House of Commons - Education and Skills

Select Committee on Education and Skills Written Evidence

Memorandum submitted by Institute of Directors (IoD)

ABOUT THE IOD

1. The IoD was founded in 1903 and obtained a Royal Charter in 1906. It is an independent, non-party political organisation of 52,000 individual members. Its aim is to serve, support, represent and set standards for directors to enable them to fulfil their leadership responsibilities in creating wealth for the benefit of business and society as a whole.

2. The IoD's membership is drawn from right across the business spectrum. 85% of FTSE 100 companies and 73% of FTSE 350 companies have IoD members on their boards, but the majority of members, some 70%, comprise directors of small and medium-sized enterprises (SMEs), ranging from long-established businesses to start-up companies. IoD members are entrepreneurial and their organisations growth-orientated. More than two-fifths export. They are also fully committed to skills and training: 97% of members' organisations provide training for their employees, compared to 65% of employers in England.

14-19 SPECIALISED DIPLOMAS

3. One of the questions raised by the Committee in the press notice of 30 November 2006 announcing its skills inquiries concerned the role played by employers in the development of specialised Diplomas. According to the website of the Department for Education and Skills (DfES), the qualifications are being developed by Diploma Development Partnerships (DDPs), "led by the relevant Sector Skills Councils as representatives of employers."[13] The IoD has no further information about the constitution of the DDPs, or the work they have been conducting to facilitate employers' input into the composition of the Diplomas. This may have been very thorough. However, a general concern does remain about any tendency to portray Sector Skills Councils (SSCs) as the "voice of business", particularly of small employers. For instance, in a representative survey of 500 IoD members conducted in March 2006, less than a fifth (19%) had heard of the Sector Skills Development Agency or the Sector Skills Councils, and only a handful (3%) were active participants.[14]

4. The IoD has also conducted recent (as yet unpublished) research on members' awareness of specialised Diplomas. Directors were asked to assess their level of knowledge about the new qualifications. The results were as follows: Very high/high—6%; Low/very low—24%; Never heard of specialised Diplomas—70%.[15]

5. Given that the Diplomas have not yet been introduced, and that the programme will not be fully implemented until 2013,[16] the fact that a high proportion of IoD members has not heard of the qualifications may not be surprising. Nevertheless, the result suggests that few IoD members have been involved in developing Diplomas.[17] It also indicates that the Diploma programme currently has a relatively low profile in the business community. This latter point will require addressing if the impact of the qualifications is to be maximised. Moreover, although much of the Diplomas' extended vocational provision will be supplied by schools directly, the Government wishes all those pursuing a vocational route to have "some good quality engagement with employers".[18] Low awareness of Diplomas among businesses could work against that ambition.

6. A further factor critical to the successful delivery of the Diplomas is adequate professional development for teachers, a point raised by the Committee in its press notice and recognised by the DfES in its December 2005 Implementation Plan.[19] According to this Plan, the design of teaching and training materials for the first five Diploma lines is due to be completed by June 2007, with professional development for staff commencing in the 2007-08 academic year. The scale of the project makes the avoidance of slippage imperative: the Government estimates that 50,000 young people will start Diplomas in 2008, requiring 5,000 teaching and support staff to be trained to deliver them.[20]

POST-16 SKILLS TRAINING

National Policy/Issues

7. Skills deficiencies are one of IoD members' prime concerns. The proportion of members' organisations reporting skill shortages (in the wider labour market) and skill gaps (in a company's own workforce) far exceeds the national picture.[21] Additionally, whereas research by the Learning and Skills Council indicates that skills-related recruitment difficulties and the proportion of employers affected by skill gaps has stabilised or declined in recent years, the IoD's surveys show skill shortages and gaps to have intensified in members' organisations. The impact of these skills deficiencies can be very damaging, increasing operating costs, holding back growth and stymieing innovation.

8. The principal weak spots in the country's education and training system, and in the current skills stock, have been well-documented, most recently in the Leitch Review. Broadly speaking, the IoD believes that the Government's priorities for skills are appropriately targeted, especially the focus on increasing the proportion of the working age population with basic and level 2 skills. Consequently, the IoD supports the Train to Gain programme, though we are aware of anecdotal criticism that it isn't yet sufficiently flexible in the range of qualifications it supports. Moving forward, the scheme should also be able to help meet employers' needs for skills of a higher level than level 2.

