Academic Year 2020/21

Further education skills index

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The analysis in this report can be used to monitor the value of the Further Education system in England over time. 

It shows the underlying trends for apprenticeships and classroom-based learning and how value-added per learner has changed alongside total value-added.

Headline facts and figures - 2020/21

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About these statistics

Measuring the impact of FE on productivity

Productivity is how much we produce with the resources we have available. Though the rate of productivity growth is influenced by a number of factors, a country’s skills level is a major component. Giving people valuable knowledge, skills and behaviours boosts their productivity.

The Skills Index takes the increases in earnings attributable to different types of FE training and aggregates these to estimate a measure of total value-added from the FE system over time. This provides a proxy measure for the productivity impact of FE, based on the assumption that in a well-functioning labour market an individual’s earnings reflect their productivity. This approach is well-established in academia and public policy analysis - see, for example, Becker (1975) and Mincer (1974), and HMT (2018), The Green Book.

Using the Skills Index

The Skills Index reports on the value of funded adult Further Education achievements and all apprenticeship achievements. The full approach is set out in the Further Education Skills Index Methodology but the Skills Index is essentially measured as the change in value-added over time. 

Value-added = FE achievers * employment rate for achievers in that qualification * estimated additional earnings from achieving the qualification

The Skills Index method holds both the employment rate and estimated additional earnings constant, so an increase (or decrease) in the Skills Index would be caused by one or more of: 

  1. An increase (decrease) in the number of learners; 
  2. An increase (decrease) in achievement rates; 
  3. A shift towards (away from) more economically valuable training, through more (less) learning being undertaken in qualifications with higher additional earnings.

The Skills Index is not intended to be: 

  • A full assessment of the total value generated by the FE system. 
  • A full assessment of the productivity impact over a learner’s lifespan. 
  • A timely measure for evaluating specific policy changes. 
  • A method for tracking changes in the quality of qualifications delivered - the Skills Index monitors changes in the provision mix, i.e. the distribution of qualifications by level and subject. 

Value-added of the Further Education system

In 2020/21 the Skills Index stood at 53.6, which is 46% lower than in 2012/13.

  • The long-term decline has mainly been driven by a decline in numbers of achievers, which were 53% lower than in 2012/13.
  • The Skills Index has fallen more slowly than achiever numbers because of an increase in average value-added per learner over the period.

Change since 2019/20

In 2020/21 the total value of FE increased by 7%, the first year of increase after a period of sustained decline. 

  • Although there was an increase in 2020/21, the Skills Index remains below the 2018/19 level.
  • In 2019/20 and 2020/21 COVID-19 restrictions caused disruption to exams and breaks in learning, leading to fewer achievements than would normally have been expected. See Further education and skills, Academic Year 2020/21.

The changes in the Skills Index overall have been a result of varying trends in the underlying classroom-based and apprenticeships elements. 

Value-added of apprenticeships

  • The Skills Index for apprenticeships increased by 11% in 2020/21, reversing some of the fall seen across 2018/19 and 2019/20. 
  • In 2020/21 the value-added for apprenticeships was 17% lower than in 2012/13. It had increased every year prior to 2018/19.

Value-added of classroom-based training

  • The total value-added for classroom-based training increased by 2% in 2020/21, having fallen in every previous year. Overall, it has decreased by 61% since 2012/13.

Value-added per learner

The Value-added per learner index shows the impact of changes in the provision mix on average value-added per learner. 

  • This shows that, across FE as a whole, since 2012/13 there has been an underlying shift towards a more valuable mix of provision types, levels and subjects. 
  • This shift has partly offset the impact of the long term decline in achievements on total value-added. 

Value-added per FE learner was 13% greater in 2020/21 than it was in 2012/13, and 7% higher than in 2019/20.

Since 2012/13, the provision mix has become more valuable for apprenticeships. In contrast it has become less valuable for classroom-based training.

Value-added per apprenticeship

The value-added per apprenticeship has increased in every year covered by the Skills Index, with an overall rise of 33% since 2012/13.

  • This is partly due to a shift from intermediate towards higher level apprenticeships, which have higher employment and earnings returns. 
  • There has also been a shift over time towards apprenticeships in sector subject areas with higher earnings returns – towards engineering, construction and ICT qualifications and away from retail, business and leisure qualifications. 

Value-added per learner in classroom-based training 

Value-added per learner in classroom-based training rose by 4% in 2020/21 but, overall, the provision mix for classroom-based training has become less valuable over time, with a fall of 14% since 2012/13.

  • This can partly be explained by a shift away from Full Level 2 qualifications towards other Level 2 qualifications which typically have lower employment and earnings returns. 
  • There has also been a shift towards sector subject areas with lower earnings returns, particularly towards health.

Impact of different qualifications on the Skills Index

In 2020/21, apprenticeship achievers contributed 52% of the total value-added of the FE system even though they accounted for only 18% of achiever numbers. 

  • This is because apprenticeships generally result in higher returns, higher employment, and higher earnings than classroom-based qualifications at the same level (see the Further Education Skills Index Methodology for details). 

Contribution of apprenticeships to total value-added

Between 2012/13 and 2020/21 the contribution of apprenticeships towards the total value-added increased from 34% to 52%. 

  • The contribution of higher apprenticeships has gradually increased from 0% in 2012/13 to 15% in 2020/21. 

Contribution of classroom-based learning to total value-added

The fall in the contribution of classroom-based training is mainly the result of a declining contributions from Full Level 2 qualifications.

  • The contribution of Full Level 2 qualifications decreased from 34% in 2012/13 to 4% in 2020/21. However, this is partly due to a reclassification in 2016/17, which moved a substantial number of Full Level 2 achievers into the Other Level 2 category.
  • Full Level 2 qualifications that were reclassified as Other Level 2 in 2016/17 are assigned the same value as current Full Level 2 qualifications (see the Further Education Skills Index Methodology for details). These qualifications contributed 15% of total value added in 2016/17 and 16% in 2020/21.
  • The contribution of Below Level 2 qualifications has also fallen since 2012/13.

Falling achiever numbers have been the key driver of the downward trend in the Skills Index since 2012/13.

Numbers of apprenticeship achievers

Between 2012/13 and 2016/17 the number of apprenticeship achievers was increasing steadily, before falling as a result of both reforms to the apprenticeship system and the impact of the COVID-19 pandemic.

  • In 2020/21 the overall number of apprenticeship achievers increased by 7%, to stand at 38% lower than in 2012/13. 
  • The number of intermediate apprenticeship achievers has been falling since 2015/16.
  • The number of achievers on higher apprenticeships increased by 72% in 2020/21 and is almost twenty times larger than in 2012/13.
  • The duration of apprenticeships also is increasing, so there are fewer achievements in the short-term - see Apprenticeships and Traineeships statistics for details.

Numbers of classroom-based achievers

The number of classroom-based achievers fell by 55% between 2012/13 and 2020/21. 

  • The number of Full Level 2 achievements has declined by 96% since 2012/13 and, although it is partly due to reclassification with no impact on value-added estimates, overall this has been a key driver in the falling Skills Index for classroom-based learning.
  • In 2020/21 the number of classroom-based achievers fell by 10,000. Within this, there was a larger 33,000 fall in the number of achievers whose highest qualification was Below Level 2, who have the lowest returns, resulting in an increase in average value-added per classroom-based learner.

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