Unfinished business: business support services and further education

Government’s recent white paper, Skills for jobs: lifelong learning for opportunity and growth, sets out an ambition for College Business Centres to work with employers to drive innovation and productivity. In late 2020, Gatsby supported the Think consultancy to review the scope, scale, and impact of some existing business support services, and consider how colleges can contribute to this landscape. The project engaged LEPs, growth hubs, further education (FE) institutions and local and national government officials. The work explored existing collaborations and what might be done to further strengthen the connection between business support and post-16 institutions.

In this guest article the report’s author, James Farr, introduces findings from the work, which are described in more detail in the full report.

Unfinished business

The White Paper’s plan to create College Business Centres is a positive step, but a close working relationship with business support services is required if colleges are to best enable local employers to innovate and grow, says James Farr.

The announcement within the Skills for Jobs White Paper that colleges will be encouraged to develop pathfinder College Business Centres is a welcome sign of ambition for further education (FE). With employer leadership now a long-established priority and the need for post-16 delivery to better connect learners with good jobs clear within the White Paper, the plan for College Business Centres clearly signals DfE’s belief in a broader role for FE in accelerating growth and productivity within local economies. Such activity will bring FE increasingly into contact with existing business support services, which are delivered to employers via a range of national and local providers. Supported by the Gatsby Charitable Foundation, we undertook research in late 2020 to consider how colleges can contribute to this landscape.

With the White Paper describing increasing productivity as a core mission for post-16 skills, then it would be reasonable to argue that further education – as the key provider of post-16 education and training – should have a close relationship with other services whose mission is to drive up productivity and growth. Whilst access to skilled labour will not in isolation drive improvements in productivity, it is a critical ingredient for any business seeking to grow.

Our report found a good level of interest from within FE and the business support community for developing the relationship between the services. However, in policy and delivery terms, both at a national and local level, we found a degree of disconnect between the two. National policy fault lines are being repeated by LEPs, but this disconnect is nothing new. Arguably the last time business support and post-16 skills saw integration (not counting the Train 2 Gain skills brokerage via Business Link) was under some Training and Enterprise Councils which developed business support offers, even merging with local Chambers to create hybrid organisations.

We found very few examples of colleges working with business support services in an integrated fashion, building training and education into the packages of support provided to businesses within a locality, usually via growth hubs. There are several probable reasons for this. Firstly, the system incentives for growth hubs and further education do not encourage the integration of services across functional silos. For example, the key success measures for which college leaders are held accountable – such as achievement rates, Ofsted grading, financial sustainability – can lead to a low priority status for strategic and operational collaborations that support growth. Examples of good practice were often described as happening in spite of system incentives, rather than because of them. Plans announced in the White Paper for a more balanced set of further education provider accountability measures represent an opportunity to put local productivity and growth more squarely on the agenda for colleges leaders and governors.

A similar picture of misaligned system incentives also emerged within business support, where respondents readily stated that further education is something of a blind spot to them, none regarding further education as an ‘animator’ of the local economy. There is also extreme variability in the type and availability of business support services in a locality (the smallest growth hub we engaged with employed three staff; the largest had over 200 staff), as well as a variable picture in terms of the capacity and capability of post-16 providers to engage with businesses.

Despite this, we found solid grounds for optimism. Both further education (via the new White Paper) and business support (via a major BEIS review focused on reducing the complexity, improving consistency and impact) are entering a period of significant change, creating an opportunity to rethink how each service works with the other to benefit learners and employers within localities.

Unlike higher education institutions, which growth hubs often partner with on innovation and research programmes particularly with support from European structural funds, FE providers have a much better reach into what IPPR North term the ‘everyday economy’, which is dominated by SMEs. Improving the performance of the ‘everyday economy’ is critical to raising overall productivity and breaking the low skills equilibrium, which economists describe as dominating many local economies. For SMEs, improvements in productivity are not usually achieved via high end, cutting edge research and development activity – instead, such improvements can be developed via the knowledge transfer of well-evidenced good practice. Colleges have a role to play in enabling this transfer.

Therefore it is heartening to see plans within the White Paper to seek proposals for sector-based College Business Centres, supported by DfE’s Strategic Development Fund. Our report calls for such an arrangement, via which activities can be delivered through start-up support, knowledge sharing within and across sectors, provision of business growth spaces, the sharing of industry-standard equipment within colleges, and the use of the college as a networking hub. We characterise these activities not as examples of FE colleges moving into the market for BEIS-funded business support, but rather as activities that colleges can deliver as a by-product of their core function – to develop the skills required in the workplace.

A second strand of our report highlights the practical steps required to better integrate the work of FE colleges with growth hubs (or any other providers of business support). Our contention is that the current delivery models of business support and post-16 education and training are fundamentally misaligned, and that there is much that LEPs, colleges and business support providers can do to join up in the service offer to employers. This might include:

• The creation of shared local economy datasets between colleges and growth hubs, which can be used to underpin joint growth hub/FE responses to key opportunities – such as offers shaped for particular technical education routes, sector offers for inward investors, and addressing market failures.
• Transparent sharing of business support and FE delivery data, which can help each party understand existing activity, build common understanding of routes and occupations, and develop shared product offers to employers.
• The use of shared events, websites and consistent vocabulary when engaging with business, all to build a cohesive dialogue with employers – FE and growth hubs ‘talking the same language’.
• Refresh the boards of growth hubs, LEPs and colleges to cross-pollinate people, knowledge and ideas.
• The involvement by LEPs of growth hubs in shaping investment priorities – such as via skills capital – to ensure that there is consistent alignment on skills and growth priorities.
• The sharing of employer leads and demand – whereby colleges stimulate and aggregate demand for growth hub services, and vice-versa.

The White Paper’s invitation to colleges to submit bids for College Business Centres offers an opportunity for stable and capable FE colleges to maximise their impact on the local economy by working more closely with similarly stable and capable providers of local business support services. Doing so would not only benefit local employers and residents by supporting economic resilience and growth. It would also strengthen the evidence of the vital contribution that post-16 provision makes to productivity. It would be good to see such arrangements succeed.

Our report, reviewing the relationship between business support services and further education, is available here.

James Farr is a director of THINK, offering policy, strategy, research and management support to FE, HE, employers and local and regional government.