9. Other priorities and targets, such as the aim to increase the proportion of adults qualified to level 4, are also important. This is particularly true for IoD members, who typically require more than half of their employees to be qualified to degree level or above. With regard to the Public Service Agreement target to increase participation in higher education towards 50% of those aged 18-30,[22] IoD research on the competitiveness of the graduate recruitment market suggests that about a quarter of IoD member organisations recruiting graduates consider there to be too many. However, the majority of graduate-recruiting IoD member organisations believe there to be either about the right number, or too few. For the latter, particular shortage disciplines include engineering and science.

10. Finally, standards in education cannot be divorced from wider considerations about adult skills. Whilst over 70% of the 2020 workforce has already completed compulsory education, most of the recent growth in skills in the working population has come as a result of better-qualified young people entering the workforce and less-qualified older workers leaving it. It is vital that due emphasis is given to what happens in schools. Unfortunately, too many young people continue to leave education without mastery of the "3Rs" or a level 2 qualification. This only serves to perpetuate adult skills deficiencies.

Supply side

11. The research that the IoD has conducted into members' views on the performance of government agencies involved in skills development has generally produced rather downbeat results. The level of knowledge about the role and objectives of bodies such as the Learning and Skills Council, Sector Skills Councils and Regional Development Agencies tends to be rather low.

12. In terms of the responsiveness of the further education (FE) system to employers' needs, however, many IoD members appear to have had more positive experiences than the picture sometimes painted of this sector. A survey in March 2006 showed that 46% of IoD members' organisations used further education colleges to train some of their employees.[23] 55% of those using FE colleges to train employees considered the quality of training provided to be good or better. Only 8% considered it poor or very poor. A variety of other links were also uncovered, with 18% of those surveyed having been contacted by a college for views on the courses it provided, and 16% contacted by a college asking about the organisation's skill needs.

Demand side

13. The Committee questions whether employers feel like they are shaping skills training, for example through the SSCs. The research that the IoD has carried out on this issue is referred to in paragraphs 3 and 11 above, and shows only a small minority of IoD members to be currently involved in an SSC. Perhaps partly as a consequence of this limited level of involvement, IoD members' views on the performance and usefulness of the SSCs thus far tend towards the modest.

14. However, turning to the Committee's query as to whether employers feel closely involved with the design of qualifications, the evidence from the IoD's research is very encouraging. Over a third of IoD members surveyed by GfK NOP in October 2006 said that they or their organisation were involved in the development of courses or qualifications.[24] Of those involved in qualification development, most were engaged with universities, awarding bodies and further education colleges.

15. On providing incentives to increase the take-up of training—particularly among small employers—this remains a much better approach than introducing compulsory investment in training, which the IoD opposes.[25] For consistency, any further incentives should most probably be channelled through the Train to Gain programme. It is vital that Train to Gain be promoted effectively to employers, for example through representative organisations such as the IoD. The recent changes of name that have marked the evolution of the initiative (from the Employer Training Pilots, to the National Employer Training Programme, to Train to Gain), are unlikely to have helped bolster its profile among businesses.

Apprenticeships

16. The last research the IoD conducted into Apprenticeships was published in 2003.[26] Two key weaknesses were highlighted in particular: the quality of work-based training provision and framework completion rates. The transformation of the first of these must be regarded as a remarkable success story. In 2001-02, 58% of work-based learning providers were judged by the Adult Learning Inspectorate (ALI) to be inadequate to meet the needs of learners. By 2005-06, the proportion had fallen to 12%.[27]

17. Although Apprenticeship success rates have also improved, 60% still do not complete the whole framework.[28] The recent ALI annual report noted that Apprenticeship success rates lower than 50% persisted in many areas of learning, a situation the Chief Inspector described as "wholly unacceptable".[29]

18. The IoD disagreed with the Government's decision to incorporate the ALI's remit within the new Ofsted, and has concerns about the possible consequences for adult learning. At the very least, this is a very sensitive time to pass responsibility for inspecting programmes such as Apprenticeships to a new organisation.

