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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 649-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE EDUCATION AND SKILLS COMMITTEE
WORK OF THE LEARNING AND SKILLS COUNCIL
Monday 7 November 2005 MR CHRIS BANKS and MR MARK HAYSOM Evidence heard in Public Questions 1 - 129
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Education and Skills Committee on Monday 7 November 2005 Members present Mr Barry Sheerman, in the Chair Dr Roberta Blackman-Woods Mr David Chaytor Mrs Nadine Dorries Jeff Ennis Mr David Evennett Tim Farron Helen Jones Mr Gordon Marsden Stephen Williams Mr Rob Wilson ________________ Memorandum submitted by the Learning and Skills Council Examination of Witnesses
Witnesses: Mr Chris Banks, Chairman, Learning and Skills Council, and Mr Mark Haysom, Chief Executive, Learning and Skills Council, examined. Q1 Chairman: Can I welcome Chris Banks and Mark Haysom from the Learning and Skills Council; Chris particularly because I do not think he has batted on this particular pitch before. Mark is becoming an old regular here; have you had two sessions? Mr Haysom: I think so. Q2 Chairman: You still have the scars. Chris, welcome indeed. How long have you been chair now? Mr Banks: Just over a year. Q3 Chairman: I was just saying how Committee business was rather interrupted by an unfortunate event called the general election and then a recess, so that is why we have not seen you before now. Welcome indeed. Would you like to make a short opening statement before we get going? Mr Banks: Yes, thank you very much, Chairman. Thank you for this opportunity, relatively early in the life of the Committee, to discuss this agenda which is of real national importance and vital to the success of the country. It is really good to be able to report there is some great work going on, some real significant progress being made, and at the same time there is a huge amount to do and some real challenges ahead. The LSC, Mark, the team and I are focused on delivering for employers, individuals, young people and adults; making a reality of the Government's priorities; ensuring that we can give as many, if not all, young people a great start; and providing that sort of platform for employability that adults need, as well as becoming increasingly critical to the success of business and, indeed, progress of individuals as well. Within that we are directing, as you know, more of our public funds towards the priorities and providing real strong leadership to the post-16 sector via Agenda for Change, which you know a little bit about, and importantly, within that, the development of our own organisation to do its job brilliantly locally, regionally and nationally which is what we have to do. Finally, I am a businessman. That is my day job, if you like. I got into this because I have seen the impact of a shortage of skills and qualifications, particularly among those not in work, because I have been involved for a long time with what was the New Deal Task Force and more recently the National Employment Panel. That is really where my interest in the Skills Agenda and the Learning and Skills Council was born. I have also seen the positive impact then that acquiring those skills and qualifications can have both on productivity and on the progression and development of individuals and the beneficial effect that has on people socially as well. Those are, if you like, the two prime drivers and they really do inform so much of what we and I do within the LSC. I am looking forward to this opportunity of discussing with you some of the progress and, indeed, some of the challenges over the next few minutes. Thank you. Q4 Chairman: Thank you very much for that. Can I open the questioning by asking you a question I asked the Secretary of State last Wednesday: what is the point of the Learning and Skills Council? Why do we need you? Mr Banks: In a way, I may have touched on some of that, Chairman. In a sense, we are balancing the needs, wants and aspirations of employers and individuals locally, regionally and nationally with priorities that the Government has as well for achieving the productivity competitiveness and personal fulfilment that individuals and we, as businesses and a country, need. Q5 Chairman: Why is that so necessary post-16, when the Government seems, according to the White Paper and policy of progression over a number of years, to be moving to a situation where it does not want any real intermediary between the Department and schools? In a sense, that lack of intermediary is a hallmark of the present Government's policy. Yet when we get to 16, we need quite a large bureaucracy that uses a great deal of taxpayers' money to deliver post-16. Mr Banks: I would prefer not to say too much about pre-16 because it really is not my area. Q6 Chairman: You take the parallel? Mr Banks: I do. I think the key thing here is this is not about intermediaries and policies, it is about making things happen locally and regionally and then adding it up to achieve these targets. That is the bit that only the LSC can, do to join that one up. Mr Haysom: May I add to that, Chairman, if I can. A useful way of looking at this is purely at the local level. I think the job of the Learning and Skills Council is to look across whole communities and to work with all the providers of education to make sure there is the right kind of curriculum mix, the right kinds of opportunities across a whole area. Our job is to try and make that happen and to do it, as Chris is saying, on behalf of employers and learners. I think, in a sense, that is one of the things the White Paper is talking about as a job for the LEAs as a commissioning role on behalf of parents in particular. I think there is a useful way of thinking about it. We come at this very much from the angle of the employer and from the learner. It is our job to look across the whole rather than on an institution-by-institution basis and to make sense of it. As we all know, it is a fairly complex world, and we are at the point where we are trying to take all the input to the providers to come up with the right kind of curriculum mix for those individuals. Q7 Chairman: Is it not a rather overcrowded world, in the sense that we have the Regional Development Agencies, we have all sorts of other people involved, we have the new Sector Skills Councils? There is a lot of other people trying to deliver high quality training post-16, is there not? Mr Haysom: I do not think they are there to deliver, are they? They are there to do specific jobs within what is a complex system, there is no doubt. We are there, I think, to be, in part, the interface that takes all that information, that knowledge, those inputs and then takes that to the supply side and, as I say, tries to work with colleges and other providers to deliver what is right for learners and colleges. Mr Banks: The Sector Skills Councils are a really good example, I think. If they are successful, and at the LSC we need them to be successful, then we will get a really good articulation of what businesses need that is specific to their sectors. Then we will have something we can work with, working with the people who are able to provide learning and training. I have chosen to sit on the board of our Sector Skills Council, which is the Food and Drink Sector Skills Council, Improve, I put myself forward for that, if you like, to see the power of that interface and to make it work on behalf of our industry. It has a galvanising effect among those businesses within the sector. Of course they are relatively small organisations and they are not there to deliver, they are there to articulate what employers need and the better they can do that via the sector skills agreements and other mechanisms, the easier it is for the LSC to make sure that the provision that does happen on the ground meets their needs that are specific to those sectors. Although it looks complex, of course, if you are a business or a large employer, there is only one sector skills council or one learning and skills council to deal with. In a way, our job is to try and make it as simple as possible. It is a very complex world and there are lots of people who are able to articulate how difficult and complex it is. We see our job as being partly about trying to make it as simple, effective and efficient as we can and by being able to look locally, regionally, nationally and by sector, we are in a unique position, I think, to be able to do that. Q8 Chairman: Do you not set yourself up to be the Government's whipping boy or girl? That is the truth of it, is not it? Everyone blames you. The Department tells you to make cuts in a particular area; it is very convenient for the Government because people go around saying nasty things about the Learning and Skills Council rather than the Secretary of State and her Department. Is that not part of your job? Mr Banks: Ultimately, they are our priorities. We have said, "This is where we are going to be spending the money", and they are agreed with the Government and we are responding to the needs of businesses and individuals. We have to own them and take, if you like, the criticism that goes with making some pretty tough choices. Q9 Chairman: How independent are you, Chris? How often do we hear the LSC taking on the Government saying, "Come on, the Government is telling us to do this. We should not have to do this. This isn't in the best interest of the sector we represent." Are you not really part of the Department for Education and Skills rather than a vigorous independent champion? Mr Banks: We are non-departmental rather than part of the Department, but I sense - and again Mark might want to comment on this - from where I see it, this is about agreement on the best way forward and on the tough choices that we need to make. Our job is then to make sure that what happens on the ground literally with individuals, colleges or other providers and employers all adds up to meet the overarching objectives. I do not shy away from that. I think these are the choices and the prioritisation that we think we should be making. Q10 Chairman: Chris, that is terribly consensual, and I am very much in favour of consensus when you can get it because it moves policy in the right direction. How often do you have to go in to the Secretary of State, bang on her desk and say, "Over my dead body will this occur"? Where is the passion when you go in as an independent body and say, "Look, what you are telling us to do in cutting the number of staff ...", or take another issue of the number of cuts you are doing to adult education, "... this won't do, Secretary of State, and if you push me any further, I'll go public or I'll resign"? I never see that side of that muscularity. Mr Banks: It might be worth Mark talking a little bit about how that plays out in practice, but there is a good robust discussion on most of these issues, Chairman. Mr Haysom: I think it is unlikely, Chairman, that we will ever fall out on a regular basis publicly, because I think that the way it should work, and is going to work well, is we do go in with passion and argue on behalf of the whole system. To make it work and to have the relationships of trust that we can go forward on, I think that is probably best done on the table or something but not doing it across newspapers, and we do. If I can come back in terms of the cuts to staff, because I do not want that to rest, that is nothing to do with the Department saying, "We want you to do this". It is everything to do with us saying, "We think this is the right thing to do. This is the way forward. This is what we want to do and it is our agenda". Similarly with Agenda for Change more widely, which I hope we will have an opportunity to talk about, that is very much the Learning and Skills Council developing the agenda, working with people right across the sector, saying, "These are the issues. These are the issues that we need to work on. These are the things that are going to make a real difference. These are our solutions and we are going to get on with them". I simplify it because, as Chris would have it, there will be some robust discussions along the way. That is very much the way it works. Q11 Chairman: I better move on before my colleagues get rebellious. If your job is raising the profile of skills in this country, why is it when you come and appear, nobody from the press bothers to turn up? We are not on television; there are no journalists sitting over there. In the time the LSC has been going, why have you not raised the profiles of skills to such attention that at least somebody turns up