Examination of Witnesses (Questions 220-239)
MS MARIANE
CAVALLI, MR
GRAHAM MOORE
OBE AND MR
JOHN STONE
26 MARCH 2007
Q220 Mr Marsden: That is interesting;
but it causes a problem, does it not, at the moment, in terms
of your interface with Government, because Government is being
quite deterministic in setting these PSA targets, and all the
rest of it. What you are talking about, and I do not mean this
particularly, is something which is much more touchy-feely, that
you cannot actually be very hard-edged about it and say "We
could do a PSA target on these sorts of things"?
Mr Stone: That is not what I am
saying actually. I am saying you need to be smarter. I am saying
there are going to be times when a touchy/feely intervention,
to coin a phrase, might be what is required. Equally, there are
going to be occasions when a full Level 2 is what is required,
and somewhere in the middle, which we have not mentioned so far,
is the whole issue of the Qualifications and Credit Framework,
which allows you to modularise, which is I think something we
ought to have on the table here, because it is a useful halfway
house.
Q221 Mr Marsden: Would it be fair
then for me to say that you are confident that you could go to
Government and say, given the way in which you are looking at
this at the moment you would be able to produce targets that were
realistic and hard-edged enough to satisfy their funding requirements?
Mr Stone: I think what I might
go to Government and say is that probably the targets need to
be a bit less hard-edged, to look more at the public value dimension
and to look not so much at outputs, which constrain the freedom
of the system to act intelligently, to look at outcomes, to look
at what broadly we are trying to achieve, is it greater prosperity,
is it lower levels of unemployment.
Q222 Mr Marsden: You think it is
too straitjacketed?
Mr Stone: I think it is too straitjacketed
and it produces unintended consequences.
Q223 Mr Marsden: Graham, can I come
back to you briefly on the issue of local need. Clearly, from
what you have said and from what your colleagues have said, you
feel some element of frustration in that respect, given that you
have got these national targets bearing down on you, but I want
to ask you another question about Leitch. Leitch, perhaps surprisingly,
in the final Report, does not talk an enormous amount about regional
differentials, in terms of skill requirements, he certainly does
not talk much about sub-regional issues. Is this an issue for
you, sitting where you are, in Stoke-on-Trent; you have talked
about the West Midlands, what the West Midlands does, not necessarily
what Stoke-on-Trent does?
Mr Moore: Certainly, in a city
like Stoke, which I believe has, or should have, an education-led
regeneration agenda, I believe that education is right at the
heart of making a difference to the people in that city and it
is the basis of both economic and social regeneration. Some of
you may know that Stoke was declared by the National Audit Office
the worst authority in the country; we have a distance to travel
here. I do not need my student numbers cut, in groups, in estates,
in parts of the city that should be participating, and I cannot
fund that because I have got to do other parts, important parts,
of the agenda. That really does upset me. I feel I have got part
of my hand tied behind my back. Of course, we get the flak locally:
"Why are you stopping this course; why are you not doing
that?" I understand that, as a funding pressure.
Q224 Mr Marsden: From your perspective,
does it make sense to try to have regional strategies for training;
in your neck of the woods, obviously not in other places?
Mr Moore: There are national priorities.
I am on the Regional Skills Partnership so I do see them operating
at a regional level, and of course we are talking about Skills
and Employment Boards locally as well. There is a whole plethora.
Q225 Mr Marsden: Do I take that as
a "yes" or a "no"?
Mr Moore: I think there is a local
priority. The answer is, I think there should be a view, if you
like, of what is needed regionally and what is needed locally,
and that is the background, that is the environment in which we
take our decisions. If a local authority says "We can see
that the development of a city centre, and so on, is going to
require these skills in the next few years," then we should
be cognisant of that and we should be addressing that sort of
issue.
Q226 Mr Marsden: Mariane, understanding
that Croydon and London and the South East do have particular
demands and needs, one of the things we have heard on previous
occasions is how the targets for skills in that particular area
are going to be moving very much into the higher echelons; we
had some evidence I think not so long ago which said that 40%
of the new demand in new skills was going to be at Level 4. In
view of what you have been saying, all of you, about Train to
Gain at the moment, would it make sense to extend Train to Gain
targets to Level 4 at the moment?
Ms Cavalli: It would make sense
to make levels other than Level 2 the priority area. The mechanism
we could spend the rest of the afternoon discussing. When we are
talking about adult skills, we need to remember also that a 16-year-old
who drops out for two years comes back as an adult student, and
we need to be clear about the fact that adult students and skills
are not always the 40 somethings and 50 somethings that need retraining.
I think the issue about regional priorities is absolutely fundamental.
I see no point in having a London Skills and Employment Board
coming up with a strategy for skills in London if the PSA targets
are coming down via national Government and then fed through,
through the LSC machine. It makes everything fragmented and impossible
to try to respond to.
