprenticeship levy take. This will raise £4.0bn this year for Treasury, rising to £4.6bn at the end of the five-year projection. With the apprenticeship budget at £2.7bn, Treasury is keeping around £800m back. AELP would like to see every penny of the funds raised by the apprenticeship levy used for apprenticeships and skills policy. While this seems like a modest and sensible ask, it would be transformational for the sector and the country.

Our next opportunity to argue for this will be the Comprehensive Spending Review, setting the medium-term detailed departmental spending for government. The current spending review takes us up to March 2025, so we should expect the next review to be in the early days after the next General Election. AELP will use that and every chance we get to argue that a vibrant skills sector is vital for growth and an engaged and thriving workforce.

As we look towards the future, it's imperative that the government, regardless of its political composition, places a renewed emphasis on skills and education in its economic strategy. The Comprehensive Spending Review presents an opportunity for this shift in focus. Investing in skills is about investing in people, and our ability to get things done. It's time for a national conversation about the level of funding required to close the country's skills gap and ensure that skills and education are at the forefront of the UK's economic agenda.

What Did The Spring Budget 2024 Mean For The Skills Sector?

By AELP's Public Affairs Manager - Ciarán Roche


Last published: 14/03/2024