The BBC Breakfast coverage of Oldham College students helping Terrence, a local pensioner, enjoy a better Christmas, attracted a lot of attention.  It captured a sense of genuine community and the core values that bring people together – something the country seems to be wanting. 

Behind this moving story, there are complex and serious issues.  There is the problem of social isolation, loneliness and the crisis in social care – a sector which epitomises low-paid employment with a poorly designed career structure, and is not well-served by an education system that privileges high-level cognitive skills above all else. 

All of these, along with a host of other issues, are tied up with the problem of insufficient public sector funding.  But this is linked to a more fundamental issue: Oldham, and much of the North of England, is already in receipt of more taxpayer-funded activity than we contribute in taxes ourselves.  

Watch: Oldham College bring festive cheer to pensioner

Background: Could colleges benefit from Tories' northern success?

Need to know: Augar review: Give colleges £1bn and freeze HE funding

This leads us to the really big underlying issue: the weakness, in our areas, of the private sector economy and our woeful national record around improving productivity. Austerity has undoubtedly made all of this much more painful, but it is not the only contributory factor.

So, at first sight, there does not appear to be an obvious connection between the issues thrown up by the Terrence story and the question posed by Stephen Exley in his blog: could colleges benefit from the Tories’ northern success?  But the links are there. 

Stephen wonders if the Augar review will finally gain its place in national policy, by providing the new government with a framework to deliver its commitments to so-called “left behind” places – many of them in the north. Further education, he suggests, may be the solution. I hope he is right – but if so, it is not just skills that is the issue. It is the whole strategy for improving economic performance.  And viewed from this perspective, the argument for enhancing the role of colleges and giving them a more ambitious remit is compelling.

The review is popular among college leaders but unpopular among universities, because it has scary financial implications and because too many people have closed their minds to the benefits of alternative routes to learning. But this should not be about a battle between FE and HE over territory. It should be about what our shared role is, within a system of innovation, economic development and skills supply, so that together we have maximum impact.

The impact of deindustrialisation

The huge expansion of higher education since the 1990s is one facet of a set of policy responses to deindustrialisation. These have evidently not worked for everyone and have arguably left some places with even more complex problems than they had in the first place.

Oldham is a good example of how this set of policies have impacted on so-called “left behind” places. Up until the 1980s, almost 1,500 young people a year left Oldham schools at 16 and went into engineering apprenticeships. Today, it is almost none. Engineering and manufacturing continue to be an important part of the local economy, but on a much smaller scale than in the past. Government policy has done very little to get into the details of how to instil more innovation, support better business practice, stimulate the demand for high skills and their effective application in the workplace. 

The response to deindustrialisation, for a generation, has been based on the theory of the knowledge economy, which sees science and innovation as a national comparative advantage, and places universities and spin-off businesses as central to economic growth. The expansion of a graduate-level workforce – which is the bit the Augar review captures – is the human capital component of this model. 

This policy has bought enormous benefits for some. University-led capital programmes have often been at the centre of city growth strategies, and enormous numbers of young people have moved to university towns and cities to study, further boosting city regeneration, night time economies and housing markets. 

But beyond that, the policy has been problematic. Science and technology investment has been disproportionately directed to the south, and elsewhere the trickle down innovation model has failed to deliver the expected business growth or jobs. While universities are very active in research and development, and hold knowledge which has vast economic potential, their main source of income, by and large, has continued to be tuition fees. And it is increasingly acknowledged that this policy has failed to close the skills gap, leaving employers frustrated and  increasing numbers of graduates feeling that the economic value of their degrees is disappointing.

Less widely acknowledged is the impact this policy has had on the so-called “left behind” places. It has been doubly damaging as they have had the worst of both worlds. The benefits of university-led science and innovation has done nothing to improve their economic life, but their higher achieving young people, in large part, have left, seeking the well-paid jobs which they thought their three-year residential degrees would guarantee. They may not get those jobs, but they don’t go home – because there is nothing to go back to. It is a vicious circle.

