The Lifelong Learning Entitlement (LLE) is intended to incentivise flexible and technically-focused provision, improve responsiveness to employer needs, and drive price competition amongst providers.
There is scepticism among sector leaders about whether LLE will be implemented or have its intended impact. But whether or not we see LLE manifest in its current proposed form, the government’s plans for LLE are indicative of society’s changing demands of HE, in response to financial constraints and three major drivers of change. Whether realised through LLE or some other policy instrument, these changing demands will heavily influence the future of the sector. HE institutions should take practical steps on strategy, systems, and capability to be ready.
The Lifelong Learning Entitlement
The introduction of a Lifelong Learning Loan was a key recommendation of the 2019 Augar Report. Augur’s proposals were intended “to promote both uptake of higher technical qualifications and flexible study,” by making student finance available throughout a working lifetime, and widening qualifying provision to include credit-based courses as well as full qualifications. The expectation was that this would make learners more price-sensitive; in any decision to spend part of their entitlement, they would have an eye on how much would be left for the future – though we know from previous reforms that students’ decisions are influenced by many factors beyond the purely financial. In theory, institutions would respond by competing harder on price, and by making their offerings more flexible, in line with the needs of older learners.
The intention of the current government was to implement this recommendation through the introduction of the Lifelong Learning Entitlement, from autumn 2025. Its objective is to give learners choice and flexibility, enabling them “to access courses in a more flexible way, to fit study around work, family and personal commitments in response to employers’ needs.” Responses to the LLE have been muted. There are two main sources of scepticism: scepticism about whether it is needed, and scepticism about whether it will happen.
The need for flexible, demand-responsive provision may seem uncontroversial. Yet the signals from both learners and employers are mixed. Research by Public First has indicated that individuals have lukewarm interest in accessing student finance to pay for lifelong learning, with only 20 per cent of respondents indicating they would consider this route, and 40 per cent expressing no interest in lifelong learning whatever (notably these attitudes are heavily influenced by the respondent’s geographical location). This reflects the historical picture of limited demand for “non-traditional” modes of learning. Further, some sector leaders have privately shared their concerns about demand from those who already have level six attainment, for the types of provision eligible given their relative esteem, and for HE in FE provision where price point may affect quality.
Employer demand is similarly equivocal. While employers report increasing skills gaps, the amount and intensity of skills provision they are funding has fallen consistently since 2011. Employer demand driven interventions such as Train to Gain in the early 2000s struggled with deadweight issues, where public funding supports activity that would otherwise have been privately funded. More recently, the use of apprenticeship levy funding to subsidise higher level professional qualifications, for example, in accountancy, may be an example of a similar effect. Some sector leaders have also privately expressed concerns that LLE could suffer similar issues, perhaps shifting the costs of CPD activity from employer to employee.
There is also doubt about the likelihood of LLE being implemented at all, at least as presently conceived. Policy on vocational education and skills is in a near-permanent state of flux, with the Institute for Government identifying 28 major pieces of legislation in this area to between the early 1980s and 2017. With implementation of the LLE not due until after the general election in July, many in the sector doubt it will survive in its present form.
It is understandable that there is doubt within the sector about whether LLE will be the driver for reform that Augar envisaged. It would be a mistake to parlay this doubt into inaction. Beyond broad support for the flexibilities the LLE would bring, political parties have yet to articulate a comprehensive vision for the tertiary sector. Yet this cannot remain the case for long. Whether a full-bodied implementation of LLE, something more light-touch, or a Labour alternative, a meaningful policy response is all but necessitated by historically challenging conditions, and accelerated by three key drivers of change.
Historically challenging conditions mean that fundamental change is inevitable. The HE sector today faces stiff challenges: a static or declining unit of resource; uncertainty around recruitment driven by domestic cost of living pressures and and opacity around the drivers of international demand; and the challenges of a typically people-intensive business model tied to expensive and often under-utilised estates; the commercial realities of a more marketised (and higher inflation) landscape; and a political and fiscal climate which will not permit additional funding or rescue packages.
