Select Committee on Education and Skills Sixth Report

2  THE SKILLS AGENDA

Background to the inquiry

5. Beginning with the discussion document Success for All in November 2002, one of the recurrent themes of the Government's education policy has been the need to improve skills levels in the workforce in order to enable people to perform more highly skilled jobs and to help improve productivity throughout the economy. The strategy laid out in Success for All was designed to improve provision of further education and training by: improving the responsiveness of the further education sector to the needs of employers and the choices of learners; improving teaching quality; developing a qualified teaching workforce, and leadership and management, in FE colleges; and improving planning, funding and accountability, including three year funding agreements.[1]

6. In early 2003, the DfES published 14-19: Opportunity and Excellence, bringing forward proposals for change following on from an earlier consultation. It established education for students aged between 14 and 19 as a distinct phase in government thinking, and proposed changes in curriculum and qualifications in order to stimulate those who were previously unengaged with continuing in education beyond 16. It also argued the need for long term reform to improve vocational opportunities on offer, to make assessment more manageable, and "to broaden choice and stretch students, with a unified framework of qualifications."[2] To examine the long term possibilities for reform, the DfES established a Working Group on 14-19 Reform, under the Chairmanship of Mike Tomlinson, formerly HM Chief Inspector of Schools, with a remit to report by the latter part of 2004.

7. In July 2003, the Government published 21st Century Skills: Realising Our Potential. Sponsored by the DTI, HM Treasury and the Department for Work and Pensions as well as the DfES, this document set out the Government's overall skills strategy. It was designed largely to draw together policies and infrastructure already in place and addressed issues from compulsory education to work based and adult learning, and was concerned to put employers' needs for skills "centre stage".[3]

8. What then were the concerns that led the Government generally, and the DfES in particular, to invest time, money and political capital in skills issues? In 21st Century Skills, the Government argues that the issue is productivity:

"…the way we develop skills and their contribution to productivity remains a serious weakness. French, German and US workers produce between a quarter and a third more in every hour they work than their British counterparts. Output per worker is 16% higher in France, and 31% higher in the US…Improving the level of skills, particularly among those with the lowest skill levels, is a focus of the Government's agenda for enhancing flexibility in the UK."[4]

9. The paper then goes on to outline the main problems the Government sought to address:

"In March 2003 we published an analysis of the nature of our skills challenge.

The key problems we identified were that:

a)  Employers feel they are not getting recruits with the right skills.

b)  We have particular skills gaps in:

i.  Basic skills (including literacy, language, numeracy and computer skills)which provide the foundation for further learning.

ii.  The percentage of the workforce with intermediate skills (associate professional, apprenticeship, technician, or skilled craft or trade level).

iii.  Mathematics—which is an essential basis for further technical training.

iv.  Leadership and management skills.

c)  There is too often a mismatch between what employers and individuals want, and the courses and qualifications available through publicly-funded colleges and training providers."[5]

10. The DfES identified other problems for the 14-19 age group. It noted improvements in the proportion of 16 year olds gaining five A* to C grades at GCSE as well as "the growing professionalism of teachers, the increasing diversity of post-16 provision and the extensive choice of subjects available for advanced study",[6] but went on to say:

"Nearly half of young people still do not achieve five good GCSEs at school. More still do not reach that standard in English and mathematics. And one in twenty leaves without a single GCSE pass…International league tables rank us 25th out of 29 among developed nations for participation of 17 year-olds in education and training.

Behind such worrying statistics lies one of the most persistent shortcomings of our education system: the weakness of our vocational offer. While there has been progress—such as better co-operation between schools and colleges on work-related learning—learning a trade has still to become a truly valued option."[7]

It should be noted that by age 19, the proportion of those with 5 A*-C GCSEs rises to 76%.[8]

11. In summary, then, the Government argues that without improved skills levels in the workforce the UK economy will become increasingly uncompetitive and individuals will be unable to respond to changing demands which may be placed on them as the key skills required within the economy alter over time. It also argues that, as well as benefits for the economy as a whole, improved skill levels bring considerable benefits for individuals:

"This is not only an economic challenge. It is just as much a social one. By increasing the skill levels of all under-represented groups, we will develop an inclusive society that promotes employability for all. When people are better educated and better trained, they have the chance to earn more and use their talents to the full, both in and out of work. They are better able to use their skills for the benefit of their families and their communities. There is strong evidence to suggest that improving skill levels can reduce the risk of unemployment, and bring broader social returns in terms of reduced crime and better health".[9]

12. The changes for education for 14-19 years olds lie at the heart of this. It is true, as Chris Humphries, Director General of the City and Guilds of London Institute argued, that if the required changes were to be sought solely through reform at 14-19, it would take 30 years for them to take full effect.[10] Nevertheless, the 14-19 phase covers compulsory, further and higher education, including work-based training; covers both children and young adults; covers the period when most students would expect to gain qualifications; and covers the period when many young people move from full time education into the labour market. For all of these reasons, and because of the range of government initiatives in this area, we considered it essential to examine what is happening in 14-19 education.