It is fair to say that there have been no effective policy interventions to fully address deindustrialisation since it first emerged 30 years ago. In Oldham, during the period before the 2008 crash, there was a "new deal for communities" programme in one district, and employment and the economy were both  buoyed by the increase of public sector investment, mainly in education and health. But this only meant that, when austerity hit hard after the crash, the impact was all the more severe – neither the private nor public sectors were able to cope.

Partial and short-term solutions

One response is to see the solution as more public spending – which would certainly ameliorate some of the issues in the short term. But Oldham has to join a very long queue of places in the same boat, from Hartlepool to Burnley, and Blackpool to Dudley. Increased public expenditure, without a clear plan for addressing the underlying issues of low productivity, will only ever be a partial and short-term solution. 

This all seems extremely dismal. And you could extend the analysis by listing a set of contributory factors which add to the misery. The social isolation of many older people is exacerbated by the breakdown of extended family ties, because their children have left and started families far away.  Policies for relocating new arrivals and asylum seekers – fantastic as the majority are – often place them in areas where economic opportunity is weakest, making the challenge of building a shared local identity even greater. And then there are the whole host of issues – social, education and economic – which affect the 50 per cent identified in the Augar review who don’t leave for university, and seek to make something of their lives in the places they grew up in. 

You could be forgiven for concluding that the outlook for towns like Oldham is just too difficult, and that running a further education college, in this context, is the myth of Sisyphus in action. However, the Oldham that I work in does not seem to be a dismal place, and the learners who come to our college do not seem to lack optimism or talent.  And our staff, and our college, and probably most of our sector, always feel we could do more – if the policy context could just be a little different.

This optimism is not misplaced. There is new thinking about the whole issue of productivity, innovation and the partnerships needed to get to grips with the problems of northern towns and “left behind places”. There's now a focus on the idea of redistributing research and development funding with a stronger weighting in the midlands and north, and around this building new "innovation ecosystems” which work across all aspects of the economy to improve the use of technology and work processes and drive up productivity.

Within these “ecosystems” universities clearly have a role to play, but so do other partners – not least employers from all sectors, large, medium and small. The solution to the productivity problem is not going to come through spectacular big bangs in single sectors, but through a new set of partnerships dedicated to “translating” science and technology across all sectors and firms in an area.  It is a much more place-based approach – and needs the local partnerships and infrastructure to deliver on this basis.  

The advocates of this new thinking do not mention further education colleges in their description of the new “innovation ecosystem”,  but if you consider Stephen’s point about northern towns, they really should. Commentators such as Ewart Keep and Alison Wolf repeatedly make the point that universities are not set up to work with employers at scale, particularly SMEs,  but colleges have a unique relationship with employers because of their unique geographical coverage. Every college works with hundreds of businesses, and the unique pedagogy of technical and professional education and training, the thing which distinguishes it from academic learning, is the link to the workplace. 

The importance of working differently 

To play this role, we would need to work differently in multiple ways.  It would mean engaging with more local employers, offering more services, and building a different kind of relationship, so we're not just selling them apprenticeships or asking them for work placements but are actively supporting their innovation plans. It would mean redefining our relationships with universities and with each other – shifting the focus from competition for numbers to impact on the economy.

This might all seem like a big challenge, but in many respects it is only returning to the role that further education colleges had when we first started, when the economy was simpler, and our relationship with local businesses was more direct.  If we want to return to the days when we were integral to our local economies, and those local areas did well, then we have no choice but to put ourselves forward.

If the country can unlock the problem of productivity, especially in the so-called “left behind” towns, then a lot of other things will change for the better – including public sector funding, and some, if not all, of the issues sat behind the story of Terrence’s Christmas tree. If colleges are not the answer to this problem, who else is going to provide it?

Alun Francis is the CEO and principal of Oldham College