One of the first jobs for every new prime minister is to appoint their cabinet. It’s a tricky balance. On the one hand are the supporters, who might have spent many months jockeying for position and favour and who may be on a bit of a promise. On the other are the rivals who may have spent many months or more attempting to discredit and find fault. Is it better to bring them in close to co-opt them or to let them stay on the outside, potentially causing trouble?

Whether it is Hunt or Johnson, it’s likely that we will have different people facing up to the nation’s challenges and opportunities. For a new chancellor of the exchequer, there will be great expectations: both candidates for PM seem to have liberally sprinkled funding commitments (tax cuts and extra spend) during their campaigns and the public was promised last year that “austerity was over”. Add to that the potential for an early general election triggered by the ongoing Brexit mess and the chances of significant spending commitments in the autumn feel very high, although the past few years have shown that nothing is predictable in politics.  

Background: Johnson promises more schools funding from ‘day 1’

More on this: Augar review: Give colleges £1bn and freeze HE funding

More news: Milton: ‘FE minister is the best job in government’

Options for the chancellor

If I’m right, it is worth sparing a thought for the incoming chancellor, whomever that may be. I can only imagine how complex it will look for them. Politically they will be weighing up when to have a budget (or a spending review), how that will position their party for the next general election, how to enhance their own reputation, what is happening or might happen in the economy and which set of compelling post-austerity public funding priorities are most important.

At times of great complexity, it helps to keep it simple, so I hope that the new chancellor will be grateful for my suggestion that there are three major priorities s/he should focus on. And to help even more, I am proposing five ways to deliver on them.

The very top priorities should be to improve productivity, support greater social justice and social mobility and address regional economic inequalities. All three are longstanding and persistent challenges that need long-term solutions; but all three are urgent as well. If Brexit has taught us anything, it is surely that the divisions in our society are too wide, with disadvantage and opportunities unevenly shared, based too much on where people live and the families they are born into.

Delivering social justice

Those divisions have beset the Brexit debate and look set to define our political landscape for many years to come. What the country needs is clear political leadership that can call-out the problem and invest for change. That investment will need to improve research, development, innovation, infrastructure and business investment across the whole country, but I will leave others to propose what that looks like. For me, there are five areas of education and skills investment that need attention to deliver on those priorities.

The first is to grow the numbers of people benefiting from higher education. The Augar report has led the way in setting out a new post-18 mixed offering, with a set of recommendations which can help here. What’s needed is funding to continue to support the traditional three-year residential bachelor degree model whilst developing the growth of more flexible offerings of standalone level 4 and 5 qualifications, which are valued in their own right. In a world in which 50-plus year careers will be the norm, flexible higher education over the life course is essential.

Because not everyone will study to higher levels, that first proposal must be balanced with supporting more adults to be able to thrive in the increasingly technology-rich labour market. With around 9 million adults with poor literacy and probably more than that with low levels of numeracy, we are in grave danger of widening inequalities between those who can adapt, learn and thrive with the changing needs of employers, and those who will struggle. Greater investment for adults to progress from basic skills, including digital literacy, on to intermediate skills is beyond urgent.

The right skills

The first two underpin the third solution: making sure that employers can recruit people with the right skills. We know that employers have benefited from a dynamic labour market, with large numbers of EU nationals working here in skilled and semi-skilled roles. The numbers of EU nationals have already declined, making employers more reliant on recruiting locally and developing their own staff to progress within the business.

Sadly, the education and skills system and the funding rules do not adequately support this shift. The obsession with apprenticeships of recent years has been at the expense of retraining and supporting in-work development and training. That has to change, with more flexibility to support employers seriously attempting to stay competitive with training and productivity improvements.

The fourth area of investment has to be in giving every young person the start they deserve in life. Some of that is about schools investment, which needs to be fair, but the biggest gap is in the 16 to 18 phase, where our young people receive around 15 hours of teaching per week compared with their peers in other countries who have over 25 hours per week. The government’s new T levels may help but it would still mean that the vast majority of our young people are getting short-changed in that crucial phase of their lives unless the base funding rate increases.

More investment in FE

My fifth and final investment proposal is to ensure that we have thriving schools, colleges and universities that can deliver across these solutions. The Augar report set out clearly and powerfully the neglect of our colleges, but the constraints on the panel meant they had to find savings from HE to support more investment in FE. The truth is that we need to at least maintain school and university funding as well as significantly boost college funding. Fighting over a declining education budget will not work; campaigning together is vital in a tough public spending environment and in tumultuous political times.

At its most simple, the next chancellor must reverse the decline in public spending on education as a share of GDP. The Office for Budget Responsibility predicts that education spending will be below 4 per cent of GDP throughout the 2020s compared with over 5 per cent during the 2000s and a peak of 5.8 per cent during the financial crisis. Only a sustained increase in the level of investment will deliver my three proposed priorities of productivity, social justice and social mobility and regional inequalities. So, chancellor, it’s simple - and we’re ready to help if you need it.

David Hughes is chief executive of the Association of Colleges