Skills and productivity

13. One of the questions that we sought to answer during the inquiry is, what is the link between skills and productivity? If skills levels within the workforce increase, will that inevitably lead to increased productivity? The skills strategy lists five main drivers for productivity, putting enterprise, competition, investment and innovation alongside skills.[11] What relative importance do skills have? We asked a number of our witnesses about this link. Professor Alison Wolf of King's College, London, told us that in her view the link was:

"Genuine but very, very difficult to work out exactly…Clearly at some level you cannot have a productive economy without a skilled workforce…Occasionally you will have very clear skill shortages, but I have to say that the skill shortage concept is often a very murky one; it is not really like that…the idea that if you have an economy you pile up some skills and throw them in and everything will change seems to me quite wrong. The British economy over the last 20 years is surely a monument to that, is it not? We seem to have been doing rather well, exactly at the time when we have been getting more and more anguished over education. I am sure we have been right to in some ways, but it underscores how complex and non-simplistic the relationship is".[12]

14. Chris Humphries agreed:

"We are not sitting there in a situation where it is possible to say that this is our productivity gap and this bunch of skills, this much investment, that much innovation, fix those and oops we are suddenly all okay again, because they interact with each other. If you are going to make a big investment, for instance in UK technology, and you do that without upskilling the workforce to make the most effective use of that technology, you have wasted the investment in the first place. These things are complicated and integrated and I would agree that skills are a critical element of it and it is very easy to have a negative impact on productivity by ignoring them, but no-one has succeeded in taking a snapshot of the UK economy and seeing how much of that problem is skills."[13]

15. This view, that improving skill levels is important but only one factor helping to improve productivity, and that it cannot be precisely quantified, was supported by the Engineering Employers' Federation[14] and by the Trades Union Congress.[15] Brendan Barber, General Secretary of the TUC, was also clear that a commitment to improve skills was very important to individuals:

"It is also vitally important too because of the impact it has on people's life chances, on their employability, on their opportunities to progress, on the discretions that are available to them in the labour market. Skills empower people and are enormously important for that reason too. It is an area though where our performance has tended to lag behind our major industrial competitors."[16]

16. This question of where we stand in comparison with our competitors was one we discussed with the DfES. Rob Hull, Director, Qualifications and Young People, DfES, told us:

"…if we look at, say, a comparison with ourselves and the USA, we do not think the difference in productivity, though it is substantial, is down to skills at all. In that case, it is much more down to the use of capital, particularly IT capital. If we look at the relationship between ourselves and our European competitors, I think that the figure is that about 20% of the difference between ourselves and them is down to the skills in the workforce."[17]

17. Even for the DfES, however, it was difficult to be precise about the skills/productivity link:

"What we are trying to do through the Skills Strategy is to create a climate in which employers are more aware of the relationship between skills and productivity; we are trying to create more research evidence on how skills actually relate to productivity, particularly when looking at profitability, because there is not at the moment a great deal of hard evidence. We are working to try and create that and to create a climate in which we work on both the demand side, encouraging employers to understand that they need more skills, to want more skills, and also on how government policy can help to create a flexible supply side where the providers of skills that are doing so with government funding are better enabled to meet the needs of the employers."

18. The Department did not agree with the suggestion that the skills strategy was largely an employer awareness-raising exercise, but did say that creating demand from employers for increased skills was vital. Carole Hunter, Divisional Manager, 14-19 Division, at the DfES told us:

"…this is not only about improving the supply side, which is what Government has tended to do in the past, and looking at how we can improve the supply of skills training and how can we make colleges and other providers more responsive. All of that is important but if we cannot create a demand on the other side from employers for that service, then we are not going to succeed. So we need to do both: we need to improve the supply and we also need to generate the demand and bring those together so that they can work together flexibly to meet the demands of employers."[18]

19. The meaning of employer demand was clarified by Martyn Sloman, Adviser, Training and Development, at the Chartered Institute of Personnel and Development:

"Essentially, when you come to skill requirements in organisations, activity in corporate organisations, or in public sector organisations, or in private sector organisations, is concentrated very much on business objectives, that is what takes the energy and that is what takes the focus. It is what is needed to get the organisation to succeed, whether it is expressed in terms of competitive advantage, being better than the opposition, or in profitability, or in the public sector service delivery, these are the sorts of vocabulary that matter. Trained staff, while a requirement, are a derived demand, so, in other words, the main thing is to achieve the organisational objectives, and skill requirements are seen as an input to that."