to report what you have to do? What is your budget now? Mr Haysom: 10.6 billion. Q12 Chairman: No press; nobody cares. What on earth is it? I know we have a pretty awful press and the BBC is getting worse in terms of coverage, but why is it this room is empty of media? Mr Haysom: As you know, Chairman, I have spent my life working in newspapers, so I am better qualified to talk about why they are not here than anyone else. This is an agenda which is incredibly difficult to get people engaged in. It is not just us working at this; we have been talking already about the Sector Skills Councils who are investing heavily and doing the same thing. It is a tough challenge, but anything you and the Committee can do to help us on that, we will be delighted with. Chairman: It was on a lighter note that question. Moving on to adult learning and Gordon is opening that. Q13 Mr Marsden: You talked in your opening remarks, Chris, about priority and you have just said to the Chairman now that you set the priorities, and therefore I want to press you a little on the current priorities. We have got, have we not, a demographic time bomb in this country with skills and with adult learning in particular. There have now been three parliamentary reports: the NIACE Report, the All-Party Further Education Lifelong Learning Report and indeed the National Skills Forum Report, which came out last week, all of which said the demography of skills is going to be revolutionised in the next 15 years, there are going to be far fewer young people and far more older people. Yet you have signed up to a programme that beyond Level 2 effectively is going to reduce opportunities for adult learners across the piece. How do you feel about that? Is that not a rather short-sighted approach? Mr Haysom: This is a very difficult area, as I think we all know. Just before I answer the question, can I correct something I just said? I said £10.6 billion, I should have said £10.4 billion for the years 2006-2007. I just want to correct that to make sure it is accurate. In terms of the priorities and focus, it is very much on young people, adults, basic skills and Level 2. I think it is one of those situations where you have to say, "Well, where else are you going to start?" in terms of this huge challenge that we had. It is very difficult, I think, to argue against those priorities. We have to give young people the opportunity to succeed. I do not think I have ever come across anyone in the sector who would argue against that. We have to address the huge skills-for-life issue that exists across the country and we have to focus on giving adults skills for employability. Level 2 is a kind of proxy and a starting point for that. No one is saying that we should be reducing provision beyond that point. I think the discussion there is about who pays and the balance of payment between the individual, the employer and the state. We have seen continued growth not just in terms of Level 2 activity but also in terms of Level 3 during this period. It is not true to say that we are pulling away from that wealth of adult education. Q14 Mr Marsden: No one underestimates the amount of effort, time and, for that matter, money that the Government has put into this sector over the last few years. Are you not being a bit disingenuous in assuming that all of this other activity will go on regardless, as you radically, as is the case, reduce the amount of public funding going into adult learning at the moment? We have a situation where we know already from the Association of Colleges and from various other independent sources that on the back of this decision many courses up and down the land are being closed. You mentioned sector two - I raised this with the Secretary of State last week - The Guardian report that because the LSC has cut your childcare support funding by 25 per cent that many people who are doing up to Level 2, particularly women, women from an ethnic background and women who are unskilled, are no longer able to take up those courses. Those are not blue sky things for the future, those are actual real cuts now that are going to affect some of the priority groups that you are currently outlining. Mr Haysom: Forgive me, I did not think I was talking about blue skies. I do recognise and we obviously recognise the challenge in all of this and what we are doing is focusing on those priorities for the reasons I have just said. That does cause a lot of our colleges to have some very difficult decisions to take about provision and support. The overall budget for adults, just so we are clear about that, is not reducing. What is happening is that we are having to move towards those priorities, as I have described. The impact of that is, as I say, some very difficult choices about those courses which are not directly contributing to those targets. Q15 Mr Marsden: I understand that, but the Chairman has just said to you now why are you not in there banging the desk and you have given an eloquent explanation as to why these things are best done in private rather than in public with the Department. But presuming you accept - if you do not accept it, please say so - the seriousness of the demographic challenge over skills in this country over the next ten to fifteen years, you are laying out a programme of activities which is going to have or could have medium and long-term consequences, why are you not banging the table now, and saying to Government, "Look, chaps and chapesses, we know that you have put a lot of money into this, but really if you insist on us cutting back in adult learner support in these areas, you are going to have big problems"? Mr Haysom: What we are doing is moving funding towards those things which are going to help us with the demographic challenge that you talk about. I think that is going to become a bigger and bigger issue as we go forward. It is something I am sure Chris would probably want to talk about as well. We are moving things in that direction, we are moving things away from those courses that are not demonstrating progression, that are not moving people towards employability skills, and that is the truth of that. As far as the learner support is concerned, we have had some very tough decisions to make. The total learner support funds are increasing if you look at it in the round but there are some specifics we have had to deal with that have reduced some of the learner support that we have been given. No one pretends those are easy things to do. We have to do some of those things and focus on those resources. Q16 Mr Marsden: If they were an easy thing to do, presumably you would not be in the position you are and be paid the amounts you are paid. You say, "Well, we have been looking to address these various issues", and then just referred to some of the courses not being priority courses, but the evidence is coming in from all over the place that some of the courses that are being cut are not, if you like, peripheral courses, they are absolutely essential courses, some of the union learning rep courses, for example. If you are satisfied - I am not satisfied, but if you are satisfied - that your current strategy is not going to disadvantage some of those key targets, what are you going to do to monitor what is going on in the colleges to make sure that there are not cuts taking place on the back of your strategy which are going to hold this country in terms of the skills agenda over the next ten to fifteen years? Mr Haysom: I think that is a really good question. Q17 Chairman: A long one! Mr Haysom: That is exactly what we have to do. As part of our remit, it must be to do that, to work with all the colleges, and other training providers - it is not just about the colleges - to make sure that they are delivering the right kind of provision for people across the piece. We have those conversations with them all the time. If we come across examples where a provision has been cut that contributes to targets and is essential in an area, then you can imagine those are going to be fairly robust discussions. Q18 Mr Marsden: Will you give this Committee a commitment today you will monitor over the next six to twelve months the effects of these existing cuts that are being reported in the colleges and you will come back to this Committee with your conclusions? Mr Haysom: Yes, indeed. I would be delighted to do that. Q19 Mr Marsden: One of the big issues, and it is related again to the issues of both the groups you have identified and the groups we have been talking about, certainly in my neck of the woods in Blackpool, is the concern about getting small and medium-sized enterprises involved in the skills agenda. What will your priorities that you have established under the new funding regime do to assist that? Mr Banks: I think that has been a very useful conversation because it has identified one of the real challenges. I think the view we have taken is we have to get it right for young people because that is a new start and we have to get that right. I think, as Mark was saying, the focus of the investment in adults is being prioritised more towards those things which we believe will give adults a better longer-term prospect which is of employability skills which we shorthand as Level 2. That is the thinking behind that and one of the first comments I made was around being led by the needs and wants of businesses or employers as well as individuals and balancing those two off. The employer training pilots that we have been running in 20 different areas around the country have been very successful in identifying, particularly for smaller businesses, learning and training opportunities which are good for the individuals concerned, in that they are high quality, result in a good qualification and are good for the businesses as well. I think in the pilots, and keep me on this if anybody knows a better number than this, I have a recollection that the employer/small business - and most of these are small businesses - satisfaction with the training and learning which has been going on under the Employer Training Pilots is over 90 per cent. So that is a good example of where we have been able to put in place a programme which meets the needs of businesses, which they can see a benefit from and which delivers high quality learning and training to the individual as well, delivered very flexibly to fit in with their normal life. In the coming year, 06-07, there is a significant increase in the focus on what is not going to be called a pilot any more but the Employer Training Programme which will be national and which will enable us to provide something like another 150,000 high quality learning opportunities for individuals, the majority of whom will be working with smaller businesses. Q20 Helen Jones: Colleges were instructed to reduce support for what is called non-essential learning. Would you like to give us your working definition of non-essential learning? Mr Haysom: What we try and do is go through all aspects of the curriculum and try and identify examples of learning which contribute directly to our priorities and to our targets, those which contribute indirectly, so perhaps not leading to qualifications immediately but are stepping stones towards qualifications within the framework, and those which do not contribute at all to any of those targets and where there is no evidence of progression towards those. Q21 Helen Jones: Let us have a look at that, because you talked earlier about wanting evidence of progression leading on to employability but the world is not as simple as that, is it? There are lots of courses run in my area, for example, courses for parents at school, help your child with reading, and they do not directly lead to a qualification but they are very successful in bringing people back into learning who may well have had a very poor experience of education in the past, and often you see those people go on and do something else. Do you not think those sort of courses ought to be protected and encouraged? Mr Haysom: Yes, as far as public finances will allow us to. There is a harsh reality in all of this, that money is finite. I actually think it is a good thing that within those finite resources we are clear about what we think is going to make the difference. That does mean there are going to be some things which are more difficult for us to find funding for. But we are very clear in terms of working with colleges and other training providers up and down the land, that what we do not want to do is cut everything like that, what we want to do is identify those things which are really going to help people back into learning. There are hard