Q227 Paul Holmes: In marketing to
your target audience, how easy is it to persuade people that they
should be paying for Level 3, that they should be paying 50% of
the tuition fees?
Mr Moore: Very difficult; very
difficult.
Mr Stone: My information is a
year old, but we found a local case-by-case approach was a good
way of maximising income. I used to delegate the ability to set
fees right down to my individual divisions, because they knew
the markets they were working in; some of the employers in their
areas were quite happy to pay for training, sometimes we were
dealing with individuals who could not afford to pay for training.
There was a time when we were able to adjust our fees into the
marketplace and, at the end of the day, I think you need some
of that flexibility if you are going to go down the road of getting
in more and more funding but without cutting off the supply of
students, which would be self-defeating, in the end.
Ms Cavalli: I think there is a
lot of work to be done by colleges, by the Government, by funding
agents, to sell the benefits of Level 3 provision, and therefore
sell the benefits of buying that provision, to potential Level
3 students.
Q228 Paul Holmes: How different is
the message to the two target audiences; that either you are trying
to persuade the employer to pay, or the individual, that one or
the other of them should put in their money?
Ms Cavalli: The message is the
same. Graham has mentioned already employers' reluctance, in parts,
to fund Level 3 provision. At the moment there is a culture which
is about not paying for further education and for having those
fees heavily subsidised, and that is the message we have got to
get across, I think.
Mr Moore: I do not think the Government
has quite got the distinction between free Level 2, they have
made a big fuss about that, and paying a lot more for Level 3,
and the gap is opening up, and that is distorting the market,
I think, quite badly.
Mr Stone: I think the markets
are very different. I think another distinction which is not made
in Leitch, which we have not made yet today, is the difference
between pre-employment training and in-employment training, because
they are very, very different, they need very different strategies.
I think, pre-employment training, you tend to be dealing with
individuals who will fit into all the normal discount mechanisms
and they tend to accept the price. When you are dealing in-employment,
the key issue is the relationship between you and the provider
and your customer, the same as in any other business, and your
ability to satisfy exactly what they need and to do a deal on
the price that they are happy with. Often you will find that price
is not the issue; the important thing is getting that relationship
right and making sure you are providing exactly what they need,
and I think opening up the ability for us to subsidise, if that
is what the Government wants, the whole range of offer would be
a great help in that regard.
Q229 Paul Holmes: A lot of the evidence
we have had has suggested that employers resent paying for Level
2 and below, because they are the skills they should come out
of school with at 16, so they are paying twice, through taxes.
The experiments in the West Midlands or North West and Train to
Gain for Level 3 have just flopped completely because the employers
would not pay up. If they resent paying for basic skills, Level
2 and below, why are they not wanting to cough up when it is above
that?
Mr Stone: Policy has tended to
destroy a number of markets in that area. We used to have a very
good business in basic skills to employers and then the Government
announced that it had to be free. We used to have a very good
business selling EFL to well-qualified overseas students but that
was redefined as basic skills and Skills for Life, so not only
did it have to be free, we had to accept a 40% mark-up in the
amount the Government gave us. All of that cost a huge amount
of money, we lost fees, and now, to have that reversed, it means
that those markets have been killed off, that market expectation
is not there and it is going to take time to rebuild them but
certainly it has been done in the past.
Q230 Paul Holmes: In theory, you
should not be having to put money into marketing because the brokerage
system should be doing this, but you say that is not working at
all, so how much of your budget do you have to divert into marketing
yourself?
Mr Stone: Increasingly, we are
putting in more.
Ms Cavalli: Our marketing budget
has gone up, in terms of working with employers, to compensate
for what we see as other aspects being undermined by the brokerage
system.
Mr Moore: To put it crudely, the
Government is spending on a brokerage network and the colleges
are not receiving money to do that but actually are bringing in
the business from the Government, I would say, in very simple
terms.
Q231 Chairman: For how long has the
brokerage system been working?
Mr Moore: Since last summer, in
fact before that.
Ms Cavalli: It is not working.
Mr Moore: The other point, of
course, is they are just starting their marketing campaign now;
you may have seen some on the back of buses and newspaper adverts,
and things. If we were expected to deliver from last August, why
do you start a marketing campaign in February/March?
Q232 Paul Holmes: Possibly that answers
the question I was going to ask, why has the brokerage system
been such a disaster, is it just that they have been slow off
the mark and it will be better by next year, or are there other
problems with it?
Mr Moore: In the West Midlands,
we have Business Link as the marketing organisation; they gave
advice and everything except training, in the past, small businesses
particularly used their services. They have added training to
their portfolio. Effectively, that is what has happened. I think
there is too much of the tick-box about Business Link; you are
giving advice to business, "Have I told them about the account;
have I told them about the banker; have I told them about training?"
They are funded now only for training needs analysis, they are
not funded for actually getting people into the training; that
seems to me absolutely wrong. You have got lots of work being
done to do a training needs analysis, where you can tick a box
and say "I've done that." It does not matter to them
whether that is converted into training or not; clearly that is
not right.
