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The UK, like much of the global economy, is facing a range of important structural changes, such as disruptive technologies, an ageing population and environmental challenges, with implications for skills demand and supply. Challenges include lagging productivity growth, skills mismatches, under-investment and gaps in basic skills. In addition, disruptive events such as Coronavirus Disease 2019 (COVID-19) and the UK's exit from the EU will further affect skills needs as well as the stock of available labour. It is therefore crucial that the education and training system can ensure that the courses and qualifications on offer are aligned to the needs of employers and the economy going forward.

The Skills and Productivity Board (SPB) was created to provide independent, evidence-based advice to ministers at the Department for Education on matters relating to skills and their contribution to productivity. The SPB has an immediate interest in using a skills taxonomy - a system for naming, classifying and grouping skills - to better articulate and identify current and likely skills gaps across the economy to enable government policy to be more effective at targeting them. Frontier Economics was commissioned to support the SPB in its work to identify how existing skills taxonomies can be harnessed to support its work. This work has two main objectives: (1) To review the alternative skills taxonomies used in different jurisdictions/contexts and assess how well they can support the work of the SPB; and (2) To provide recommendations for how taxonomies can be used to address the key questions that the SPB has been tasked to answer.

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Merger activity has been a pervasive feature of the further education (FE) market for many years with 171 college mergers from 1993 to 2018, averaging roughly six per year. Merger activity has increased considerably in recent years following the Area Review (AR) process. There were 53 mergers in the three years since 2015, more than the number in the preceding decade. Given the increased college merger activity in recent years, it is important to understand whether or not these have proved to be a successful route to improving college performance. The question is relevant to informing future government policy as to whether, and in which circumstances, mergers are an effective tool for driving improvements in the sector. This report examines how college mergers affect performance using an entirely quantitative approach.

The focus is on financial performance with some analysis of quality as proxied by success rates. We have drawn on College Accounts from the Education and Skills Funding Agency (ESFA), which are a rich source of financial data. We have looked at a range of financial outcomes including operating profit, debt, interest payments and others. We have also measured changes in the quality of provision following mergers using success rates from the National Achievement Rates Tables.

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