choices; there really are. We cannot do everything. Q22 Helen Jones: Do you not accept that when you are doing that the people who are hit hardest are some of the most vulnerable and some of the worst-off people, who have had a very bad experience of education and are often the most under-privileged? Mr Haysom: What we do try to do is make sure there is the right kind of provision for those people to bring them back into learning and if a particular course they were hoping to go on is not available, we are making sure across the community, through every part of funding we can get our hands on, there will be opportunities for them to come back into learning. But there is a reality in this, that we cannot do everything that we would wish to do. Q23 Helen Jones: With great respect, we are not talking about people who have often planned to come back into learning and are going to be seeking courses, we are talking about people who are gradually led back into learning, and if those particular courses are cut how do you know they are going to go looking elsewhere? Mr Haysom: We are not saying that all of those courses are going to disappear, what we are saying is there will be provision across an area which will create opportunities for people to find their way back into learning, and they may be funded from European Social Fund money, they may be funded in part through the LSC, they may be part-funded by an individual and part-funded by a college. There are all sorts of opportunities. Again, I am not pretending what we are seeing here is something which enables us to keep running everything that is currently running, or was being run until a few years ago. Q24 Helen Jones: Let us have a look at the economics of adult learning. We can park that one for a minute and we will come back to it when we know exactly how many courses have disappeared. There is an assumption now that colleges will have to raise fees for adult approved courses and the learner contribution is expected to go up roughly 10 per cent I think. Do you not agree that once again that hits the poorest people worse, particularly those on low wages? If you are on certain kinds of benefits you will get exemption, if you come from a low wage economy, you will not. Is this not again skewing the system to those who can afford to pay? Mr Haysom: I do think there is a real issue about the whole fees question and how it relates to people who are not earning very much money at all. I agree with you that if people can afford to pay, they should. I also agree that if people are on benefits or in other circumstances can get fee remission, there is a real question about people who are just above that kind of threshold. Q25 Helen Jones: Have you done any research on what the likely outcome of this increase in fees will be? Are adults actually going to be prepared to pay it or will they vote with their feet? Mr Haysom: There was a long consultation on this last year with the sector and there were some steps introduced then as a consequence of that to start increasing the fee assumption within the funding package. What we saw last year was that some colleges were quite energetic in pursuing the fees policy and in those circumstances we did not see a huge drop-off of numbers in learning; it varied enormously in different places but other colleges decided they would rather stop running the course than run the risk of charging fees. I do think there is a real issue there as well which is supporting some of what you are saying. I do think there is something incumbent on us as the Learning and Skills Council to help to address that, because our funding methodology does not encourage colleges to take sensible risks in terms of running those courses, and that is one of the things within Agenda for Change which we are trying to address to make it easier for colleges. The other thing I would say about the whole escalation of the fees assumption is that we have been charged as the Learning and Skills Council with working with providers to help them with the spirit and to learn in a way you are suggesting needs to be learnt and to draw out the lessons and to help colleges through that period. Q26 Helen Jones: Does your research include any look at the social profile of people taking courses? Because you could well have the same numbers taking courses but the profile of your students might change considerably. Mr Haysom: It is possible, yes. Q27 Helen Jones: In theory, for instance, you could keep people who are better off and have a decline in those people who are worse off. Is that what really what we want to achieve in adult education? Mr Haysom: No. Q28 Helen Jones: Are you looking at that? Will you be able to come back to the Committee with figures to tell us what is happening? Mr Haysom: I repeat the point, what we are trying to do is to move our funding towards the priorities. We are trying to make sure in every part of the country that we have sensible stepping stone provision for people. That is what we are trying to do but we cannot fund everything. Within the fee part of this there is a huge amount of work to be done and I would of course be pleased to come back at a later time to talk more specifically about fees. Q29 Helen Jones: If you are looking at funding, what do you say to the argument that the Employer Training Pilots are funded extremely generously and is that right? Are we not going to end up paying for training which employers would have bought into anyway while we are seeing reductions elsewhere? Mr Banks: This is another really good question which is how do we make sure we are investing the public money in training and learning which would not otherwise happen. The evidence in the Employer Training Pilots is that the businesses we are engaging with are those which typically have not been engaging in learning and training of their staff and with individuals who have not had the opportunity yet to get to a first Level 2. So we are very keen to focus the money on these initiatives which have a real opportunity to attract new businesses or employers and new learners. I do also think that the focus on first Level 2 does help some of the more disadvantaged individuals from a learning point of view because inevitably there is a lot of demand for higher level skills as well ---- Q30 Helen Jones: Only if you get them there first. Mr Banks: That is absolutely right, but I am minded by the fact that if you are out of work you are more than twice as likely not to have a qualification than if you are in work, and that is why we need to be focusing on helping that group. Equally, we know over the next few years if Level 2 is going to be almost the benchmark of employability we have to get as many people as possible up to that level so they can participate in the growth of the economy and for them personally. Ultimately if others were here they would be talking much more about the vital importance of us being able to compete with other countries and other economies which are developing many millions of highly skilled workers while we are still at the stage of having to bring large numbers of our people of working age up to a basic level of skill and employability. That is where we are at the moment, and in a sense that has to be a building block - we often call it a platform for employability - to allow people then to go on and learn intermediate and higher skills they will need later as well. Q31 Chairman: We had a very good lobby of the House of Commons last week organised by the Association of Colleges and they produced some very good people to talk about how the cuts were impacting on them. What came out of that was something I do not hear much from the Learning and Skills Council, that if you have a college sitting in a town, like mine in the centre of Huddersfield, Huddersfield Technical College, it is a community resource and it is seen as that and it symbolises continuing education for people who are older, people who are younger, all those intermediate ones, as a community resource. If you damage the fabric of that, it is no longer seen as a community resource which offers something for almost everyone, you have damaged something very, very important in the life of the community. The feeling I got from listening to the evidence last week is that you are in danger of undermining that culture of seeing the college as a community resource. Does that not sometimes worry you? Mr Haysom: It is something I am aware of. I do spend a lot of my time, as you can imagine, out and about, visiting colleges, talking to principals, to chairs of governors, learners, you name it, and so I am acutely aware of that, and it is a very special responsibility I think for a college. That is why I do believe that we need a degree of sophistication in managing this whole thing to make sure we do not undermine the viability of colleges and their ability to stretch across the whole community. That is why in part we are going through a significant change ourselves so we can have a degree of sophisticated conversation with them to find a way through all of this. Yes, you are absolutely right. Chairman: We have to move on to the funding of 16 to 18 year olds. Q32 Stephen Williams: Mr Haysom, we have met previously on the Public Accounts Committee where we talked mainly about other matters but we did touch on the funding gap post-16 and you will have heard Sir David Normington at that meeting, who was sat next to you at the time, say he felt, and it was his Department's perspective, that the funding gap was around 7 per cent and then he moved his estimate slightly later in the meeting. The Learning and Skills Council commissioned a report from the Learning and Skills Development Agency which suggested the gap was 13 per cent, and certainly the Association of Colleges which has spoken to all of us at various places over the last few months has latched on to that figure. Where do you think the percentage gap is? Mr Haysom: I have heard all sorts of numbers, including the one from David Normington that day, and we commissioned a report from LSDA and we are inclined to go along with that as a working number. Q33 Stephen Williams: So you accept the findings and you think 13 per cent is broadly correct? Mr Haysom: I think you can argue it any number of ways, but for the purposes of this discussion 13 per cent is a number we could agree on. Q34 Stephen Williams: It is closer to the mark than 7 per cent? Mr Haysom: I think that would certainly be our view, yes. Q35 Stephen Williams: Can we look at some of the factors which lead to this funding gap. If somebody from my constituency, Bristol West, were going to the new Redland School which the Learning and Skills Council has partly funded, which is going to open in September next year, and they are going to study A level economics, and their next-door neighbour went to the City of Bristol College to study A level economics as well, at that point as I understand it the funding per head would be the same. Thereafter, various factors come into play which means this gap opens up, some of them to do with different census points for counting the number of people on that course, some of them to do with drop-out rates at the end, whether they complete and take the exam, some of them to do with the recoverability of VAT. Clearly VAT is a matter for the Treasury, not for you, but some of these things sound as if they are standards or regulations which must be under the control of your organisation, is that right? Mr Haysom: You are absolutely right, it is a combination of different factors which are to do with unit prices through to methodology of funding, and when we spoke briefly about this at the Public Accounts Committee recently I said then that our Agenda for Change document has a specific section which is all about simplifying the funding methodology, and coming up with a methodology which actually enables us to move a huge amount of resource to the frontline rather than tying the resource up with people needlessly counting things on screen. But the other huge benefit from it is it is a funding methodology which can be extended across the whole system rather than just for colleges, and that is what we are trying to work towards, and that will have a big impact on the kind of issues you are raising. Q36 Stephen Williams: Is that Agenda document proposing to change some of those things I have mentioned like when you count the number of students on a particular course? As I understand it, at school they are counted right at the start of term in September, but at college they are counted twice, before and afterwards, and arguably the college figure is the more accurate. Mr