While the pandemic changed the context within which policymakers and people professionals have to operate, it has not changed some of the fundamental trends that our economies – and our skills development systems in particular – need to prepare for. The arrival of Industry 4.0 with its associated changes driven by automation and technological advances, Scotland’s changing demographics and our ageing workforce in particular, as well as persistent economic inequalities all require a flexible, responsive skills development system.

In our latest report – Skills to Grow – we look at what contribution enhanced individual learning accounts (ILAs) could make to such a system in Scotland. When we started planning this report over a year ago, we could not have foreseen what was to come. Our primary objective was to flesh out what contribution a form of ILAs could make to meet the challenges posed by our changing economy and evolving skills needs. What this report now offers, however, is a timely assessment of how enhanced ILAs can be used in our COVID-19 recovery too.

Underlying challenges in a new context

Even before COVID, there was an urgent case for strengthening Scotland’s skills system. Before the pandemic struck, the 2020s looked to be defined by economic transitions demanded by automation and technological change, Brexit, responding to our climate crisis, shifting demographics and population ageing, and existing economic inequalities. Due to COVID and ongoing restrictions stretching well into 2021, Scotland will have to face these pre-existing transitions in a very different context than before.

Policymakers will need to respond to economic and social changes in the months and years ahead, prepare people and businesses for them, work with businesses to adapt to this context, and to bridge people from sectors that are contracting to the sectors of the future. Increasing demand for skills among employers and employees, increasing the utilisation of skills by employers, and shaping the supply of skills in this new context will be crucial to Scotland’s economic prospects.

Designing ILAs

ILAs can take several forms, but the basic principle behind their design is (usually) a financial entitlement to training provided by the Government. This can vary in the level of award, forms of co-funding by learners or employers, economic or social targeting and its interaction with the broader skills system.

Our report looks at ILAs and similar interventions around the world – most notably Singapore, France and Canada – as well as models that worked in Scotland and the rest of the UK over the last two decades. When evaluating the existing Scottish individual training account approach, we find that it is skewed towards out of work younger learners, based in the central belt of Scotland, with construction the most popular sector.

We also dedicate a chapter to some of the challenges and trade-offs in designing such schemes. We see that low take-up can be a significant issue, as well as a lack of employer engagement – crucial to the success of these schemes. The targeting of schemes also varies significantly as does the generosity of funding. Scotland’s £200 ITA compares poorly to, for example, France’s buildable scheme. Lastly, we see that the targeting of such schemes is linked to the overall objectives, be it sectoral skills interventions or a broader boosting of lifelong learning.

The unique strength of ILAs

We conclude that through the ongoing disruption associated with COVID and into a post-pandemic world, ILAs offer particular strengths to learners, employers and skills providers across Scotland. ILAs offer flexibility and individualisation that enables them to be valuable and adaptable tools to support learners throughout their working lives, and through challenges from multiple fronts: be it as a tool to support early-career progression, as an opportunity to learn to work with new technologies, or as a means of accessing retraining that can support a smooth transition from high- to low-carbon industries.

In assessing the relative strengths and weaknesses of ILAs and their international variants, we can see that in iterations delivered so far, they have been most effective as a tool for stimulating demand for lifelong learning among working-age adults over 25 – and in doing so extending or reigniting engagement with the skills system. The recommendations we make therefore envisage ILAs that are targeted at adult skills development. 

Our recommendations at a glance

Lessons from iterations of ILAs seen so far in Scotland and other parts of the UK tell us that the level of funding attached to ILAs and the design of learning offers are often not well constructed to maximise impact. One of the key recommendations we make is for the funding to be increased from the existing £200 to £500, with a buildable entitlement over several years. This would allow longer-term skills development planning for learners, but also include a use-it-or-lose-it element. Beyond adult skills development, we think the scheme has the flexibility to be targeted at areas of economic need, but also learner need where particular barriers to skills development exist – this could mean targeting people with disabilities, caring responsibilities or from specific geographic regions.

Achieving employer buy-in, for example through career progression agreements as well as additional financial incentives should also be a part of the model. Furthermore, we recommend additional support with living costs to support take up amongst the lowest of earners. This could include using the devolved social security system to provide income replacement for the period of training as well as additional incentives for course completion. Lastly, the report makes it clear that any enhanced ILA model has to be digital-learning friendly, which will require specific steps around quality assurance and accreditation.

ILAs for Scotland and beyond

The Skills to Grow report is written in a devolved context and its recommendations are primarily aimed at the Scottish Government. However, there are some lessons offered to other legislatures across the UK, where the basic principles as proposed in the report can be used to design similar schemes to fit circumstances.
As we look towards the next Scottish Parliament election, our hope is that these proposals can form a part of the debate around our economic recovery, but also the long-standing challenges of rapid technological change, low productivity and poor adult skills development opportunities.