An Improvement Plan for Oldham’s Local Economy - Alun Francis and Andy Westwood

By Alun Francis and Andy Westwood

Policy comes at us thick and fast in English tertiary education. Barely 12 months after the Skills White Paper and we also now have the passing of the Skills Bill, the response to the Augar Review and a Levelling Up White Paper to digest. For colleges offering HE, there are also the small matters of 1000+ pp of consultations from the Office for Students and the Department for Education on “low quality” HE and the proposed Lifelong Loan Entitlement. Following the Spring Statement, there is now also a formal review of the apprenticeship levy. And all of this alongside the confirmation of sector budgets for the rest of the parliament in last autumn’s Spending Review - the financial parameters within which much of these policy initiatives must be delivered.

These are just some of the key government strategies that we’ve been considering during the Oldham Economic Review, commissioned by Oldham Council and led by a partnership between Oldham College and the University of Manchester. It was overseen by a board of commissioners from the Greater Manchester Combined Authority, the Chamber of Commerce and public, private and voluntary sector employers and stakeholders from Oldham, as well as both of our organisations – Oldham College and the University of Manchester. In addition to skills and higher education, the review looked closely at R&D, innovation and productivity, in detail at employment and skills data and at housing and health and also at issues affecting the borough’s civic pride, including its heritage, social fabric and the town centre.

But DfE policymaking tends to plough on with rather less consideration of what happens around it - of how skills policy relates to and supports these other agendas. There are specific challenges about how it relates to “place”. So with the Skills Bill passed and the aforementioned consultations ongoing, there is now a real opportunity to think this through in detail – from the point of view of one particular place. The key policy common to both agendas is LSIPs and the plan for colleges to better meet local skill needs. But LSIPs run the risk of being a one size fits all solution that miss substantial differences within and between places. Most of the products are fixed - apprenticeships, T Levels, levels 4 and 5, retaken GCSEs in English and Maths and so on. They also risk underplaying some of the broader economic issues that we’ve covered in the Oldham Review - and how skills interact and reinforce agendas on R&D, productivity and wages as well as on public services, local institutions and civic pride.

Even before the “Levelling Up” white paper was published, it was clear that the DfE wished to stick to its broad policy approach. “Left behind” places with weaker economies and labour markets, lower skills levels, fewer jobs and lower wages were to be offered the same policy options as richer, more productive, higher income places. And the impact of these policies are measured using the same performance metrics, regardless of context. This isn’t all the fault of DfE. Budget constraints mean that the Department has not had the license to pour more resources into colleges or ‘left behind’ places - even if they wanted to.

Yet funding levels do remain an issue. According to the IfS, even with additional funding from the recent spending review, college spending per pupil aged 16-18 in 2024 will still be around 10 per cent below 2010 levels, while school sixth form spending per pupil will be a whopping 23% below 2010 levels. Additional funding for adult education and apprenticeships announced in Spending Review 2021 - because of the scale of the cuts over the last decade - means that spending in 2024 will still be one-third lower than 2010. This is hard to square with the scale of the problem, especially when the concentration of issues in specific places is considered. And this makes the Levelling Up white paper’s ‘skills mission’ seem unambitious. It aims to offer 200,000 “high quality training places” annually of which 80,000 will be in lower skilled areas. According to Stephen Evans of the Learning and Work Institute, over 800,000 adult learners have been lost over the last decade and so it will take several years just to restore numbers. The Institute for Government estimate that it won’t even restore numbers to 2014/15 levels.

There are also issues of quality to consider in making comparisons. The problem with adult training up to 2010, was that too many qualifications produced little in terms of further learning or improved productivity. One of our findings in Oldham was that there has been a dramatic reduction in the numbers of adults with no qualifications – which was around 20 per cent in 2005, and is now around 10 per cent. However, there has been no concomitant improvement in wages, income or better jobs. So qualification rates may have improved, but prosperity has not. There are lots of reasons for this, but there is a part which belongs to the skills system. It must deliver qualifications which have real labour market value, and which genuinely improve the skills of those taking them, if it is going to make a credible contribution.

