Memorandum submitted by EEF, the Manufacturers'
Association
ABOUT US
1. EEF, the manufacturers' organisation,
has a membership of 6,000 manufacturing, engineering and technology-based
businesses and represents the interests of manufacturing at all
levels of government. Comprising 11 regional associations, the
Engineering Construction Industries Association (ECIA) and UK
Steel, EEF is one of the UK's leading providers of business services
in health, safety and environment, employment relations and employment
law, manufacturing performance, education, training and skills.
CONTEXT
2. EEF welcomed the findings of the final
Leitch report on skills. In particular, recommendations to place
greater emphasis on intermediate and higher level skills is especially
relevant to the needs of manufacturing. Furthermore, the report
recognised the need to achieve the higher level skills within
the existing workforce, in addition to improving the flow of more
highly skilled individuals into the workforce. This is essential
if the UK economy is to compete in higher-value added activities,
which will increasingly rely on knowledge and innovation.
3. We also welcomed the proposal to move
further in the direction of a system of demand-led training provision.
The review correctly identifies the short comings of the current
system of trying to predict and provide training provision. There
is a need to direct a much greater share of public subsidy for
training through well-informed customers. Train to Gain and Learner
Accounts are two potential mechanisms for achieving this.
4. Thirdly, the report recognised the current
complexity of the learning and skills landscape in England, including
the number of bodies and intermediaries—both sectoral and
regional—that have been established to influence training
provision and finding flows. While the report is not a blueprint
for reform, the acknowledgement of the current confusion is welcome.
5. Finally the report recommends the introduction
of some form of compulsion on employers if unsatisfactory progress
in improving skills is made by 2010. EEF has cautioned against
the use of compulsion in the engagement of employers in training
activity. The government must first provide the framework which
supports employer-sponsored education and training. Without this
framework, employers will continue to face constraints to providing
more and better training. EEF research has identified a number
of these barriers including a lack of information on available
training and suppliers and a lack of appropriate provision locally.
6. Also important in determining the impact
of education and skills policy is how outcomes are measured. At
present, international league tables are often cited as a proxy
for the UK's relative position on skills and training. In a global
economy, this measurement can be useful in assessing what progress
is being made compared with our competitors. It can also be useful
in analysing the role of skills in the UK's productivity performance.
These tables often do not tell the whole story. For example, the
US has a similar proportion of its workforce educated to the equivalent
of Level 3. It is the much higher proportion of people qualified
to Level 4 and above which has a greater impact on US productivity
performance.
7. Moreover, it tells us less about the
types of skills and qualifications the UK needs to develop in
order to improve innovation and competitiveness, for example.
Government targets should not, therefore, primarily be aimed at
improving the UK's standing in international league tables. Rather,
they should focus on helping the UK to develop the skills needed
to improve productivity and innovation.
NATIONAL POLICY
8. Current government policy is focussed
on a number of key themes:
— increasing participation in education
for those aged 17 years and over;
— increasing the proportion of 19 year
olds qualified to NVQ Level 2;
— raising to 50% the proportion of
18-30 year olds in higher education;
— improving completion rates of apprenticeships
and;
— all adults to achieve a Level 2 qualification.
9. EEF agrees that more should be done to
improve achievement of school-age children. A significant proportion
(54%, according to DfES) of young people finish compulsory schooling
without five good grade GCSEs (or equivalent) including English
and mathematics. Thereafter, employers and colleges have an uphill
struggle to bring young people up to an acceptable standard, and
to a level from which they can progress into further, high level
skills training. This is particularly acute in engineering, which
recruits many of its entrants at degree and Advanced Apprentice
level.
10. Furthermore, it is essential that the
vast majority of the existing workforce is qualified to a level
expected at the end of compulsory schooling (NVQ Level 2). At
the very least business needs a workforce to have adequate numeracy
and literacy skills. Without these foundations it is difficult
to engage individuals and offer training to meet skill needs.
Efforts to ensure that all individuals are equipped with these
skills are necessary if the UK is to meet its ambitions to increase
the stock of intermediate and higher level skills.
11. Providing adults with a first full Level
2 qualification can therefore act as an important stepping stone
to further learning. However targets can skew behaviour, and promoting
Level 2 qualifications to people for whom a Level 3 or some other
form of training or qualification may be more appropriate (for
both the individual and company) will result in lacklustre engagement
and potential loss of credibility for training activity. The individual
resents being taught what they "already know", and companies
gain little value in releasing staff to simply receive accreditation
of existing skills. Perhaps this accounts for the high proportion
of "deadweight" ascribed to the Employer Training Pilot
activity, where it is clear that "assessment" rather
than "learning" took up the greater proportion of provider
activity.
12. In addition, the workforce in manufacturing
is changing. Chart 1 illustrates that job shedding has been concentrated
in lower skilled occupations and the proportion of management
and professional positions has increased. This trend is forecast
to continue over the next decade as firms demand higher level
skills to ensure they meet their strategic priorities—increasing
innovation; accessing new markets; improving productivity and
responding to customer demands.
