INSTITUTES OF TECHNOLOGY From Concept to Delivery JANUARY 2017 A COLLAB GROUP POINT OF VIEW
Contents SECTION PAGE 0. Executive Summary 1. Why are IoTs Needed? 1.1 The Economic and Political Context 1.2 Productivity, Skills and Technical Pathways 1.3 Drivers of Change within the Further Education Sector 2. What Model should Institutes of Technology follow? 2.1 How can an IoT be made unique? 2.2 Hub and Spoke Model 2.3 Funding Models for an IoT 3. The General Structure of an IoT 3.1 Governance Structure 3.2 Responsive to Employers 3.3 Curriculum provision 4. Making it Happen 4.1 What is needed from Government 4.2 Conclusion 3 4 5 6 7 9 10 13 13 15 16 16 17 19 20 21 2
0Executive Summary In January 2017 the Prime Minister announced that Technical Education should be at the heart of Britain s Modern Industrial Strategy and included an overhaul of technical education to help level the playing field by providing a credible alternative to the academic route. This levelling of the field includes 170 million in new government funding for Institutes of Technology (IoTs); this is a massive opportunity to change the way skills are delivered in this country. The Industrial Strategy announcements signal that the government is serious about getting technical education right because it is critical for the UK economy; it is the only way to address our growing productivity and skills gaps and offers a solution not only to the ever-changing needs of industry, but also for millions of people across the country for whom a qualification for in-demand skills will be a lifeline into work. It is now for the FE Sector to grasp this opportunity. Over the last year, Collab Group and its member colleges have been working with government, bringing ideas and potential solutions to create successful Institutes of Technology that will deliver quality STEM education across the country. We are pleased that many of our recommendations are being adopted by government, such as placing these new Institutes within existing providers in a hub and spoke model, and overlaying the priorities and recommendations given by the Sainsbury Review and Post-16 Skills Plan. Technical Education offers a solution not only to the everchanging needs of industry, but also for millions of people across the country for whom a qualification for in-demand skills will be a lifeline into work. We must now look at the structure of Institutes of Technology to ensure that they deliver on their promise. Collab Group Colleges have explored the challenges and opportunities presented by Institutes of Technology and have developed a proposed structure that will positively impact learners and industry across the United Kingdom. 3
1Why are IoTs Needed? INSTITUTES OF TECHNOLOGY From Concept to Delivery 4
Why are IoTs Needed? 1.1 THE ECONOMIC AND POLITICAL CONTEXT The UK is going through a period of unprecedented uncertainty with change which will fundamentally alter the dynamics of the UK s political and economic affairs. The recent referendum vote to leave the European Union has both immediate and long term repercussions in both economic and political terms. Added to this the continued direction of travel toward devolution of public sector policy and delivery including the devolution of skills policy - is creating a different and more complex environment. Combined these developments are seeing power in many different spheres of public policy being transferred away from central government and towards local devolved administrations. What is clear though, and what unites these currents, is that traditional centres of power are shifting quite radically throughout the UK. It is within this broader economic and political context that the UK economy, and UK businesses, face significant challenges in its productivity capacity. The effects of the financial crisis of 2008 are still being felt in key industrial sectors and productivity, the driving engine of long term economic growth, continues to lag far behind other advanced industrialised countries according to the OECD, Germany is 28% more productive than the UK and France is 27% more productive. The Government recognises that this productivity gap needs to be dealt with urgently and that a co-ordinated and robust response is needed to ensure that the UK is able to remain competitive on the world stage. It is clear that vital sectors of the economy such as engineering, construction, advanced manufacturing will be central to ensuring that the UK s productivity gap is closed and the foundations for long term economic growth are secured. 5
1Why are IoTs needed? (Continued) 1.2 PRODUCTIVITY, SKILLS AND TECHNICAL PATHWAYS In order to address these significant challenges, the UK needs a skills system that is responsive to macro-economic priorities. We believe that part of the answer lies in robust and accessible technical education pathways in line with the 2016 Sainsbury Report 1 and Post-16 Skills Plan 2. Whilst it is generally accepted that the pathways for academic education in the UK are well established, whereby a student can progress through levels one to five acquiring the skills they will need to succeed in their chosen career, a comparable route of progression does not exist for those undertaking technical education. Whilst other European countries, including Switzerland, Germany, the Netherland and Norway, have well established pathways for technical or vocation-based provision (typically delivered in partnership with employers) there is no comparable provision on the same scale in the UK. Since 2010 the Government has adopted a range of policies to address these longstanding skills deficiencies; this has included the introduction of national colleges, seeking employer endorsements for industry