Select Committee on Education and Employment First Special Report

Fourth Report: The relationship between TECs and the proposed Regional Development Agencies (HC 265)

Fourth Report: The relationship between TECs and the proposed Regional Development Agencies (HC 265)

Published:  3 March 1998
Government Reply: Fifth Special Report, Session

 1997-98 (HC 752)

Published:  21 May 1998


Government Response

Further Government Action

1. We believe that RDAs should play a central role in drawing up skills agendas, but, without a greater say in allocation of funds and without a direct responsibility for skills, we do not think that RDAs' powers will actually amount to a strong influence.

The Government want RDAs to play an important part in ensuring that skills training matches the needs of the labour market, focusing in particular on skills which are central to the prosperity of their region.

RDAs will have a say in the allocation of resources for skills training because the Government have accepted the case for a development fund for use by the Agencies to support regional skills needs.

The Government do not agree, that it is essential for RDAs to have direct control of all TEC budgets at the outset. The initial responsibilities of the Agencies and the funds which they will have for skills will give them considerable influence in the regions. RDAs' roles may, nevertheless, develop over time.

RDAs have drawn up Skills Action Plans which set out what they will be doing to develop the regional skills base. These plans have been drawn up in consultation with a wide range of partners at national, regional and local level.

As part of the Spending Review, RDAs have been given an additional £8.5million to support economic development and inward investment. The Government will significantly increase RDAs budget flexibility, in a single cross-departmental budget to which DETR, DTI and DfEE will commit funds for the next 3 years, to allow RDAs to exploit their potential for innovative business-led working and to devise strategies to meet local needs.

2. We are very conscious of the dangers of simply adding RDAs as an extra layer to the structures already in place for regional skills development. We believe that this is likely to result in duplications of effort, confusion of roles and conflicting priorities, which will weaken a real opportunity to form an integrated policy for regional skills development.

The Government are currently undertaking a review of the future role and funding of TECs.

The Government do not accept that RDAs will automatically add an "extra layer" to the structures already in place for regional skills development.

Since the Committee's report was published, fundamental changes have been made to the way post-16 learning is funded and planned in England, including the role of Training and Enterprise Councils. As reported in the Government's response to the Committee, the Government carried out a major review of TECs. The outcome of this review, and a further review of all Post 16 structures in March 1999, resulted in the publication of the White Paper Learning to Succeed in June 1999. The White Paper recognised the Committee's concerns that current structures were a recipe for confusion, duplication and frustration, and that there were too many bodies involved in planning and funding post 16 provision. It therefore announced the creation of a national Learning and Skills Council to replace the FEFC and TECs. The LSC will be responsible for the planning, funding and quality assuring all post 16 learning up to degree level. It will be operational from 1 April 2001.

The creation of the LSC, and its 47 local arms, will lead to a major improvement in the co-ordination and coherence of all post 16 learning to meet both present and future skill needs.

3. We believe that the proposed framework could be a recipe for confusion, duplication and frustration for TECs.

The Government has inherited a developing relationship with TECs. This relationship was developed by the previous Government, but continues to be the subject of public and media scrutiny and needs to evolve further. The Government are conscious of the significant sums of public money channelled through TECs and the importance of ensuring accountability, propriety and value for money. We shall ensure that the guidance issued to TECs is clear about roles and how the relationship between TECs and RDAs will work in practice. The guidance developed for RDAs will also set out clearly respective roles and responsibilities.

See above. The creation of the LSC is intended to address the potential for confusion and duplication by making it responsible for the planning, funding and quality assuring of all post 16 learning up to Degree level.

The LSC will work closely with RDAs at national and local level. This will be critical to ensure that labour market information is shared so that plans are developed on a consistent basis; the plans of the local Learning and Skills Council are drawn up with reference to the regional strategies; the LSC national skills agenda is informed by regional priorities.

To underpin this important relationship:, RDAs will be represented on the LSC Councils at local and national level; at national level the LSC will be required to consult RDAs in drawing up guidance to the local LSCs, local LSCs will be required to consult their RDA in drawing up their plans and have regard to the RDA regional and sub-regional economic strategies in doing so; and the LSC will work closely with the RDA and National Training Organisations to develop appropriate skill packages.

4. We believe that the DfEE officials' description of the role for Government Offices as being "the focal point between Regional Development Agencies and TECs" is unsustainable.

The Government want TECs to take forward agreed regional objectives and priorities in their plans. In contracting with TECs, Government Offices for the Regions will ensure that TEC plans address regional objectives. We shall develop effective mechanisms.

Government Offices for the Regions will contract with TECs on behalf of central Departments and will also manage the Government's relations with RDAs. Government Offices for the Regions will, therefore, be the "focal point" for Government business with both TECs and RDAs. Again, we shall develop effective procedures. At the strategic level, RDAs will also have direct access to central Departments to contribute to national policy.

Government Offices will retain their sponsorship role for RDAs and will be responsible for managing the Government's relationship with individual RDAs.

5. We recommend that RDAs should assume the role of contracting with TECs for management of Government-funded training programmes and of business development and human resource programmes. This should include financial responsibility and strategic responsibility for the skills agenda, with the consequence that the role of Government Offices for the Regions would be significantly diminished. We believe that this will be an important step towards RDAs achieving the critical mass which will be essential if they are to be credible and effective instruments for nurturing regional economic development.

The Government do not believe it would be appropriate at this stage to ask RDAs to assume contractual responsibilities for National Programmes delivered through TECs.

No longer relevant following establishment of LSC; see 1& 2 above.

6. The Secretary of State should use his powers to give strategic guidance to RDAs (as defined under Clause 7 of the Regional Development Agencies Bill) to ensure that RDAs put skills development and National Education and Training Targets at the very centre of their regional economic agendas. The Secretary of State should also ensure that appointments to RDA boards reflect the importance of regional skills development, and that appointees' interpretation of regional economic development is not based merely upon strengthening business support and attracting inward investment.

The Government fully support this recommendation, including the Committee's views about the importance of skills developments.

Nothing to add to initial response

7. We note that Scottish Enterprise has discretion to vire small percentages between programmes, and that this has worked well in deriving maximum benefit from funds. We believe that RDAs should have similar powers.

The Government agree RDAs should have sufficient flexibility over how they use their funds within agreed spending plans, to enable them to operate effectively.

The Government will be introducing a single funding stream from 2002, which should give RDAs the additional flexibilities that they are seeking.

8. We recommend that a pilot project should be developed in one or two regions where the history of collaboration between local bodies is strongest, such as the North West and the North East.

RDAs will be new organisations and must be allowed to concentrate on developing and implementing their regional economic strategy. It would be inappropriate to introduce a project piloting alternative methods of contracting with TECs before the review of the future role of TECs has been completed. After the review has been completed, and once shadow RDAs have been established, the Department will look again at the practicalities of pilots as recommended by the Committee.

See 2 above; RDAs will work closely with LSC to ensure that at local level their regional skills strategies inform, complement and are integrated with the LSCs plans and strategies.

9. We support the principle of an early phased approach to the transfer of funding streams for TECs from Government Offices for the Regions to RDAs.

At this early stage of RDA development and before the review of TECs is undertaken, the Government consider there would be no added value in transferring the TEC contracting role to RDAs. The Government will review the situation when the review of TECs is completed.

This is no longer appropriate in view of the establishment of the LSC's national and local responsibilities. See 2 & 3 above.

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