A handful of research intensive institutions may have sufficient diversity of income sufficiently robust, reliable, and diverse income streams that these challenges can be addressed through tactical rather than strategic change. The overwhelming majority of HE institutions are not in such a position. For many, existential decisions loom. The combination of these pressures and the absence of a public safety net mean that the answer cannot only be “more of the same.”
Three underlying drivers of change
If difficult choices must be made, how are they to be navigated? New landmarks are beginning to emerge which may help. Society’s expectations of HE institutions are changing in tangible ways, and aligning strategy with these new demands may help institutions to plot a sustainable course. Alongside the fiscal and political conditions creating the burning platform, we might expect three further “mega-trends” to be particularly salient: productivity, localism and marketisation.
It is becoming clear that the UK has a knotty productivity challenge. International comparator countries have emerged from the pandemic much more strongly than the UK. Whenever decisions are to be made about the allocation of public resource, productivity must be a consideration. HE has a positive story to tell here. At the individual level, despite an increased supply of graduates in the labour market, there remains a substantial wage return to studying in HE. At the macro-economic level, whilst measurement is not straightforward, the indication is that HE makes a positive contribution to UK productivity. The relationship is not straightforwardly simply linear in terms of volumes of higher level skills, but a more complex function of their distribution, fungibility, cost and mobility within the labour market. It is an important and ongoing task in the sector to continually strengthen our understanding of these impacts and maximise their potential.
While the productivity impacts of HE are detectable at national level, they are often felt most tangibly at local level. Localism and devolution are increasingly significant features of UK society. Deals devolving responsibility for skills to mayors and city regions are on the increase. Geography is playing an increasing role in determining the allocation of resource. This is another strong suit for HE. HE institutions generate a range of positive impacts on their surrounding locality and region, including on regional economies and on both the supply and demand side of labour markets. They are able to sensitively align to local labour market demand and plug into complex local and regional supply chains, deploying types and modes of provision which allow the benefits of HE to accrue locally as well as being exported more widely.
Turning in toward the sector itself, the emergence of “students as consumers” is an expected side-effect of the 2012 reforms. With a long term trend for increased participation in HE, and with graduates in England now bearing more than 80 per cent of the cost of their education, prospective students are increasingly demanding about their experience. Not only that, but the dimensions along which that demand manifests are multiplying as fees and funding systems give them greater leverage in expressing what is important to them personally. HE has never been a “one size fits all” experience. Anticipating, and shaping and responding to the increasingly complex and fragmented panoply of learner demand will continue to be a critical capability. Innovation will be required with respect to the learner journey, from attraction, throughout recruitment, induction, delivery and assessment. Students will need to understand and feel engaged with their learning journey, and increasingly have the ability to shape it to meet their changing circumstances.
Practical steps to be ready for change
These drivers will change the sector profoundly, in ways that cannot be fully anticipated. HE institutions can prepare through practical action at three levels: institutional strategy, systems, and capabilities.
Strategy
Institutional strategy should respond to the drivers by building resilience. This can be achieved through deliberate diversification, aligned to shifting long-term expectations (rather than short-term imperatives). It is noticeable that many institutions which did especially well following the 2012 reforms were also those that successfully anticipated changing long-term trends.
Opportunities to diversify include strategic partnering with other actors in the localism/productivity puzzles, such as major local employers and the wider tertiary education landscape, adapting provision to non-traditional modes such as modular programmes and digital delivery, and working more closely with industry to translate and commercialise research.
As with any locus of innovation, many pitfalls await diversification strategies. Knowledge exchange with the commercial sector can be helpful here. Practices such as systematically identifying and evaluating IP, forensically analysing target markets to capture demand signals, and building a culture of innovation, are as applicable to HE institutions as to commercial entities.