best standard vocational qualifications and the reform of apprenticeships through the introduction of the apprenticeship levy 3. Time will tell how effective these measures will be, but from early indications and despite some good progress, it is evident that these changes do not go far or fast enough. The consequences of failure are clear: the emerging UK workforce will not be equipped with the skills that employers are looking for and key sectors of the economy vital to the UK s long term productivity and economic prosperity will fail to develop the skills and training system in step with the real-world skills, FOOTNOTES 1. https://www.gov.uk/government/ uploads/system/uploads/ attachment_data/file/536046/ Report_of_the_In dependent_ Panel_on_Technical_Education.pdf 2. https://www.gov.uk/government/ uploads/system/uploads/ attachment_data/file/536043/post- 16_Skills_Plan.pdf 3. Further Education and Training 2010-2015 6
1Why are IoTs needed? (Continued) needs and priorities vital if the UK is to compete in a globalised world. Currently, the majority of technical provision is delivered at level one and two which is not reflective of the skills needs of employers who require employees to have skills proficiencies commensurate with levels three and above, with the skills shortage most acute at levels four and five. The government has recognised the need to ensure provision for levels three to five and, through the Post-16 Skills Plan, has set out a new approach to create clear and accessible pathways for technical education, their commitment has been further reinforced in the 2017 Modern Industrial Strategy. But in order for this to be achieved it is clear that a new delivery mechanism is needed, one which inspires confidence in both students, parents, adult learners, employers and government (nationally and locally) that a viable route of progression is available for non-academic based learning which will ultimately lead to viable and secure routes to employment. 1.3 DRIVERS OF CHANGE WITHIN THE FURTHER EDUCATION SECTOR Creating high quality Technical Education pathways that inspire confidence in both students, parents and employers alike is the underpinning of a new approach to delivering a ready to work workforce at levels three to five. It seems to be accepted by both Government and Industry. But how do we move away from a debate to action? What is the most effective vehicle to deliver these important skills based pathways? Reviewing Post-16 Education and Training Institutions 4 signposts a move towards: fewer, larger and more financially resilient organisations 5. This strategy is underpinned by the ongoing programme of Area Based Reviews (ABR) which seek to realign and refocus local provision so it best serves the FOOTNOTES 4. https://www.gov.uk/government/ uploads/system/uploads/ attachment_data/file/520838/bis- 16-118-reviewing-post-16-educationand-training-institutions-updatedguidance-on-area-reviews.pdf 5. Reviewing post-16 education and training institutions: area reviews (waves 1, 2 and 3), p1 7
1Why are IoTs needed? (Continued) training and skills needs of local economies. With an emphasis on financial resiliency, the ABRs could point towards a system that is less reliant on public sector funding, embraces new sources of funding (notably the apprenticeship levy) and creates larger regional college groups and University-FE college groups harnessing a more commercial approach. Government has also emphasised the importance of employer led solutions and: for a professional and technical education system that provides individuals with clear, high-quality routes to employment. 6 So in our view, the emphasis on coherent technical pathways combined with the co-creation of provision with employers plus new sources of funding provides an environment for the FE sector (and notably larger college groups) to fundamentally re-think how they deliver services. So what is the answer to our earlier question on what would be the most effective vehicle to deliver the important skills based pathways? We believe that the answer is to be found in the development of community based Institutes of Technology, centred around re-thinking the General Further Education College model and harnessing the opportunity of the changes now underway in the sector. The answer is in the development of community based Institutes of Technology, centred around re-thinking the General Further Education College Model & harnessing the opportunity of the changes now underway in the sector. The government has signalled a commitment to Institutes of Technology with a 170m funding pledge, it is now important to implement the most effective structure. FOOTNOTES 6. Productivity plan, p25 8
2What Model should Institutes of Technology follow? INSTITUTES OF TECHNOLOGY From Concept to Delivery 9
2What Model should Institutes of Technology follow? 2.1 HOW CAN AN IOT BE MADE UNIQUE? There have been many initiatives in recent years that are seeking to address the UK s widening skills gap; these have included policies such the implementation of national colleges, vocational qualifications, and the introduction of the apprenticeship levy. The Government has also said it wants to create IoTs, yet another initiative. It is, therefore, understandable that some scepticism might exist as to how an IoT could offer a truly original model of delivery rather than be yet another education institute in an already saturated supplier market of GFEs, UTCs, National Colleges, Universities and Private Sector independent training providers. What gap could the IoTs possibly fill? In our view, true community based institutions, rooted in devolved regions which leverage the full potential of existing providers (FE colleges, universities and employers) could offer something new. There is a need for local provision of strong levels 4-5 STEM provision built around robust and credible technical education pathways aligned to wider macro-economic goals. There is a need for local provision of strong levels 4-5 STEM provision built around robust and credible Technical Education pathways aligned to wider macroeconomic goals. Local Solution LEVELS 1, 2 & 3 Core Skills Regional Solution LEVELS 4 & 5 Institutes of Technology National Solution LEVEL 6+ Degrees 10
