Market Update July 2014: Qualifications & Learning Market Update

It is a real challenge to precisely define an accurate market place or UK frame of reference for City & Guilds Kineo Qualifications and Learning. The best approach is probably measured as a combination of Private and Public funded education and skills programs using government and employer statistics for these areas – and there are many estimates depending on what is or isn’t included.

Defining the Education & Skills Private Business and Government Investment Markets

From the work completed by the City & Guilds Strategy team, we think the market could be worth over £45-50 billion in England alone – with around 15-20% of this coming as a contribution from Government stimulus in one form or another.

Whilst we are increasingly operating in more and more of this huge Learning market, a key segment for the City & Guilds Kineo team is in Regulated Qualifications & Accredited Learning. In this business unit, our Qualification sales account for around 27% of CG Kineo invoice revenues whilst Accreditation and Consultancy services deliver a further 8%.

The Regulated Qualifications/Accredited Learning Markets

Looking deeper into the formal Qualifications market, things become only slightly clearer. Whilst the volumes of Qualifications are tracked, it’s more difficult to translate this into a precise value estimate. Making some sensible assumptions, we think the market could be worth £500-600 million annually – with this being fairly consistent over the last few years.

We can get more granularity if we review the market in volume terms and look at the quantity of certifications issued by Awarding Organisations. N.B. There are some challenges to meaningfully interpreting this data as the information measures learner successes, indicated by qualification certificates being issued. Depending on the qualification size this could be 3-24 months after point of learner registration – so it’s not straightforward to pinpoint exact year on year trends but we can draw out some insights. This data shows that the Vocational Qualifications market, measured by Certifications, grew by 2.1% with over 9 million certificates being issued in the 12 months to the end of Q2 in 2014.

Using these measures, the Top 5 sectors that have seen the most growth are Healthcare, Health & Safety, International English, Employability and Creative, combined delivering an additional 400k certificates. Partly, these increases are reflecting industry trends eg. UK Creative successes and more work-ready skills support for Learners as well as population trends eg. Healthcare for an ageing demographic and immigration.

Overall the City & Guilds share of Certification volumes has held steady in the last 12 months. Interestingly, the anticipated consolidation of Awarding Organisations isn’t happening everywhere, as the top 80% of Quallification volumes are being accounted for by 17 Awarding Organisations compared to 15 last year. However, across the lowest 5% of Quallifications, volumes of the number of Awarding Organisations operating has dropped by 3%, so we are probably seeing some consolidation in this segment in particular.

Excluding BTEC qualifications – where City & Guilds hasn’t operated previously – the market is worth about £500 million. City & Guilds remains the clear brand leader – again holding market share whilst Pearson and OCR have lost a significant share in terms of Certification. This is a very strong performance given the impact of lower funding for some of the key City & Guild’s industries, including:

  • English & Maths: Market decline due to schools opting to offer GCSEs
  • Building Services: Funding reduction for adults
  • Hairdressing: Decline in number of centres due to the change in schools participation and a reduction in funding

City & Guilds Kineo Qualifications and Accredited Programs Performance

It’s obviously clearer if we look at our own business performance figures and the current status of our CG Kineo Employer Qualifications and Accreditation revenues.

2014 continues to be a turnaround performance as we accelerate our growth with large employers. Currently – to the end of June – CG Kineo Qualifications & Accreditation are tracking 13% ahead of last year in terms of invoiced revenues.

Breaking this down further, our National Qualifications revenues are growing at more than 5% against last year and the Accreditation & Consultancy Services (excluding our Managed Learning Service) are increasing at 33%. We expect this to tail off towards the year end. Nevertheless, this is a really strong performance compared to the national trends given the significant decline in the number of employers with direct grants who have, on average, 14% less funding to support programs this year compared to last year.

CG Kineo have driven this success through growing public employers including MOD and CSL, whilst supporting and switching some private employer Qualifications from competitors. We’ve also invested in innovative new service offers and partnerships developments and have won privately funded workforce plans in companies like Tesco and Barclays.

The Future Employer Market for Qualifications and Accredited Programs

We are facing significant uncertainty in the publicly funded market arena, as the government are proposing significant changes that may well affect the core service sectors where CG Kineo currently are strong.

Whilst we are still in a period of consultation, many of our large employers are telling us that the uncertainty is driving some inertia in decision making and forward planning. Naturally they (and we) are planning prudently until things become clearer.

However, the current government is making some very encouraging statements about involving employers more in the development of the skills industry and also want to grow the number of employers receiving direct grants. Unfortunately this has not been evidenced in the statistics yet.

Whatever the outcomes, the CG Kineo team have been working hard to try to future proof ourselves against these investment constraints. Innovative service launches like the MLS and other linked propositions are designed to support employers with their need for efficiencies, and at the same we can improve employees’ learning performance for greater effectiveness.

So, in spite of some significant market pressures, it looks like 2015 is going to be another consistent year of revenue growth for the CG Kineo team. The great news is that we have increased the surplus and the amount we can reinvest in terms of our charitable goals including more Learner Bursary’s, Talent Celebrations like The Skills Show sponsorship and more research into learning. As the City & Guilds saying goes: "We Make Money to Make a Difference".


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