Haysom: On 21 September we announced some changes as far as the funding system is concerned for 06-07, and within that there was reference to the fact we would be looking to achieve some reductions in the funding gap as a consequence of changing some of the methodology, and there are further opportunities to go down that road. It is not entirely within our gift, as you can imagine, because what we do stretches across schools and across all parts of the system --- Q37 Chairman: Not academies. Mr Haysom: The funding methodology ultimately is the same, is it not? There are other differences with academies, we are aware, Chairman, but it is not entirely within our gift so we need to achieve this with colleagues in the Department and we are busy talking that through. Q38 Stephen Williams: Do you have a target percentage yourself within the strategy, say over the next two years, for reducing that gap? Mr Haysom: I am not sure it is possible to quantify it quite like that. Part of the dilemma in all of this is understanding the impact on individual colleges and individual providers, because it will vary according to the mix of what you do. I do not think a crude percentage is necessarily the right answer. I would hope that what we have announced on 21 September will have the impact of maybe as much as halving the gap and taking it down to something approaching 7 per cent. That is our immediate first step. Q39 Stephen Williams: Will that be over two years? Mr Haysom: That is by the end of the two year period, yes. Q40 Jeff Ennis: So that takes us back to square one where we were a couple of years ago, if you reduce it back down to 7 per cent? Mr Haysom: I do not know whether I am qualified to answer. I was not here two years ago. Q41 Jeff Ennis: How big a problem is this funding gap as far as the LSC is concerned? How much of a problem is it causing for you both locally and at local LSC level? Mr Haysom: That is a really interesting question. Q42 Chairman: You keep saying that. Mr Haysom: There have been some good questions today. You have to give praise where it is due. I think it is a good question because it is a subject of conversation pretty much wherever you go in the sector, and whoever I meet and at whatever meetings, it comes up after a while and it is a question of fairness I think. If you were to look at it as a question of economics, and how well our colleges are functioning as businesses, which is one dimension I think we should look at, then you would say, "It is not really a material issue at all because our colleges are pretty overwhelmingly successful in the way they run their businesses and they are capable of running them at a surplus", which the vast majority of them do. So on that level I do not think you can argue it is an issue. There is an interesting argument about quality and if you invest more in the workforce and so on, do you get better quality results? I think the evidence there is a little contradictory as well because what we have seen over the life of the Learning and Skills Council and education through FE is success rates increase by 10 per cent for young people and 13 per cent for adults over that period. So there is some contradictory evidence and that is why I say it is a good question. Q43 Jeff Ennis: I guess to some extent it must impact more severely on areas like Barnsley, for example, where we have gone over to a more or less fully tertiary college system. In areas like that, where we have gone over to a more or less fully comprehensive tertiary college system, what have been the main problems which have come through to the local LSCs? Mr Haysom: In Barnsley? Q44 Jeff Ennis: No, I am using Barnsley as an example, but the question is general. Mr Haysom: It is difficult to articulate what they may be because the evidence is not that the funding gap leads to poor financial performance. There is poor financial performance but I have to say the correlation there is more with poor management than it is with the funding gap. Nor can I see a strong correlation with quality. I am not quite sure how I can answer your question beyond that. Q45 Jeff Ennis: What about the issue of over-achievement of student numbers, which has faced some local colleges in terms of setting up agreements at the beginning of academic years and then, for example in Barnsley - and Barnsley has the lowest stay-on rates by the way ---- Mr Haysom: Yes, I am aware of that. Q46 Jeff Ennis: ---- Barnsley College recruited well over a hundred additional students to do sixth form courses and the local LSC initially turned round and said, "I am sorry, we agreed so many students, we cannot afford to fund those." If that had been a predominantly sixth-form school type setting, there would not have been a problem. Mr Haysom: I accept that point. One of the things we and colleges have to get to is being much smarter in the way we plan for growth and in fact the way we plan for numbers. I have just spent many hours over the last week reviewing the performance right across the country in the last planning round we went through to see how much 16 to 18 growth we had planned in and what the emerging pattern was. There are a number of places where they have over-achieved in terms of 16 to 18 and those are unfunded numbers. There are other places where there is under-achievement. Q47 Jeff Ennis: I am looking at your memorandum. At the bottom of one of the pages with regard to the LSC's Annual Statement of Priorities, you record six priority areas for 2006-07. The first priority of the six is to "Ensure that all 14 to 19 year olds have access to high quality, relevant learning opportunities." If the LSC are not going to provide the funding for sixth form courses, we fall at the first hurdle, do we not? Mr Haysom: It is a difficult area, though, is it not, which is why I say the important thing here is to get the planning right. What no one would wish is for us to hold back a sum of money on the chance that College A may over-perform, College B may under-perform. We understand how much money we have got and we want to allocate it fully to meet demands in the system. That is what we try and do. That does mean our planning has to be, back to my sophisticated comment earlier on, at a sophisticated level with each provider to try and anticipate that. Q48 Jeff Ennis: I guess in the lower demand areas we need to have some sort of flexibility within the machine, in order that if we do recruit more students than we originally intended it should not be a problem, but it is a problem at the present time, is it not? Mr Haysom: It is an issue when our planning assumption between the college and ourselves is overtaken by additional growth, you are undoubtedly right. That is why I keep coming back to the fact that we have to get better at the planning side. Q49 Jeff Ennis: Is the over-achievement of student numbers going to be a problem in future years like it has been this year? Mr Haysom: If we can get better at the planning between us, it should become less and less of an issue, should it not. Q50 Jeff Ennis: Is the problem with the colleges rather than the LSCs? Mr Haysom: I think it is a problem which we share, I really do. I think we need to be better on both sides at anticipating growth and it is not just anticipating growth because there are some parts of the country, as we know, where the opposite may be happening, but there is demographic decline in that age group and therefore you have got to be able to factor that in. It is not an easy issue, as I know you are very aware. Q51 Chairman: When you were before us on a previous occasion, you said you had been doing this research which was of the least well-performing regions in the country. Mr Haysom: I am not going to fall for that twice, Chairman. Q52 Chairman: Do you have a region which gives you particular concern still? Mr Haysom: There are parts of all of our regions that I would have concerns about and I think that is probably what you would expect. Q53 Chairman: You surprised us, you suggested the previous times it was the Eastern region where people had greater needs than in other regions. You do not have concerns about the Eastern region any longer? Mr Haysom: I have concerns about individual parts of all of our regions and that is what I have spent the last week talking to my regional directors about and how we address some of those concerns as we go forward. Again, a big part of how we address those concerns is what we are trying to do in terms of our internal reorganisation to make sure that we have got the expertise which we need at every level within the organisation in every part of the country. That is what we are trying to achieve. Q54 Chairman: You do not do a league table of the regions any longer? Mr Haysom: It depends what you mean. Q55 Chairman: You used to. You came to this Committee and said "You will be surprised, Chairman, it is not the North West or the North East, it is actually the Eastern region." We were absolutely astonished. Mr Haysom: I recall talking about regions that I thought performed very well. What we do is we understand by a number of performance measurements, not just regions, but where the parts of the regions, the sub-regions, I would not say in a league table, but where they would sit in terms of their relative performance. That is what we do all the time, we look at relative performance and say, "why is that happening there when down the road that is it happening?" Q56 Mr Marsden: Who is performing really well at the moment? Mr Haysom: Again, I would prefer not to get into it. I could tell you who might be performing particularly well in terms of this measurement but we have a very, very wide remit. Q57 Chairman: You cannot tell the Committee any longer, given all your regional offices and your local offices, who is doing better or worse? Mr Haysom: One of the things which we have pledged to do - and again given my background in newspapers will not come as a surprise - is to try and be a lot more transparent about all of this and about performance issues and we are working towards doing exactly that. I would be absolutely delighted to give you an awful lot of information about the relative performance by all sorts of performance matrix and to come back and talk about that another day, if you wish. Q58 Mr Marsden: But, not today? Mr Haysom: Not today, no. With respect, it is a hugely complex range of issues that we cover at the LSCs, there is not just one measurement which we can talk about. Q59 Chairman: What we are saying is it did not used to be that complex because the LSC gave us that information. Mr Haysom: The LSC gave you that information? Q60 Chairman: Yes. Mr Haysom: Forgive me, I do not know. Q61 Chairman: Can we have those figures? Mr Haysom: Yes, I am quite happy to give them to you. As I say, we are moving towards trying to be transparent about all of this happening. Q62 Tim Farron: Do you have a sense, or indeed, do you measure the impact of the funding gap on the differing nature and quality of provision between school sixth forms and FE colleges? Mr Haysom: In part that was what I was referring to earlier, that it is quite difficult to see that quality gap between the different things which you pay for because we have seen a very rapid improvement in quality in FE provision. Q63 Tim Farron: What about class sizes? Mr Haysom: Again, there is no one answer to that, is there, because the range of provision that is on offer across all the different kinds of institutions vary in class sizes. I personally have sat in on classes in sixth forms, sixth form colleges, FE colleges and all different kinds of things and seen all different kinds of class sizes. Q64 Tim Farron: In terms of having any kind of figures to work with, there are some apples which you can compare with apples. A level history being taught at Kendall FE college is also being taught at Queen Catherine's School sixth form, and you can look at those figures and look at what it pans out at across the system, do you? Mr Haysom: I have not got that information to hand. Q65 Tim Farron: Do you ever look at those figures? Mr Haysom: I personally do not look at those figures. Q66 Tim Farron: Would you, perhaps? Mr Haysom: I can go away and look to see whether we have those comparative figures to see whether there is a correlation in terms of the funding gap. It is not something I have explored in that way. Q67 Tim Farron: You understand the point, in a sense, the funding gap is important in and of itself but the impact on the experiences of the young people, and not so young people in some cases? Mr Haysom: You are absolutely right. One of the things, of course, we can talk about