2What Model should Institutes of Technology follow? (Continued) An IoT built on this basis could be made up of individual elements which when combined would create a resilient, adaptable and commercially viable institution. The level of co-ordination and system wide planning that an IoT would be able to leverage would make it uniquely responsive to local economic demands and priorities. The key elements of an IoT would then be: Focus on Technical Education pathways and levels four and five provision Key role for industry and employers Leveraging existing resources provided by FE Colleges working in collaboration with Universities Effective incorporation and utilisation of technology Specific focus on STEM subjects Ability to leverage specialist teachers and assets Funding would be provided through non-government sources (Apprenticeship Levy /Student Loans) A robust and effective governance structure Agility and responsiveness to respond to market needs All of these elements could be brought together to create an institution that is truly unique but leverages existing capability. Applying this model an IoT will offer provision aligned to local economic priorities and fill a gap in the market rather than creating yet another supplier from the ground up. Through this 11
2What Model should Institutes of Technology follow? (Continued) approach it can build on the existing asset bases and utilise local resources which are already operational. Existing colleges will group together under the IoT banner bringing their local knowledge and expertise to co-ordinate provision with employers around local needs. The IoT model is not about trying to create a brand new institution a solution which is both labour and capital intensive rather, the IoT model is about re-aligning and refocusing provision (around technical education pathways) so that it is more responsive to the needs of employers and local economies. Underpinning all of this would be institutions which are less reliant on Government funding and instead are able to pursue new funding routes including the apprenticeship levy. Productive employer relationships will form a key part of the IoT model. Employers will be involved in all aspects from design, implementation and delivery through co-creation of curriculums, building pathways to employment and providing robust and credible careers advice to learners. Within this context the IoT will take on a vital role providing the primary interface between students and employers. The IoT will act as a trusted broker, linking employers with students and ensuring that both sides have the information and resources needed to ensure they make the best decisions from their respective points of view. An IoT would adopt a whole systems approach linking up employers to all parts of the education system to ensure that the best talent is routed through credible and robust pathways leading to employment and successful careers. It is through this uniquely developed employer engagement and relationship building strategy that an IoT will be uniquely placed to respond and adapt to market forces as well as to changing skills demands. 12
2What Model should Institutes of Technology follow? (Continued) 2.2 HUB AND SPOKE MODEL In order to deliver on the features we have outlined, an IoT will need to be set up in a way that ensures effective levels of employers engagement and market responsiveness; the most efficient way to facilitate this will be for the adoption of a hub and spoke model. The hub will be in a central city location and act as the focal point where the corporate and administrative functions of the IoT will be activated. The hub will maintain responsibility for the marketing and employer engagement aspects of the IoT and responsible for ensuring strong brand identity to create strong customer confidence in the IoT model. The hub will also be responsible for the business development operations of the IoT as well as providing relationship management oversight for employers, partners and other stakeholder groups. This has the potential to deliver a collaborative model that harnesses the power of existing suppliers and their asset base around common goals to support industry and students. 2.3 FUNDING MODELS FOR AN IOT The government has promised 170m for IoTs, but IoTs have the chance to be self-sustaining, not relying on government funding beyond this initial set up period. The way that the FE sector is funded has changed dramatically in the last five years with EFA and SFA funding decreasing yearly since 2011. This reflects a broader systematic change in the way that public services have been funded, reflective more generally of the government s economic priority to ensure fiscal and economic prudence in public spending. The effects of these changes have had profound implications for the FE sector as a whole with colleges encouraged to adopt more commercially led business models in the absence of traditional levels of centrally assured funding. FE College A Anchor Employer A Local Sector A IoT FE College B FIGURE.1 Representation of a Hub and Spoke Anchor Employer B University A 13