19. With regard to Apprenticeship frameworks themselves, the IoD made a number of recommendations in its 2003 policy paper, such as permitting the inclusion of other industry standard qualifications as alternatives to the NVQ; replacing the key skills qualifications with a minimum entry requirement of GCSEs at A*-C in English and mathematics; and the inclusion of Technical Certificates into all Apprenticeships. The rules on Technical Certificates were modified in 2005, with the effect that the knowledge element of an Apprenticeship no longer has to take the form of a separate qualification. Clearly, the appropriate content of Apprenticeships is determined by SSCs in consultation with employers in their sector. Nevertheless, as a guiding principle, the theoretical knowledge underpinning an Apprenticeship should be protected as a central feature.

Qualifications

20. It has become a received wisdom that the qualifications system is confusing, convoluted and difficult for employers to understand. A large number of qualifications is taken automatically to breed bewilderment and uncertainty.[30] In fact, the IoD's research in this area has shown the situation to be far less clear cut. An NOP survey of IoD members in September 2005 showed that 66% of directors were familiar with the range of vocational qualifications in their sector. 53% thought that the number of qualifications in their sector was about right, 17% that there were not enough, and only 11% that there were too many.[31] A further IoD survey conducted in October 2006, whose results have not yet been published, revealed slightly less decisive results, but still with a majority of members familiar with the range of vocational qualifications in their sector, and just a small minority considering there to be too many vocational qualifications.

21. It is true that 115 accredited awarding bodies and a national qualifications framework containing more than 4,000 qualifications sound large numbers. There are also many thousands more awards developed by awarding bodies in response to employer and learner needs that are not recognised in the national framework. However, the UK is a modern capitalist market economy, with 4.3 million businesses, where employment is increasingly specialised and where there are many different types of jobs. That there is consequently a variety of awarding bodies offering many different qualifications is not surprising. It is also a good thing—an effective market in qualifications should result in awarding bodies competing to develop and offer courses and qualifications that meet the needs of employers and learners. It is also worth noting that a single employer will not be faced by all of these qualifications at once—the organisation will primarily be concerned with the range of awards in its economic sector. A focus on the overall number of qualifications can therefore be misleading.

January 2007

13 ixhttp://www.dfes.gov.uk/14-19/index.cfm?sid=3&pid=224&lid=186&ctype=Text&ptype=Single Back

14 Source: Q1 2006 IoD Business Opinion Survey (fieldwork conducted 20-31 March 2006). The telephone survey was carried out by GfK NOP using a representative sample of 500 IoD members. Back

15 This is unpublished data from Q3 2006 IoD Business Opinion Survey (fieldwork conducted 02-10 October 2006). The telephone survey was carried out by GfK NOP using a representative sample of 500 IoD members. Back

16 Source: Specialised Diplomas-your questions answered (Department for Education and Skills, October 2006), p 2. The document is available on the DfES website at: http://www.dfes.gov.uk/14-19/documents/14-19%20DfES%20 Diplomas %20insert_06.pdf Back

17 Having said this, a separate question in the same research survey revealed that approximately one in ten IoD members were involved in developing courses or qualifications with SSCs. It is possible that some of these members may be helping to develop Diplomas. Back

18 14-19 Education and Skills (Department for Education and Skills, Cm 6476, February 2005), paragraph 7.16, p 55. See also paragraph 7.14, p 54. Back

19 14-19 Education and Skills Implementation Plan (Department for Education and Skills, December 2005). Back

20 Ibid, paragraph 3.38 (Figure 3.5), p 55; and paragraph 3.31, p 54. Back

21 See: Who do we think we are? A profile of the IoD membership (Institute of Directors, March 2006), p 45. One possible explanation for the degree of disparity might lie in the characteristics of members' organisations: growth-oriented businesses that compete on the basis of high skills. Back

22 For the latest data on the Higher Education Initial Participation Rate (HEIPR), see Autumn Performance Report 2006. Achievement against Public Service Agreement targets (Department for Education and Skills, Cm 6992, December 2006), p 53. The provisional figure for 2004-05 is 42%, representing no change on the final 2003-04 figure. Back

23 Source: Q1 2006 IoD Business Opinion Survey (fieldwork conducted 20-31 March 2006). Back