Mr Stone: I think it comes back
to that important relationship between the provider and the customer
and, particularly if there is an element of customisation going
on, it is very difficult for a third party to have sufficient
knowledge, for example, across the whole of London, in some cases,
about not only what is available but what could be done through
the dialogue in that relationship. There is always going to be
a need for a small, central, independent advice and signposting
service, but it is £4 million out of £27 million going
on this in London at the moment, which is a huge amount of money,
and actually I think the model misses the point.
Q233 Paul Holmes: Why did they miss
the point; why set it up like that in the first place, whose advice
did they take?
Mr Stone: It comes from employers
saying they want an independent source of advice to make sense
of the complexities of the system; so it is a natural and honest
reaction to that.
Q234 Chairman: Clearly, someone who
has no experience of giving advice on training?
Mr Stone: It is whether it is
possible to do it through this model, I think, is what we are
exploring now.
Ms Cavalli: Plus they are selling
only Level 2 qualifications.
Chairman: It is such good value, the
evidence you are giving us, that I feel guilty in moving you on.
Q235 Jeff Ennis: We have focused
already on the fact that there is an overemphasis on Level 2 qualifications
under the new structure and the impact that has had, which we
have explored already, on ESOL courses, etc., and I think
that is happening nationally. Given that is the sort of impact
which this focus is having on the general further education college
scenario, what do you feel the impact is on, say, specialist adult
education courses, specialised access courses, and things like
that? I am thinking primarily of colleges like the Northern College
in Barnsley, Chairman. What effect do you think, John, this overemphasis
on Level 2 is going to have on the northern colleges of this world?
Mr Stone: I must declare another
interest, as a Governor of the City Lit, which is, I suppose,
right in the middle of this argument, at the moment, and obviously
they are suffering cuts, it has to be said, and having difficulty
grappling with their mission.
Q236 Jeff Ennis: The Learning and
Skills Councils' mission is ready on the desk then?
Mr Stone: It is being managed
and I think, to be fair, the LSC in London has provided a certain
amount of protection, but there is a great struggle in the institution
about its mission of providing education, soft skills, or whatever,
to City workers, and the move into qualification-bearing Level
2; obviously it is difficult. I think the great unknown in all
of this, in a sense, is how much useful work is being lost; we
have lost, it must be getting on for, nearly a million students
across the country now, in adults, and that was not all unsophisticated,
uncertificated rubbish, a lot of it was very useful to people,
and individuals, in their careers, providing the sorts of soft
skills which employers want, and so on and so forth. Because it
could not be measured and catalogued, that has become unfashionable
and has been replaced with another model.
Q237 Jeff Ennis: Going on and focusing
once again, to some extent, on the brokerage situation, and obviously
it is not working at all, at the present time, and we have mentioned
the fact already that it has been very much an employer demand
to set up some sort of brokerage system. The information we have
been given from the DfES is that the reason they brought in the
system was to try to address the issue of dead-weight, which the
Chairman referred to in his opening remarks, and that it would
help the smaller employer engage with training providers, etc.
Can we focus on that; is the brokerage system addressing the dead-weight,
is it addressing the small employer scenario, or is it failing
in that regard as well?
Ms Cavalli: Let me pick up on
Croydon, if I may. I am a director of Croydon Business, the sole
function of which is to work with and support small businesses,
to help with inward investment and support, once they are with
us. There are no more small businesses which are engaged with
training, as a consequence of Train to Gain and the brokerage
than there were previously. It is worse than that as well in that
they do not feel they are able to talk to their local FE provider
in the way they used to but have got to go through a brokerage
system to try to get the kind of training needs analysis done
which we have talked about, by people who have not got either
the experience or the track record in helping them to be able
to do that. We are doing it but we are doing it for nothing, we
are doing it to support them.
Q238 Jeff Ennis: On the brokerage
system and the impact it is having, and we touched on, earlier
on, the fact that, because you have been providers for decades,
as it were, you have been signposting people to the brokerage
system, and then sometimes they refer back to the college that
particular individual through that brokerage system and on other
occasions they do not, I think you said that, Mariane. To where
would they refer those individuals, other than the recognised
colleges?
Ms Cavalli: We are able to find
out and we are not concerned about whether they have been lost
to the college but if they have been lost to the system. It is
the latter that we are finding, that they are not being followed
up; the advice and information they are being given does not feel
like it is the kind of solutions really they were looking for.
I think one of the reasons why the brokerage system was introduced
was to try to put more independence into the level of advice and
guidance they were receiving; they are receiving independent advice
now, but it is not expert advice.
Q239 Jeff Ennis: Do we know what
sort of level of leakage, shall we say, to the system is occurring
in the Croydons of this world?
Ms Cavalli: No. Personally I could
not tell you that.
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