2What Model should Institutes of Technology follow? (Continued) In the face of these challenges the IoT model has another distinct advantage because of its ability to develop a flexible, commercially viable business model which is less reliant on central government funding. Whilst an IoT could still make use of some public funding and would serve as a cost effective use of taxpayer money an IoT would not be as dependent on this source of funding as GFE colleges. The introduction of the apprenticeship levy in 2017 will see large businesses looking to invest in training for their staff and IoTs could serve as a sustainable and trusted training provider of level 4 and 5 apprenticeships. An IoT will need to be able to harness the revenue streams of both the apprenticeship levy and the student loan market. A network of IoTs will support national employers to deliver apprenticeships and traineeships which fully utilise levy funds. It is through this direct link with employers and a funding model that is predicated upon continued growth and investment in the UK workforce that an IoT model can function as a sustainable and robust business model. Institutes of Technology have a distinct advantage because of their ability to develop a flexible, commercially viable business model less reliant on central government funding. 14
3The General Structure of an IoT INSTITUTES OF TECHNOLOGY From Concept to Delivery 15
3The General Structure of an IoT 3.1 GOVERNANCE STRUCTURE We believe an IoT will need to have an agile, transparent and responsive governance structure which at the same time permits the kinds of commercial freedoms necessary to create a truly stand-alone and self-sufficient institution. There are different models that can be utilised to ensure that an IoT is flexible and adaptive whilst at the same time accountable to students and employers. However, an underlying principle must be that an IoT can operate as an independent institution and afforded the kinds of freedoms necessary to operate as a commercial entity. We believe that this could be only work if an IoT was created as an independent legal entity inside a college group structure. In order to leverage the largest asset base, the preferred option would be to create an IoT subsidiary that forms part of an existing college group. The group structure would also reinforce the financial resiliency of the IoT by ensuring full accountability and oversight of its financial and commercial operations. 3.2 RESPONSIVE TO EMPLOYERS In order to ensure that IoT provision is aligned to the changing skills needs of employers effective employer engagement will be critical to an IoTs success. An IoT will provide a responsive interface to scout talent and recruit for highly skilled industry specific roles. The role of the IoT need not be limited to direct recruitment but it will also provide a way to deliver training to upskill an employer s existing workforce. To ensure employer confidence it needs to ensure employer led representation on the IoT board drawn from local and national employers as well as from LEPs and other local and national stakeholders. 16
3The General Structure of an IoT (Continued) The IoT will be agility-led. Provision and the means for delivery will remain flexible to adapt to changing skills demands. The IoT model will allow for clear and accessible careers advice which will be designed with employers, specifically to advise apprentices and students on career goals and ambitions within a given industry. The structural freedoms afforded to an IoT will allow it to form strategic partnerships with anchor employers who will help to contribute and shape its overall strategic direction. It will be important to ensure that these employers are central to the local and regional economy and have a key role in shaping the lines of business, curriculum provision and values of the new institution. This involvement could also extend to allow employers to invest in and take a shareholding stake within the IoT. 3.3 CURRICULUM PROVISION An IoT should deliver a curriculum that is responsive to the needs of both employers and students. IoTs must be able to create a curriculum which is outcome focused, offers maximum flexibility and meets the needs of the individual and industry. This should include flexibility around online learning and facilitated study centres as well as the creation of online learning material devised for core units. Online provision would be complemented by the creation of a number of learning and employment hubs to create an ongoing interface between employers and learners. The qualifications for this kind of technical education will be designed in collaboration with industry to facilitate workplace delivery of learning provision. This employer led interface would also increase opportunities for employer and peer to peer mentoring and development. 17
3The General Structure of an IoT (Continued) The curriculum will need to be focused to enable the best learning outcomes for individuals and designed to offer maximum flexibility dependent on employer s requirements and the student s aptitude and chosen route. IoTs should provide Recognition of Prior Learning (RPL) and experimental learning to enable specified provision and streamlined progression. Delivery will be planned with stepping on and off points within an all year round framework rather than normal academic year which better reflects the all year round nature of business, work and employment. IoTs must be able to create a curriculum which is outcome focused, offers maximum flexibility & meets the needs of the learner & of industry. 18
4Making it Happen INSTITUTES OF TECHNOLOGY From Concept to Delivery 19