in terms of the experience for young people is if you ask the young people within FE what their experience is, they give an incredibly positive response about that experience. Yes, you are absolutely right - and again that is coming back to the previous question - the set of issues around the funding gap is not just about fairness, is it, it is about all the outcomes that flow from that. Q68 Tim Farron: Now, in terms of building the case for closing the funding gap even further --- Mr Haysom: Which indeed we have done. Tim Farron: --- you can help yourselves in that respect. We would be grateful for that kind of information. Chairman: We are going to move on to the strategic and planning role of the LSC. Q69 Mr Chaytor: If the budget for 2006-07 is £10.4 billion and this year's budget is £9.6 billion that means there is a 121/2 per cent increase year on year but, at the moment, you are going through an enormous redundancy procedure which will result in hundreds of people being taken off the payroll. There is a discrepancy of the pressures on you to reduce the numbers of staff and yet you still seem to be talking about 121/2 per cent in the next year. Mr Banks: May I answer that, not least to give Mark an opportunity to breath, but he may well want to come in and comment on this as well. The increase in the total amount of money that is being spent is, if you like, the money that is going, as you say, to the frontline. Broadly, the amount of money that is being invested in adult programmes is flat and there is an increase in the amount of money that is being directed towards younger people, and that is what we have been discussing here. The genesis of the reorganisation of the Learning and Skills Council was Agenda for Change, themes one to six, which again Mark was referring to earlier. In other words, if we want to make a really significant improvement in the outcomes for learners and employers, which was where we started, then the system has to be more flexible, more responsive, has to change a lot, be simpler to operate and, indeed, consistently high quality. We identified with the sector, with college principals and others, the things that would make the most difference to allow the system to focus on delivering a better learning experience for learners and employers. That was the main driver of it, if you like, to get real effectiveness from the total investment which we are making. Now, the driver in terms of the reorganisation of the LSC was how do we organise ourselves to be able to manage those new relationships strategically locally. We have been talking a lot this afternoon about why it is so important to have - the word Mark used was "sophisticated" - a real high quality dialogue with the providers of learning and training with other organisations at all levels within the LSC. The reorganisation is designed to get the balance right of skills and high quality people able to build strong partnerships locally, people who can then provide support at the regional level and plug into the regional priorities and agendas as well, and also deliver what needs to be done nationally. That was the main driver. Now, the outcome of that, and of course it is not insignificant at all, is that we will need fewer people to do it and it will cost less in terms of overhead budgets to run the system. I do want to make it clear - and I am sure Mark will want to comment - recognising there is an efficiency agenda as well, the driver here was how do we make sure that the LSC is able to do that job really well locally, regionally and nationally and design the organisation to do that. The current proposals that have been published are designed to make sure the LSC can do its job in that way. Q70 Mr Chaytor: Will all the additional £800 million go into the frontline delivery of 16-18 year olds. Mr Banks: Yes. Mr Haysom: Yes. Q71 Mr Chaytor: By what proportion or by how much money will the central administrative costs to the organisation be reduced? Mr Banks: There is a plan to reduce the total cost of running the business by up to £40 million and that will be redirected to the frontline as well. Q72 Mr Chaytor: As a percentage of current admin costs? Mr Haysom: The current admin budget is £219 million; it is £249 million, I think, including capital but it is £219 million. That is a significant reduction. Q73 Mr Chaytor: Do you set the national strategy or does DfES set the national strategy for learning and skills? Mr Banks: It has to be the Government. They are the Government's agenda, are they not? Q74 Mr Chaytor: As an organisation, are you merely the implementers of Government strategy? Mr Banks: I used the phrase earlier "there are priorities", in the sense that we have to translate what the Government is seeking to achieve and the policy direction that the Government is taking into what happens locally and regionally in a way that makes sense for individuals and businesses and that is where our priorities fit in. Again, I think we were having the discussion a little earlier that this is ultimately an agreed way forward, the priorities which we have set and the way that we are managing the organisation going forward is in agreement with the Government because they set the priorities in terms of the overall policy direction. Mr Haysom: It would be good to think that strategy was informed by what is happening out in the real world and, of course, we are the people that represent that. That is where our bit comes into play where we are taking the evidence-base to say "this is where we think we should be going" or "this is the possible outcome from whatever it is that you are considering." Q75 Mr Chaytor: When the LSC was launched it was established with one central body and 47 local bodies. Now, you have established a regional structure and am I right in thinking you are now also going to establish 118 local delivery partnerships which I do not think are referred to in the brief you sent to the Committee. We started off with a two-tier structure and now we have got a four-tier structure: national, regional, local and sub-local, or sub-regional and local. How is that compatible with the streamlining? Mr Haysom: Can I brief you on the story about that. Some of you will be aware that when I arrived two years ago what I inherited was the 1:47 relationship, which you have just cheerfully described, where I had 47 local councils reporting to me, I also had national directors reporting to me. I had something like 55 direct reports; that is no way to run anything. What we did very quickly was to put in a regional tier of management to run the organisation and start to run the thing in the way you would expect an organisation of that scale to operate, so we put in nine regional directors. Those nine regional directors were not an additional cost, they also had to run their own councils as part of that. What we have done in this reorganisation is to announce that we want to strengthen that tier within the organisation. Frankly we need to because there is a huge government agenda at regional level, which everyone will be familiar with, and we believe there are opportunities of doing things much more efficiently by doing them once in a region rather than four, five or six times. We can take an awful lot of administrative type functions to a regional level and do them once and save some of the money that I absolutely believe - passionately believe - should go to the frontline. The local partnership team is something which I think was always the missing bit as far as I am concerned because we talk about local Learning and Skills Councils but a local Learning and Skills Council is typically a county. Now, I have never been quite clear in what way that was truly local because I think it is quite difficult to describe that as local. What we are saying now is we want small expert teams with the ability to really reach into the local area. We have tried to map the country in a sensible way to do that, we have taken into account LEAs, we have taken into account travel-to-learn areas, we have taken into account population and so on. We are moving towards having these small but expert teams right at the frontline to do exactly what Chris was describing, and what was being talked about earlier. Q76 Mr Chaytor: How will they link in with the life long learning partnerships which already exist for the local authorities' strategic partnerships on which the colleges and other learning providers are represented? Are we in danger of just multiplying bureaucracy? Mr Haysom: No, what we are in danger of is making sense of it. Whereas at the moment we try and interface with all those different things from a county level, a sub-regional level, what we are trying to do is to map so that it can work with local authorities and with other partnerships. We work really hard to make that possible. I do honestly think this is a huge step forward in terms of trying to make sense of that kind of complacency. Q77 Mr Chaytor: Could I ask about the powers to plan at local or sub-regional level. Have all of the 47 LSCs produced Strategic Area Reviews for all the areas within their remit? Mr Banks: Every local Learning and Skills Council every year produces its local plan, that is the mechanism for reflecting what the individuals, the business or other employers and the communities need locally. That is the key document for starting to plan the provision locally which informs the discussions Mark and his team have with the local providers of education and training. The local plan seems to me to be a really important part of the process and it is signed-off and approved by the local council. I would draw the Committee's attention to the fact that there are two parts to the Learning and Skills Council, some of you will know this I suspect. There is the executive team which Mark runs and then in each of the 47 areas there is an appointed local council, we call them non-executives but essentially they are some employers, some providers, some other representatives of community groups who are there to make sure that the local plans meet the needs of local people. That is one key document. I cannot answer you precisely whether every single local Learning and Skills Council has come forward with a formal Strategic Area Review yet but I do know that in a large number of areas they have, indeed, been through those Strategic Area Reviews and are developing some interesting and innovative solutions for the future. Q78 Mr Chaytor: Has the Schools White Paper not made all of that redundant? Mr Haysom: In what way would that be? Mr Chaytor: In giving more autonomy to schools, establishing schools as independent trusts, bringing in sponsors who will be the big players in developing those schools. We had a period of time in which the LSC was established and given a responsibility for Strategic Area Reviews. Very few of those Area Reviews have led to reorganisation at the 14-19 level in the areas and now the whole thing is being ripped up essentially because we are moving to a more market based system. Chairman: What is the question, David? Mr Chaytor: The question is has the White Paper not made the Strategic Area Review planning process redundant? Chairman: Have they? It cost you a lot of money, did it not? Q79 Mr Chaytor: How can you plan if schools are all autonomous? Mr Haysom: Forgive me, it is an interesting question, is it not, because you may ask the same question, how can you plan when all of our colleges are autonomous? We do. What we do is we work with colleges, we work with schools, we work with all other training providers and what we try and do is act as a catalyst in every area that we are in to bring about change on behalf of the learner and on behalf of employers. I simply do not accept - forgive me - the Strategic Area Reviews have not brought about change. I am more than happy to send you an awful lot of detail about all the changes that have flowed out of our Strategic Area Reviews. It is one of those things, is it not, where things get on and get done quietly and no-one really notices, it is one or two things that people see that do go ahead which then people turn around and say "Well, that means nothing is going ahead". I can send you an awful lot of detail, Mr Chaytor, to demonstrate the effect. The other thing I would say is that the Strategic Area Review process is now embedded within what we do for a living because we introduce something called business cycle where we describe how you do business in this sector. The business cycle starts every year with an annual statement of priorities. Then we take that down to a regional level, we take it down to a local and provider