However, accepting this point, there is still a big problem of scale. 80,000 places will not go very far in meeting the needs of ‘left behind’ towns or regions. Take Blackpool - picked out in the Levelling Up white paper and where Boris Johnson and Michael Gove visited to publicise it - skills levels are low and will take time to turn around. According to ONS data, 24 per cent (19,400) of adults have qualifications at L4+ compared with 43 per cent nationally. To reach this average, Blackpool would need 15,439 people to get a higher education qualification.

In Oldham, these numbers are higher still. 28.3% (40,700) have L4+ and to get to the national average a further 21,285 would need to be added to this figure. Furthermore, to get Oldham to the national average at other qualification levels would require 14,824 more people at L3 (up from 73,400 to 88,224), and 4,438 fewer adults without any qualifications if the town was to be in line with the national average (i.e from 9.5% to 6.4%).

So, between such places, neither the targets nor the mission will go very far. It is hard to see how residents will access high paying jobs nearby if skill levels are low. And it is also hard to see how better quality jobs might develop locally. As research from the OECD in areas like Blackpool and Greater Manchester shows, the focus should not just be about increasing skills and qualifications but also on how these skills are utilised in local firms and sectors or in public services and other local institutions. In this way the connections to other missions will be vital – including to R&D, innovation, good jobs and productivity. In other words this isn’t just a supply side problem.

These are big issues and they show the need for more robust engagement – between local leaders, devolved authorities, the DFE and the Treasury – about the scale of the challenge, and the ambition and capacity to make a real difference. This must be accompanied by a more differentiated approach to support for places with weakest skills and local economies. Largely ‘one size fits all’ systems to qualifications, funding, accountability and the operation of national programmes and missions look inflexible and under resourced. Furthermore, LSIPs look limited in both design and ambition too. Why? Firstly, they can’t channel extra funding in order to close the big gaps between places. Secondly, they are more likely to reflect the nature of the economy in left behind places rather than changing and growing them. So, if it’s a ‘low skill equilibrium’ and employers are functioning at lower levels of productivity and pay then LSIPs may simply reinforce rather than break the cycle.

And if - as now seems likely - LSIPs largely follow the footprints of LEPs (even though their future is uncertain), then new problems emerge. Large LEP areas such as in Greater Manchester may miss or underplay the more localised challenges in poorer towns such as Oldham, Rochdale or Ashton. Elsewhere, such as in the West Midlands or the North East, the overlapping boundaries of LEPs and other institutions create layers of complexity and inconsistency that employers in local and regional economies could do without. Part of the problem is that the institutional arrangements for delivering change are cumbersome given the complexity of the post-industrial economy, not just in terms of growth and innovation, but also the geographies of this – even within devolved areas.

This geography needs to be understood much more clearly. Similar issues affect apprenticeships and T Levels in places like Oldham and Blackpool. With fewer high skilled businesses, there are fewer placements or jobs with training. Again, it is hard to see how LSIPs can offer necessarily different strategies in places with these different challenges. This situation is different in other places. Margate isn’t the same as Milton Keynes and Rochdale isn’t Reading. Interventions need to be different if serious inequalities are to be reduced.

So if LSIPs are potentially too limited in their scope and ambition, what should colleges be doing to understand their local economies and their skill needs in the coming decade? This is one of the questions we asked ourselves when we embarked on the Economic Review of Oldham last summer. We knew there were bigger questions that we needed to think about - not just what local employers wanted from FE. For a start, one of the biggest topics in domestic politics since the referendum in 2016 has been what to do with so-called ‘left behind’ places - towns, smaller cities and rural and coastal areas. Oldham often comes up as an example of the sort of town that needs help - post industrial - and an economy characterised by low skills/low productivity and low wages dominated by ‘foundation’ sectors. One of its biggest challenges is that there are not enough higher paid jobs and those that exist tend to be funded through the public purse. As the Levelling Up White Paper rightly points out – the driver of prosperity is the private sector, and in places like Oldham (and, actually the wider Greater Manchester city region) it is not big enough.