"The important thing, I think, from the Committee's point of view, is that it is seen in the context of the organisation. It is not somebody coming in and saying: "You must have better skilled staff," nor is it somebody saying: "Your productivity should be higher."[19]

20. An employing organisation seeking to raise productivity and having the skills to successfully bring about improvement would integrate the aims of the skills strategy with strategies addressing the other productivity drivers. The DfES proposals do not adequately address the key role that employers have to play. Nor do they address ways of developing the skills of board members and senior managers who have to take the decisions on strategies for all the drivers needed to raise productivity.

21. There was a broad consensus amongst our witnesses that improving the skills of those in the labour market would assist in improving the productivity of businesses, but only if the other factors identified as important were also addressed. A more highly skilled workforce is therefore seen as necessary, although it is not by itself a sufficient condition for increased productivity. However, the benefits for individuals are much more clear cut. People who improve their skills and are able in consequence to move to more skilled and better paid occupations are clearly benefiting personally and by helping to create a flexible, mobile workforce are also assisting the economy. A more skilled workforce can open up higher value added markets, particularly for small companies. It may well be that this desire for personal improvement will come to be seen as an important driver of improved productivity. But what skills will those in the 14-19 phase of education need to acquire in the coming years? We turn to this question in the next section of the report.

Skills training or general education

22. The skills strategy is designed to put in place measures to enable the workforce to become more skilled. But what are the outcomes that will tell the Government and the rest of us that it has succeeded? The question 'what would success look like?' is posed in the skills strategy, but the disappointingly anodyne answer provided is that "The real measure of success is whether individual employers and learners see a difference".[20]

23. We really need to take the question back a stage and ask: what do we mean when we talk about skills? Is it simply another way of referring to vocational training, or is it an attempt to bring together all learning under one heading in an effort to strengthen coherent learning programmes and encourage parity of esteem between academic and vocational learning, something which those involved in the vocational sector have sought largely in vain? The term 'skilled worker' has traditionally been used to refer to someone who has been trained in a particular discipline, such as a bricklayer or electrician. How does that translate into a programme of reform for the 14-19 phase of education? Should we be training young people for specific trades and skilled occupations, or should we be offering them a general education which will enable them to thrive in a flexible and possibly volatile labour market?

24. One part of the 'vision' of the 14-19 phase put forward by the DfES is that young people "can easily see how their studies will lead to further education and employment, whether they are involved in general education or more specialised vocational courses".[21] In the context of the paper, that might be thought to refer to students undertaking the new GCSEs, in vocational subjects and hybrids, which have optional vocational and general units. More recently, the Government has introduced Young Apprenticeships, under which children from the age of 14 are able to opt for a course of study which involves spending two days a week away from school at a college, other training provider or employer. Choices currently available are Young Apprenticeships in Art and Design, Business Administration, Engineering, Health and Social Care, Performing Arts and the Motor Industry, and the DfES says that craft Young Apprenticeships will be made available in the future.

25. Does this mean that some children will be specialising and narrowing their choices at too early an age? Professor Wolf was adamant that fourteen year olds should not be pursuing specific career options:

"There is a serious challenge in terms of how you conceive of the curriculum for fourteen to nineteen-year-olds who are not finding the current more academic end more satisfactory. It has been a consistent failure of the last 15 to 20 years in this country. It is the worst failure in our education policy and we have kept re-inventing, kept re-inventing and kept, in my view, being seduced by qualification structures rather than worrying about the curriculum content inside them. It is not just about basic literacy, basic numeracy, basic IT, it is about trying to develop slowly, in a costly and consistent fashion, good general education which may have a lot of practical and vocational flavour to it, but which is not about turning fourteen-year-olds into bad plumbers. Trying to feel that you can re-invent and get young people who have good prospects to make almost irrevocable vocational choices at 14 in the way our grandfathers may have done is not possible. You cannot and should not turn that far back."[22]

26. Many of our witnesses, for example the Construction Confederation,[23] argued that literacy and numeracy were the key issues. Susan Anderson, Director, Human Resources Policy at the CBI, told us:

"If we look at the numeracy and literacy levels in the UK workforce, we see that 23% lack adequate numeracy 23% lack adequate literacy and that compares in Germany, for example, with only 12% lacking literacy skills. Only 7% lack numeracy skills. In France the figures are somewhat higher but they are still only 17%. Clearly, we need to take action with our school children—because there are issues as well with our school leavers—and with the general UK workforce there are significant problems on numeracy and literacy. We are not talking about people who cannot read one word or add up two figures but they are not functionally literate or functionally numerate and therefore they cannot be functioning at their full capacity in the workplace. It is a big disadvantage when we are measuring ourselves against our key competitors in Europe."[24]

27. Stephen Alambritis of the Federation of Small Businesses said that companies were looking for people to come to them with generic, 'soft', skills, rather than specific technical abilities:

"… when we ask our members, small employers, what they are looking for in youngsters, they do go … to attitude. 77% talk about punctuality, attitude and appearance. What they are looking for is … a firm handshake, a friendly manner, good approach to customers, good manners. That is what they are looking for first. After that, they are quite happy, where there is support, to train in-house … They are certainly looking for that core approach to punctuality, work, turning up and that obviously breeds confidence that they will retain that member of staff, if they spend money on training them."[25]

28. Employer views depend on the size, nature and sector, competitive aspirations, and the short and long term outlook of their businesses. They will look for the education services to 'deliver' people who can carry out instructions correctly and follow procedures accurately or, in internationally competitive businesses, they value people at all levels who take responsibility and contribute to the business in their role. The national interest and the interests of individuals are not pre-occupations of employing organisations. Conversely, the business plans and aspirations of employing organisations are not the pre-occupations of government, politicians or education and training suppliers.

29. If the Government is serious about addressing the needs of business, it is vital for it to be aware of what businesses want from young people when they emerge from the education system into the labour market. The education system aims to assist individuals to achieve the highest level of attainment possible in their chosen field. An employer is looking for someone who can make a significant contribution to the business rather than someone necessarily with particular qualifications. These two approaches are not inherently incompatible, but currently educators and employers do not work together effectively enough.

30. Our judgement is that what employers want most of all is young people who are literate, numerate and work-prepared (that is accepting responsibility, open to learning and able to work with others) when leaving the education system, rather than people who have had training in specific skills. The means by which this is achieved, however, may well be education based on real life tasks.

Working across Government

31. The Skills Strategy document bears the signatures of the Prime Minister, the Chancellor of the Exchequer, and three Secretaries of State. It therefore represents one of the most visible attempts at cross-departmental working. How well are the different departments working together?

32. We asked if the DfES has the political clout to lead other departments that also have a role in promoting skills. Ivan Lewis MP, Parliamentary Under-Secretary of State for Skills and Vocational Education, told us:

"… I would argue that joined-up government in this area was not as positive as it should have been before we set about the process of developing the Skills Strategy. I believe that since we began the process of developing that White Paper, we worked through the White Paper together across government and we are now in the process of an early stage of implementation. There has never been a closer synergy than there is now between ourselves particularly, the DTI, the DWP and the Treasury."[26]

33. It is right that the four Departments should all be involved with the promotion of improved skills. It reflects the fact that different departments have responsibility for the different but interdependent productivity drivers—enterprise, skills, innovation, competition and investment—which the Government has identified. The DfES has a tricky balancing act to perform. It is the lead department for education and training, but it must always guard against seeing things solely from the provider's point of view. It would not be the best use of the substantial resources being committed to this sector if policies on skills, and the education and training arising from them, become dominated by supply side education and training, rather than being integrated with policy on the other productivity drivers by engaging with the decision makers on boards and in senior management in employing organisations.

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f 1   Success for All, page 5. Back

2   14-19: Opportunity and Excellence, page 7 Back

3   21st Century Skills, Introduction. Back

4   ibid, para 1.7. Back

5   ibid, para 1.8. Further problems are listed as points d to g, but these first three appear to us to be the key issues. Back

6   14-19: Opportunity and Excellence, page 4. Back

7   ibid Back

8   Figure is for England for 2003: www.sustainable-development.gov.uk/indicators/regional/2003/h05.htm Back

9   21st Century Skills, para 1.5. Back

10   Q 15 Back

11   21st Century Skills, para 1.3. Back

12   Q 5 Back

13   ibid Back

14   Q 980 Back

15   Q 1020 Back

16   ibid Back

17   Q 630 Back

18   Q 631 Back

19   Q 169, 171 Back

20   21st Century Skills, para 1.32 Back

21   14-19: Opportunity and Excellence, para 2.2  Back

22   Q 17 Back

23   Q 246 Back

24   Q 1209 Back

25   Q 246 Back

26   Q 811 Back

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Prepared 24 March 2005