Systems
Effective institutional systems can make the difference between an institution being able to respond to the drivers with agility, and it missing the boat. The perpetual journey of digital transformation can lead to greater efficiency, better ability to respond quickly to changing environments or capture emerging demand, reduce admin burdens on staff and improve student experience.
Beyond digital transformation, the burgeoning possibilities for AI/machine learning and data technologies will be as transformative for HE as the rest of the economy. Early examples of data analytics tools which can help, for example, target early intervention to mitigate potential drop-outs have had some success. This is only the tip of the iceberg. Analytics can be deployed to drive adoption of new income streams, for example through using machine learning tools to give insights on local labour markets, enabling precision-targeted provision. Machine learning can be deployed to improve the performance of existing revenue streams, for example through better understanding drivers of international demand.
With regard to both digital transformation and AI/machine learning technology, powerful competitive forces in the commercial sector are compelling rapid innovation which HE institutions can usefully observe and build on. There is wider learning from the commercial sector that is relevant to HE institutions, and this is perhaps most apparent with respect to systems and processes. Areas of particular interest might include commercial approaches to addressing the cost base, with intensification of estates utilisation being a clear example with direct read-across to the HE sector.
Capability
Institutional capability must be constantly refreshed and renewed to ensure that the three drivers can be seized as opportunities. Given the opportunities identified above, it may be helpful to highlight three areas of particular importance, though capability-building is of course a broad and ongoing imperative.
The first of these areas is in leadership capability. I have suggested that the three drivers will bring about change in the sector that cannot be met through incremental adjustments to operating models. If this is the case, then institutions must equip themselves with the leadership capability to articulate and implement a new vision for what an HE institution does, the openness to innovate and learn from beyond the sector, and a mindset which recognises that fundamental change is required to secure long term sustainability. Pragmatism and reform must challenge (and respect, and complement) tradition. This will mean both greater permeability between public and private sectors and HE, and accessing contingent specialist support on projects or programmes where needed.
The second area is commercial capability. It will be increasingly important for HE institutions to engage toe-to-toe with commercial organisations – both as suppliers of skilled people and as strategic partners in local growth. This requires further strengthening commercial skills, greater permeability with the private sector, and viewing commerciality as part of what creates ongoing success for the whole institution rather than something done only by the commercialisation team.
The final area of capability building to spotlight is concerned with the successful implementation of new delivery models. For example, building high quality content generation capability on a more commercial basis, where delivery does not require more traditional academic approaches. It is of course essential that institutions continue to robustly champion quality and rigour – to lose sight of these would be to gravely misunderstand the purpose of higher education. Exploring new delivery models for doing so, however, feels like an evolution of that mission in response to changing societal demands, rather than a diminution of it.
As HE institutions continue to address themselves to these capability challenges, they can benefit from hard-won experience in other sectors. The political and fiscal conditions since the 2007-8 financial crisis have posed fundamental questions for any organisation that depends in some part on public funding. The 2012 reforms perhaps delayed these effects from being felt in the HE sector. Now that the effects are biting in HE too, a permeability of staff with local and regional government, the wider public sector, and third sector organisations is a significant opportunity. The adversity those organisations have faced has generated a substantial body of practical know-how about transformation and delivery of high quality services in the face of great fiscal challenge.
The HE sector is facing historically stiff challenges; and fiscal and political headwinds mean it cannot count on additional public support in response. Incremental changes to current operating models will not go far enough to meet changing societal expectations, such as those around productivity, localism and student choice. Instead, practical steps can be taken – on institutional strategy, systems and capability – to make institutions better able to meet these challenges. As a result, HE institutions will be ready to respond effectively to forthcoming policy instruments, LLE or otherwise.
Dan is grateful to the many sector leaders who shared private perspectives during the preparation of this article; to Andy Westwood for his perennially valuable perspectives; to colleagues at Wonkhe for challenging debate; and to colleagues at MH&A for insights from across the wider education, employment and skills landscape.