4Making it Happen 4.1 WHAT IS NEEDED FROM GOVERNMENT From a ministerial perspective, a clear advantage to the approach we have set out is that these IoTs would require minimal central government supervision and oversight to get it off the ground. In our view, IoTs need to be driven by local politicians and local employers, not by Whitehall. Government needs to give the green light to let local areas press ahead in developing their plans. The move towards increased devolution in areas relating to skills and education policy is driven by a recognition that the commissioning of skills services can be done most efficiently and effectively at a local level where local commissioners have first-hand knowledge of the kinds of skills and productivity gaps that employers are trying to address. As successive Governments have clearly highlighted in the schools sector, there cannot be a one size fits all approach that can be rolled out at a national level. The local context must be kept in mind whenever provision is being planned and delivered. The creation of IoTs therefore must ultimately be seen as a decision for a local area such as one of the new City Regions or rural Combined Authorities. It is clear however that national leadership will be required to endorse and support the IoT model and enable local areas to deliver their vision for joined up learning and training through the IoT model. In order to get the ball rolling, government could allow five or six combined authorities to move forward with designing and implementing plans within their local areas. The extensive powers afforded to metropolitan regions such as Birmingham, Sheffield, Tees Valley and Manchester or to rural areas such as Cornwall, would make them prime candidates to move forward with developing local plans and strategies for the creation of an IoT. We believe that a small group of larger colleges in these regions, collaborating with a small number of 20
4Making it Happen (Continued) universities and two or three large employers, could pilot and set up a small number self-sustaining institutions. There is of course a cost that would be attached to prototype IoTs to move from the design through to the implementation and delivery stage funded through a combination of central government, LEP, university, FE colleges with investments from private stakeholders and partner organisations. 4.2 CONCLUSION Since June 2015 there has been an on-going debate about IoTs. We believe the time is right to move from conceptual model to delivery; the January 2017 Industrial Strategy proves there is political support to do so and there is also need to create something that can radically alter the delivery of technical education and embed the thinking of the Post-16 Skills Plan. The further education sector, collaborating with others, has the expertise, knowledge and ambition to make IoTs a reality. With the impact of devolution deals being felt across the country it is becoming a matter for local economies whether they embrace a more responsive employer led solution. But it is clear that the direction of travel has given local politicians the power to address the skills needs of their local workforce directly. Government needs to provide an endorsement of this model and then let the sector get on with creating a responsive, agile, market led solution that will serve the skills needs of employers and contribute to making Britain a leading and dynamic 21 st century economy. Now is the time to embrace a model that has real and profound potential to address the systemic issues that have held back the UK workforce for too long. The further education sector, collaborating with others, has the expertise, knowledge and ambition to make IoTs a reality. 21
4Making it Happen (Continued) The benefits of the IoT model should now be clear: It will provide a way to deliver high quality apprenticeships within the sectors that are most vital to the long term productivity and capacity needs of the UK economy. It will allow local resources to be utilised effectively through a harnessing of existing asset bases and local as well as national knowledge and expertise. The government needs to find an effective and efficient way to deliver 3 million apprenticeships by the year 2020. The productivity gap needs to be addressed in a systematic and coordinated way, and this needs to be underpinned by an effective redesigning of the pathways for technical, vocational and professional education. IoTs could provide a unique way to co-ordinate a robust and employer-led response to the very real challenges being faced by the UK economy. An IoT would be the most effective way to deliver a key component of the TPE pathway focusing on level 4-5, that is meaningful and will give students and parents confidence in the power of this pathway. For too long learners have been underserved by TPE pathways in which there are no clear ways to build a clear and robust career path. In order to address this it will be important to ensure that leaners have confidence in the ability of TPE pathways to allow them to pursue and develop new career opportunities. IoTs would be the most effective way to deliver a key component of the TPE pathway focusing on level 4-5. It will give students and parents confidence in the power of their chosen pathway to deliver for their futures. We believe that the IoT model will work because it provides a concrete way to ensure that the needs of employers are aligned to teaching provision. The rationale for an IoT is underpinned by the identification of the historical and contextual problems that have restricted the delivery of effective skills based training. An IoT seeks to employ the expertise and insight of all parts of the system to create a solution that would be transformative and to the benefit of future generations. 22
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