In other words it was fairly clear that just meeting the skill needs of local employers as this stand wouldn’t necessarily take us or our students very far. Not even to the better paid jobs in nearby Manchester or elsewhere. Oldham needs more than that. It needs a vision for what it wants to be and a plan to get there. It needs to know what it’s relationship to nearby Manchester should be as well as to neighbouring places like Rochdale and Tameside. It needs a dynamic sense of what is changing and how much manufacturing, innovation and R&D matters as part of that. But it also needs to understand other drivers of the local economy - the town centre and high street, the social economy and the social fabric and civic pride of the place. That includes a deep understanding of the town’s heritage and a past built on cotton, the mills that still dominate the skyline (there are still over a hundred standing in the borough). In other words, more than just a plan for skills supply.

These are all issues that help make up the levelling up agenda. As the white paper sets out - and as followed in the OER - there are a six capitals that must come together to bring about long term change. Human capital - skills (and health) is one, but as important are physical, financial, intangible, social, and institutional capital. We found this a very helpful framework - not just for Oldham as a whole but also for the College, with its under appreciated but critical role in supporting innovation, social capital and well-being and also being a key institution within its place.

The importance of institutional capital was demonstrated in the Review with the partnership between Oldham College, Oldham Council and the University of Manchester as well as through the involvement of the GM Chamber of Commerce and the Combined Authority and key private, public and voluntary sector organisations. This has been a partnership that sought to really understand the town, the city region, the local and regional economy and the challenges and opportunities that they all face. But it has worked well and made the most of each partners strengths. It has helped to build institutional capacity across each and collectively in Oldham and in GMCA. But in practice, FE policy doesn’t really recognise or support these additional roles in the way that the Levelling Up white paper or the Oldham Economic Review recognises. They are not priorities in the FE white paper, the Augar response or to the OFS or ESFA. Typically, policy prefers a one-dimensional approach limited to the supply of certain forms of human capital when viewed from a local level, colleges and other institutions have much broader and similarly important roles.

One area where this has been particularly relevant, has been the linking of plans for Oldham to the city region and university’s plans for innovation and R&D. This is of course another key strand of the Levelling Up White Paper - via its interest in intangible capital. This is also a major priority for Government with the Spending Review confirming that it would be spending £20bn annually on R&D by 2024-25. This has meant that the college and Council and the Review Board have thought long and hard about what this means for Oldham - for apprenticeships, L4/5 and how they best come together to support regional plans for Innovation GM and for growing R&D intensive sectors such as materials, manufacturing and the life sciences. These are key economic strategies for GM and for the country as a whole but it’s not clear how this joins up practically with DFE policy or gets captured appropriately in an LSIP? Getting these joined up must be a policy and delivery priority.

There’s one final lesson that OERB offers. And that’s the importance of the strategic role of colleges. Policy rarely seeks a role for local colleges as strategic players in their places working with local partners including the local/combined authority, the LEP, the Chamber of Commerce and local universities. DFE policy doesn’t prioritise the capacity or autonomy that might support this. But despite this, some colleges are breaking out of delivery roles to offer something much more significant. The OERB took evidence from Dudley College - an institution that is deeply involved in local and regional conversations about business, innovation and the communities of the West Midlands. The OERB showed that Oldham College could lead similar debates about the local economy. Colleges can do so much more if they are recognised and supported in this broad and strategic role. They are part of a place’s institutional capital and critical to its future.

In some ways, there is nothing new in this. In the review, a major discussion was around heritage, and how towns like Oldham can turn their industrial past to their advantage in creating a better future. In October 1944, with the new Education Act on the horizon, and a major debate taking place about post-War reconstruction, Oldham employers formed two organisations. The Oldham and District Textile Guild was set up to “encourage the training of juvenile and adult operatives by means of schemes coordinated with the work of the Technical College”. And alongside this, was the “Oldham and District Textile Society”, the purpose of which was “to provide experts to give lectures on various aspects of the industry, hold exhibitions and organise a technical library”. This was set up by employers - in the college itself. The post-industrial context may be more complex, but it’s the spirit of these partnerships that is exactly what needs to be revived if there is any chance of meeting the challenges of “levelling up”.

The full Oldham Economic Review Report can be found here: https://oerb.org.uk

The views expressed in Think Further publications do not necessarily reflect those of AoC or NCFE.