level and we start those detailed conversations about what needs to happen across the whole of the area to bring about the changes which are necessary for employers and for learners. The Strategic Area Review process in a sense is what we do for a living, so that is how important it is. Q80 Mr Chaytor: How many Strategic Area Reviews recommended the establishment of academies? Mr Haysom: Again, I am not sure that is the way that we should quite look at this. We work incredibly hard to make sure that academies, where they are proposed, add to the provision that an area requires. We will be talking in detail with the academies' unit to see how we can make that academy plan fit within the provision that is required by learners and employers. Q81 Helen Jones: Does that mean none of them recommended? Does that answer mean none? Is that a long-winded way of saying none of them do? Mr Haysom: I am sorry, I was not aware I was being long-winded, I apologise. Chairman: You were not long-winded. Q82 Helen Jones: You were if you were just saying none. Is it none? Mr Haysom: As I have just said, I am not aware of any making that recommendation. It does not mean that some have not been recommended through that process but I am not aware of any sat here now. Q83 Chairman: Mark, I have never known you be long-winded. Before you move off that, just very quickly, some people, if there were any media here or if we were on television today, might look at this hearing so far and say "When are they going to talk about real skills, something I identify with". Did any of these inquiries, coming from the regions, come up with real problems, shortages? When you came here last time a lot of people were obsessed by the shortage of plumbers and electricians, do you remember that? Mr Haysom: I do indeed. Q84 Chairman: That seems to have moved away, to some extent. One member of our Committee - who we miss a great deal from St Alban's - made it a great campaign, I recall. Out of all this people we represent would like to know, in your view, is the Learning and Skills Council terribly worried that some skills we vitally need for the future are not there and which are they? Mr Haysom: That is exactly what we are doing at a local and regional level all the time. We are creating real things, bringing real skills to the area. Q85 Chairman: When I asked you which was the lowest performing region, you were very reluctant to say which was the lowest. Mr Haysom: Only because you trapped me last time, Chairman. Q86 Chairman: I did not, you offered that information. It was not a trap. You are not long-winded and I do not trap people. The fact of the matter is when you put some real meat on this, okay if there is not a national problem with plumbers and electricians now, is there a real problem that this region in London is not going to be able to have the skills for the Olympics in London? All these reviews, did they come up with anything which said "There is an emergency here, we have got to do something"? Mr Haysom: Absolutely, that is what we have been busy doing. London and the Olympics would be a classic one, the Thames Gatesway is part of that whole issue as well. One of the really urgent things that we have to tackle - not just in London, in fact this is a countrywide issue - is in construction skills and that is why we have invested massively in construction skills and creating additional provision all over the country. I have had the joy of going around opening some of those brand new centres that we have created as a direct result of the work we have done. Q87 Dr Blackman-Woods: I am sure you will be aware that in some regions there have been disagreements between the local LSCs, the regional LSCs and the RDAs about the priorities for regional skills training. Do you think that the concordat that you signed in July of this year with the DfES, DTI and RDAs is going to solve those disagreements in practice? Mr Haysom: I am not aware of huge disagreements in many regions. I think there has been a significant amount of progress achieved over the last year or two in bringing all of those things together. Do I think concordat on its own is going to achieve that, well I guess it is helpful, is it not, in spelling out how we are going to work together, and certainly I will be supportive of that. I think it is the relationships on the ground that have made the biggest difference over the last couple of years. When I arrived in this job, frankly, I was horrified at the amount of time that I had to spend, and a lot of other people had to spend working within the LSC and in other bodies, arguing about structures and how things should work. It did seem to me the most unproductive thing that we could be doing when our jobs should be to get on and make those structures work. I think there has been significant evidence and significant progress achieved over the last couple of years in doing just that, I really do. Q88 Dr Blackman-Woods: If you said there were not disagreements, I think they were and there was evidence, particularly, in the lack of focus in terms of some regional skills strategies, but have we cracked that now with regional skills partnerships? Should that enable the identification of regional skills training to be better and to be more focused? Mr Haysom: Yes, it should. As I say, I think we have moved on very significantly on this. The LSC's job is not just to deal with the regional priorities, what we have to bring to the party is a really clear understanding of the sector priorities. I think we also have to have an increasingly important job at city level and city region level which brings me back to the partnership teams we were talking about previously. Mr Banks: If you are saying is there a commitment within the LSC to make the regional skills partnerships work and to make sure the sum of what we do delivers on the skills element of the regional economic strategies then the answer is absolutely. The process that we are going through to build our capacity within the LSC to operate at the regional level as a real agent of change in a sort of leadership role within the regional skills partnership is designed specifically to ensure that we are able, if you like, to pull off that trick of doing what is right locally, but in a context that when you add it up delivers what the region needs as well. Q89 Dr Blackman-Woods: I think I was partly asking what is your assessment of how well regional skills partnerships are doing at identifying the needs for regional skills training. It is building on Barry's question but at a regional level. Are they being successful, are they being focused and if I can add in another question, in terms of prioritisation are they looking more to national level or regional level and are they looking internationally, where is the competition going to come from? There has been mention of that earlier and that is something which really concerns me because I represent a constituency in a region that could be doing better in terms of economic output and we do need to look towards the international competition. Is that informing the skills strategy? I am trying to find out where the balance is? Mr Banks: The North East is one I can also feel very familiar with for business reasons. It seems to me here that the regional skills partnerships are all at a different stage of development, that is always the answer. It is very difficult because we remember when people used to describe the LSC as patchy, it was always very difficult, which are the good bits, which are the bad bits. The Regional Skills Partnerships we believe have the potential to do that, to bring together the RDAs who are, increasingly in my view, real strong partners with the LSC. I do think whereas it took us at the LSC some time to get ourselves organised to be able to be really good partners at the regional level I think we are now in a much better position to do that, and that relationship is working better. Those discussions, you are right, have to be informed by both, and the trick we have to pull off is which is local, regional and national within a context which allows us to compete internationally. You are absolutely right, for those of us who are involved in the market sectors which compete internationally, that is the competition and the benchmark, I agree. Q90 Dr Blackman-Woods: Can I move on to a slightly different topic. Levels of participation in education at 17 are still quite low in comparison with OECD countries for this country. We have talked a lot about structures this afternoon and I would like to hear you say something about whether the change in structures or Agenda for Change is going to get at some of the cultural problems which underpin that low participation. Are you confident that is being addressed? Mr Haysom: I think we made some pretty good progress in terms of increasing participation of young people. We are still behind and you are right to focus on an issue of 17, because I think there is a specific there. You will know from a conversation we had very recently that I have particular concerns about your part of the country, as I know you do, so there is a huge issue there. We are not going through structural change ourselves just for the sake of our health, we really are not. This is all about getting ourselves in the best possible shape so that we can deliver the change for the learner and for the employer, that has got to be what it is all about. That is what Agenda for Change is all about, it is shaking things in the system that people within the system have been concerned about for some time which are just getting in the way of the whole sector moving forward. I quoted some examples earlier, and I will give you one again. If we make the funding methodology so complex that a huge amount of the attention of a training provider goes in just managing that funding system then there is something horribly wrong, is there not, because they should be thinking about what is right for the learner, what is right for the employer and they should not have resource tied up doing that, they should be focusing that resource in the frontline. Things like that I really do believe will make a big difference as we go forward and the more we can do that kind of thing to simplify the system, I think the more learners and employers will benefit. Q91 Dr Blackman-Woods: You are confident it is going to improve then? Mr Haysom: I would not be doing it if I did not believe it is going to make a difference. Do I think it is all that needs to be done? Absolutely not, I see Agenda for Change as it is currently as a starting point. Q92 Dr Blackman-Woods: Just one thing, Chris, you said earlier about relying very much on Sector Skills Councils to articulate the needs of that sector. How successful do you think they are currently at doing that? Are you able to work successfully with them if they do not articulate those needs properly and how do you know that? Mr Banks: That is a really challenging one. I think the answer to that is the sector skills agreements which have been written by the SSCs that started earlier have been really useful in informing our decisions about provisions. I think there are some good examples of Sector Skills Councils that have been around a long time, equally a lot of them are past embryonic but they are still establishing themselves. The view that we have taken is that it is our job to ensure that we work closely with them and help them in whatever way we can to build that articulation of what employers need. At the same the LSC is not solely reliant on the Sector Skills Council, we do have direct contact with a very large number, particularly of the bigger national employers, where we are having a much more strategic discussion and dialogue with them than we have ever had before. Historically those relationships with large employers have tended to be on a transaction basis around apprenticeships or basic skills or whatever. We are moving to a more strategic discussion with them about workforce development within key sectors. I think that do element, which is within the LSC, known as the National Employer Service, which is a group dedicated to doing that, is the flip side of the employer training programme I was talking about earlier which is where we provide that support to the smaller business. I think on an individual company by company basis we are starting to have the right dialogue but clearly it will be very helpful to us if the SSCs can be sharpening the focus on what really counts across sector as well. Chairman: It will be very nice if you and the Sector Skills Council at some stage said "Look, these are the real needs of skills, this is where if you are going to be looking for a job in three or five years you should be moving towards" so that young people in this country, and older people who are retraining, get some focus and some sense of direction. That was a comment. Some of my colleagues have been extremely patient, there is a lot of interest in this, Tim? Tim Farron: I will be quick. It is following on those remarks, and also the Chairman's earlier probing about meeting the needs of employers. I just wonder if you would comment on the obvious fact that lead-in times often for the provision of new qualifications - validation, accreditation, marketing and then delivery - can be really quite lengthy. Having worked in higher education myself and with colleagues in further education, I know sometimes that can be deemed as a badge of honour. Chairman: This is supposed to be a quick question, Tim. Tim Farron: It will be a quick question when I get to it. Chairman: No, you will get to it now, what is the question! Q93 Tim Farron: What are you going to do to assist accrediting bodies and lead bodies to ensure that they can make sure the courses they offer are still fit-for-purpose by the time they get taught? Mr Haysom: I think this is a huge area for us to talk about, and I am not sure we are going to have time today. It is a question of qualifications and their relevance for employers as represented by the views of Sectors Skills Council is a very important one going forward. There is work being done on that. Personally I would like to see that work move a lot more quickly. I would like to see the decisions being much more under the control of Sector Skills Councils when they are ready to take those decisions about what is right for employers and individuals, I think it is very important. The specifics of how long it takes to introduce a new qualification, I guess I could answer a little bit wearily about the number of qualifications that there are existing in the system and the fact that there are already too many for learners and employers to understand. Chairman: We are on to Section 4, and I want to call on Nadine to open the questioning on this section. Q94 Mrs Dorries: Chairman, I do not think David realised he was doing it but he asked most of the questions on this section. He talked to you about the remodelling of your workforce and the skills strategy, so you have answered all those questions. I have got one, given that all my questions have been asked. Chris - I came from business to politics too - you talked about the interface that the Learning and Skills Council has with the employer. I am having trouble getting my head around that because I do not quite know why employers would go to you or why you need the interface with employers. Historically, supply and demand has always sorted itself out. If there is a sheet metal company in an area, the sheet metal workers will follow. I am not quite sure why the finance that you are using to interact with employers could not be better used to give a hundred kids in Barnsley training courses. It just seems a bit "jobs for the boys"ish to me. Mr Banks: I am not going to comment directly on that, I am sure you will understand why! The majority of the interface with smaller businesses is through brokerage and through other intermediaries rather than direct with the LSC. Our job is to make sure --- Q95 Mrs Dorries: But you still pay for it. Mr Banks: --- that employers can get what they need. I will now speak as an employer. Throw me three balls and I will drop them all; throw me one and I will catch it. I think it is really important to try and make this system as easy to navigate as possible, particularly for the smaller business which does not have its own in-house HR department or very often its own training manager either. We have to find ways of enabling them to engage with the system and get what they need, and we cannot assume they will all be able to do that. I think for the larger businesses they need to talk to someone about their business overall, some of them do, and I would not say every large business does but if you are a national organisation do you want to have to go and talk to 20 or 30 different organisations that are all local and of course the answer is no. You need to be able to have a strategic discussion with people about workforce development, about the contribution that they can make and we can make to building the productivity. That is what the national employer service is about. It is a relatively small group of people, but it is a very important strategic discussion. Q96 Mrs Dorries: I would argue that with you because if a small business needs to go to you to talk about how they are going to get the training, they should not be operating as a small business, they are not fit to. With a large business, the larger organisations, do they really need to go and sit down and talk with somebody about how their workforce develops? It seems like a waste of money. Mr Haysom: What they need, surely, is the confidence that the right skills are being developed for them to be able to recruit those people over time. There is a significant amount of research which we can share with you, which I am quite happy to organise to share outside of this meeting which demonstrates there are massive skills gaps around the country. There is a developing issue and we have talked about the ageing workforce and the demographics that take us in that direction. There is a massive issue there as we go forward. What we are doing is making sure that we understand what it is that employers are seeking to achieve in terms of the skills that they need and those skills are changing very fast and the competition is not now local, regional or national, it is global. We are working incredibly hard with all of the training providers to make sure they are responding to that need. Q97 Mrs Dorries: I have got a CentreParks village moving into my constituency and the local university is now running courses on tourism. Did they really need the Learning and Skills Council to tell them to run those courses on tourism or would the market have just adapted to the areas being more tourist-orientated anyway? Mr Haysom: We would not have told the university to do that anyway because universities sit outside of our responsibilities. Q98 Mrs Dorries: If they can do it and adapt their courses for the way the needs of the area are changing, why would it be necessary for you to be there? Mr Haysom: Let us look at it this way, let us imagine it was colleges that were responding to that and putting on courses --- Q99 Mrs Dorries: I think it is actually. Mr Haysom: ---would we really want every single college to say "Ah, there is an opportunity, let us all pile in, let us all invent different courses, let us all try and work with that same employer, let us all try and take advantage of this new thing" or would we want to sit down across a community and say "how do we deliver what that employer wants in a way that makes sense for that employer." I have to say that is the experience pretty much everywhere, where there is a major new investment such as that, the employer does welcome the fact that what we are able to do is work with all the providers to come up with an offer which is absolutely what they want rather than a free-for-all which is a duplication and a waste of public money. That is just one example, we can give you many, many more but I am happy to share some of that outside this meeting. Q100 Mr Wilson: Chairman, you asked at the start essentially what was the point of your organisation and Nadine asked that in another round about way, I would like to put it to you in a slightly different way from that. You are cutting your staff by a third, as I understand it, why not cut it by 100 per cent and give the money to business, to the CBI, or the IOD or somebody that could run the organisation in the way that they want it run? Why not do it that way? Why do we need your organisation to do that? Mr Banks: I think what we were saying earlier - remember the main driver here - we are trying to respond to and lead the needs and aspirations of employers, of individuals locally, regionally and nationally and by sector, so it is a very complex map. We are trying to do that in a way, which is part of the LSC's role, to work with the sector - the providers, the colleges and others - to respond to that in a way that makes sense, again for the employers and the learners. It is a fine balance, is it not, I think, of those different stakeholder needs and our job is to make sure that we meet all of those. I think if you ask me which is the one that keeps me awake at night, it is the demand-led bit, personally that is the thing that we need to get right. Somehow we have to make sure that the whole system can then respond to those needs rather than just have them articulated. I think that is where this role locally, regionally and nationally comes in. It is somewhere between the demand and the supply. I like to see it at least as being led by the needs and wants of employers, individuals and communities but at the same time working with the post-16 sector to make sure we deliver it. Those are equally balanced and it is really important to keep that balance. Q101 Mr Wilson: I can see why there might need to be an element of national and local planning, but just convince me why there needs to be an element of regional planning? Mr Banks: What we do has to deliver against the regional economic strategy and the regional economic priorities. Q102 Mr Wilson: You are doing it because somebody else is involved in doing it? Mr Banks: Ultimately, when you add it all up, we have to be able to compete internationally, do we not, and so that means somehow in this we have got to be able to be brilliant locally, regionally and nationally. Q103 Mr Wilson: We are competing as a nation, not as individual regions. Mr Haysom: I think the way to look at it, from a regional perspective, if are trying to look at it from the needs of a business or indeed of a learner, is that what we need to do across the whole region is to make sure that we are providing access to the right kind of training for those individuals and for those employers across a region because you cannot create that provision in every sub-region because that is not a terribly efficient way of doing it. You do need lots of provision everywhere but some you need to plan across the whole. Let me give you an example, one of the really interesting achievements of the Learning and Skills Council over the last few years has been the creation of centres of vocational excellence and I think a number of people on the Committee will be aware of these centres. What we have done is to create networks of these centres of vocational excellence across a region so employers have got the right kind of opportunities across a whole region. It is not possible to do that everywhere locally. I think you do have to take a regional view of the world. From my perspective you need something which is above local and between national and region does that, I think that is the appropriate response. Chairman: Possibly not in Rob's regions. You are in the South East. Q104 Mr Wilson: I am not convinced. What was the process you went through that made you decide to cut a third of your staff? Mr Haysom: We went through a huge amount of detail on this. I arrived a couple of years ago, we were in the middle of a restructuring exercise as I arrived. I have to say, it was an exercise which went on far too long and did not address the needs of the organisation because it ended up being all about cutting costs rather than getting the skills that we need. What we did this time round was to start at the very beginning and say "What is it we are here to do? How are we going to achieve this? What is the best structure?" so we have sought to reinvent the whole thing. The starting point for this is to pick up on what it is that employers are saying to us that we need to be doing, and providers saying "This is the kind of relationship we need with you" so we have taken all those inputs and built the organisation from that. The absolute starting point is to think about it as a local organisation. The essential building block for this new organisation is the local bit, what is it we need to do locally? What we need to do locally is to have a small expert team that can have the kind of discussions and dialogue that we have been talking about. They need a regional - for want of a better description - service centre to provide them with the information they require to support them in those frontline deliveries, and therefore we designed it in that way. Q105 Mr Wilson: Essentially you are saying you came in there and found you were delivering things in the wrong way or you could deliver them in a better way? Mr Haysom: Yes. Q106 Mr Wilson: That is what you are saying? Mr Haysom: We would not be doing it if we thought we were doing it absolutely the right way at the moment. Q107 Mr Wilson: What assessment have you done to establish that those staff cuts are going to be workable and you can deliver exactly what you need to deliver? Mr Haysom: We have done a huge amount of work, talking to an awful lot of people with a huge amount of experience in this light. We have designed it using their expertise. We have a whole set of criteria by which we have established how many people we need doing whatever role it is in whatever part of the country it is. That will be everything from the number of colleges that they have to talk to, the size of those colleges, the number of other training providers, the nature of the population in that area and so on. There is a matrix of all of these different things. Q108 Mr Wilson: Is that documented somewhere in a report or somewhere? Is it just around a need for somewhere? Mr Haysom: That is a curious question. Q109 Mr Wilson: I am trying to understand exactly what you have done in terms of written down evidence to justify the fact that you are cutting a third of your staff and where that is. You are talking in very vague terms and I want specifics. Mr Haysom: Forgive me, I thought I was trying to be specific, I am obviously failing in that. Of course we have done a lot of detailed analysis, of course we have got all of that in writing, that exists. We have created a business case for this in the first place. Q110 Mr Wilson: Have you published it? Mr Haysom: We have published all the detail on the internet. Are you not aware of that? Mr Wilson: No, I am not aware of that, that is what I have been trying to get at. Chairman: If I can put you two together on that. I must stop you there. I have two colleagues who want to come in. Gordon. Q111 Mr Marsden: These new nine regional centres, how much power are you going to give the heads of them? Mr Haysom: The regional directors? Q112 Mr Marsden: Yes, the regional directors, how much power do you think you will give them? Mr Haysom: I do not intend giving them more power than they have currently. There is a line management relationship. Q113 Mr Marsden: You were saying earlier - I will not go through the Byzantine description of your bureaucracy that you gave us earlier again - that these reforms were designed to streamline, to make decisions quicker, to respond and all the rest of it and yet you are not proposing to give your regional directors any new powers to cut deals on their own, to deal with paperwork? Mr Haysom: They have those powers now. Q114 Mr Marsden: You are confident the powers they have at the moment will deliver the streamlined approach, the quicker response to the sector skill shortages and everything that we have been talking about? Mr Haysom: I am confident that if we get the structures right and get the right kind of people and the right jobs in the region then, yes. Q115 Mr Marsden: In which case, why do we need to have reorganisation? Mr Haysom: Forgive me, I have just said we need the right people doing the right things in the right places. Q116 Mr Marsden: You are not changing the personnel presumably? Mr Haysom: The regional directors? Q117 Mr Marsden: Yes. Mr Haysom: They have been in post for a little over a year. Q118 Mr Marsden: My colleague, Rob Wilson, has been rather sceptical about the regional aspect of this and, no disrespect, there are certain Regional Development Agencies perhaps working more coherently than others. Given that is the case, presumably you are going to want to have these people dealing very closely. If you are, then that is fine, you are saying you do not think you need to devolve the powers for the decision-making for yourselves at the centre? Mr Haysom: This is all about a move towards devolution from the centre. Q119 Mr Marsden: Sure. Mr Haysom: I have not used those words, forgive me, but that is very much what we are all about. The last time I was here we talked about this, and the creation of a regional tier to enable us to start to move in that direction, and this will enable us to do it still further. There are all sorts of things which are constantly being pushed down the organisation. Q120 Mr Marsden: What concerns me, and probably other Members of the Committee, several times in your evidence today you have said you took a great deal of evidence from this, it took a great deal of time to do that, no-one is querying your productivity, what we are querying, I think, is your ability to act and respond rapidly on it. One of the issues that I am trying to ferret out, if I can put it that way, is your ability at regional level to respond quickly to some of these issues. That is why I say, do you think your regional directors have enough powers of initiative and enough power to do that? Mr Haysom: Yes, I do. What I do not think they have enough of at the moment is support around them. I do not believe there is enough consistency across the Learning and Skills Council in terms of that support. Let me give you an example. In the North West we have made great strides, and partly made great strides because we appointed a regional skills director doing a particular job with a particular team around him. We do not have a consistency of approach on that. One of the things we are able to do is to do just that. There was a question earlier about our ability to respond to Sector Skills Councils, a very big part of what we have to do as an organisation is to make life easy for those Sector Skills Councils because they range from tiny organisations to very large ones. We are going to have a consistent approach at regional level to enable us to do just that. I do not think, by the way, that is remotely Byzantine in terms of structure, I think it is a simplification. Q121 Mr Marsden: No, that was not what I described as Byzantine, it was the previous thing you --- Mr Haysom: --- inherited, yes. Q122 Mr Marsden: The thing you are now replacing. My final question, which is a very specific question, I just want to confirm what you said earlier. Am I right in thinking that you said that the anticipation was that you were going to save £800 million through this slimming down process? Mr Haysom: Absolutely not. What we are going to be doing is saving £40 million a year from this point onwards. Just for the knowledge of the Committee, when the LSC was created from its predecessor bodies, the FEFC and the whole of the tech movement, that was an annual saving of £50 million that was achieved then as well. Q123 Mr Marsden: You are saying £40 million a year. What I would like to ask you then is the £40 million a year you are going to save through this process, has that already been divvied up, as it were, or accounted for in your spending assumptions and priorities for the next three years? Mr Haysom: It is going to take us a couple of years to achieve that, as you can imagine, in terms of a payback. Any of you who have done this in business will know you do not get it in. It is not in the current plans at the moment but it has been made very clear that anything that is saved is designed to go to the frontline. Q124 Mr Marsden: When you have finally got these sums of money saved from the process, will you look again - bringing us circular to what we discussed - at whether some of this money might not be provided for some of the adult learners we were talking about? Mr Haysom: As I said a second ago, and I am sure Chris will concur with this, one of our very biggest challenges as we go forward is this whole adult skills issue. While we make it really clear that the priorities which are identified we believe are the right ones, because it is difficult to say why they would not be, we do believe there is a very real issue as we go forward in terms of adult skills. Mr Banks: Just to reinforce that, but also to say, to be very blunt about it, if we only deal with the skills of young people it will not be enough for us as a country. We are absolutely on the same page on that, it is where we are focusing now that we are really talking about. Q125 Jeff Ennis: On the continuing theme of reducing the skills gap, Chairman, one programme I have been quite impressed with in Barnsley and Doncaster is the entry to employment programme for the hard-to-reach youngsters, for want of a better description, I think it is working. How integral is that programme and the expansion of that programme to reducing the regional skills gap, shall we say? Mr Haysom: I think it is a hugely important programme and I think we should be very proud across the country of what has been achieved through it. What has been particularly impressive in the last year has been that more and more young people have been coming out of those programmes with something very positive so they are coming out with employment or they are coming out with enrolment on a course and an increasing number of them are coming out and going into apprenticeships, it is still a small number but it is an increasing number. It is what we would call in the bureaucratic world, if I can use that word, a positive progression. More and more of our young people are getting positive destinations. I think the real issue for us to work hard on is what happens to those young people who are not even able to get on to the entry to employment stuff because it is not the right course for them, it is kind of a pre-entry to employment provision that we have got to make sure we have got across the country. That is the bit we need to work hard on to deliver. Q126 Chairman: Apprenticeships, high dropout rates, you were concerned about it a year ago, are you still concerned about it? Mr Haysom: Yes. Again, there have been some very good improvements in what we would call framework completions. More and more young people are staying on longer within the apprenticeship but it is still not where we would want it to be. We still need further improvements and a lot of that is about the quality of the provision that is offered and we are working very hard to improve that. Some of it is about the nature of the frameworks themselves and whether they are absolutely right for employers. Q127 Chairman: On some of these more specific areas we are going to have you back as part of our inquiry into learning and skills. Mr Haysom: We would be delighted to come back. Q128 Dr Blackman-Woods: Can you tell us why you published Agenda for Change ahead of the Foster Review and the Leitch Review? Mr Haysom: We have been working on it for well over a year; we did because we went out and talked to the sector about what was important to them and we talked to them about what it is that they wanted to see changed. We did that during the summer of 2004 and the work was then carried on from there. We came to a point where we were able to publish and I was able to go back out on a series of road shows - which I apologise they were regional but it seemed to be the only efficient way of doing it - and fed back to everybody involved what had been achieved. What we did do was to make absolutely sure, because you would expect us to do this, what we were talking about in Agenda for Change was not going to clash in any way with what Sir Andrew Foster was talking about in his review of FE, and indeed, what Sandy Leitch is looking at in terms of his review. There has been a very serious attempt to align that work and to be able to say that is clearly stuff that the LSC should just be getting on with and working with the sector to sort out. What we do not want to do is tie that up for another year waiting for various reports to emerge, but let us make sure within that that it all fits together and that is what we have been trying to do. Q129 Dr Blackman-Woods: Will you amend it if necessary or revise it after the Foster Review? Mr Haysom: It depends what emerges, does it not? Chairman: Certainly, we will find both of those reports very useful and we will be writing up our skills report after that. Can I thank you very much, Chris and Mark, for quite a long session. Hopefully, you have got some value out of it; we certainly have. Can I thank my colleagues and Gurney's who I slandered almost last time because I said they were Hansard and Gurney's, I believe the Clerk tells me, has been going longer than Hansard, not that these two ladies were there when they started! We ought to ask them sometimes about the high skills they develop in the job! Thank you all very much. |