Chart 1
UNSKILLED OCCUPATIONS DRIVE JOB SHEDDING,
% CHANGE IN EMPLOYMENT
Source: Institute for Employment Research
13. Nevertheless, the present focus of having
targets and funding that only supports the achievement of single
level qualifications and hence a hierarchy of qualification achievement
is too narrow. We need a structure that also recognises that the
accumulation of a breadth of relevant qualifications and skill
sets (even if at the same level) is equally valid and required.
14. The government's target for young people
in higher education recognises the role of a higher skilled workforce
in meeting the competitive challenges the UK faces. EEF welcomed
Leitch's recommendation to widen this ambition. The report suggests
enabling higher education providers and employers to work together
to ensure more people capable of degree-level study and achievement
have the opportunity to do so. We also recommend the promotion
of alternatives to academic degrees (such as NVQs at Level 4 and
5) to those in work. The funding of higher education (HE) also
needs to be opened up and made available to a wider range of providers
that can demonstrate they can deliver the quality required. This
is a consideration of the new further education (FE) Bill, and
also by the Higher Education Funding Council for England (EHEFCE)
employer engagement initiatives.
15. Importantly, increasing the numbers
of people with higher level qualifications will only have the
desired impact on productivity and competitiveness if the subjects
they study are relevant to the needs of the country. Over the
past decade enrolments in engineering and technology degree courses
have been flat. However, there appeared to be an increase in applications
last year. This could suggest that the introduction of higher
tuition fees may have helped make these subjects more attractive.
16. However, increasing the numbers of people
studying science and technology subjects at a higher level must
start by encouraging young people to continue them at GSCE and
beyond. Good careers information and guidance and high quality
teaching, which enthuses young people, is key to this.
THE ROLE
OF GOVERNMENT,
EMPLOYERS AND
INDIVIDUALS
17. A number of departments are currently
involved in developing and implementing the government's skills
strategy. This recognises the fact that the need to improve skills
and training cuts across a number of policy areas including innovation;
regional development and social policy. There still remains a
need for more joined up thinking between departments. For example,
linking the Department for Work and Pensions (DWP) strategy to
promote increased employment and the Department for Education
and Skills strategy needs to bring together initiatives to get
marginal groups back into work and the challenges presented by
an ageing workforce. The Leitch review has some useful recommendations
in this respect, including the adult careers service.
18. There is also a need for greater coordination
across business improvement initiatives. The implications for
skills and training should be considered across programmes such
as lean and general business improvement, innovation, design and
energy efficiency. This does not imply that more organisations
need to be involved in these fields, rather a need for more seamless
working. Nevertheless, the drive to simplify business support
programmes must not lose sight of the important linkages with
skills. The new Commission for Employment and Skills will have
an important role in coordinating these issues.
19. In addition to creating the framework
for post-16 learning and skills, government makes a substantial
financial contribution to post-16 training. This year, the budget
of Learning and Skills Council (LSC)—the main body responsible
for funding post-16 learning—will rise to almost £11
billion. This supplements the estimated £33 billion that
employers invest in workforce training—reflecting the benefits
firms can receive from improving skills.
20. Individuals also benefit from acquiring
new skills. These benefits are often reflected in higher salaries.
However, individuals tend to make less of a financial contribution
to their education and training. Outside of higher education,
some individuals contribute to their own development. However,
this does not appear to be particularly well embedded in the UK's
learning culture. For example, there has been some take up of
Career Development Loans to improve vocational skills, but evidence
from a 2001 survey showed that borrowers tended to be young, well
educated and employed.
21. Learner Accounts could be a vehicle
for leveraging greater individual investment in training. An evaluation
of the original Individual Learning Account (ILA) system of learning
accounts suggested that it had some success in stimulating individual
demand—79% of learners thought that something like an ILA
would encourage them to invest more of their own money in learning/training[1].
22. The design and implementation of Learner
Accounts will be critical in their success in encouraging greater
individual investment. EEF would like to see the new system of
Learner Accounts deliver the following:
— equip individuals with transferable
skills, preferably through certified learning;
— motivate individuals to engage in
their own development and offered progression opportunities;
— offer some form of entitlement/account
that can be moved between employers;
— encourage employers to partner with
employee to increase investment in skills; and
— put more/real purchasing power in
the hands of "training customers";
APPRENTICESHIPS
23. Engineering has a long tradition of
apprenticeships and EEF recommends that manufacturing and engineering
companies consider apprenticeships when planning for future competitiveness.
The role of apprenticeship in preparing the engineering and manufacturing
workforce for the future cannot be understated.
24. With that in mind, we believe that apprenticeships
should be challenging, exciting, and a real alternative in terms
of learning style to academic courses. Of course, engineering
needs "blue skies" thinkers, researchers and academics,
but it also needs practical, technically-skilled people to put
ideas into practice and make concepts reality.
25. Given the challenging nature of an engineering
or manufacturing apprenticeship, we are concerned that too often,
apprenticeships are only promoted to low-achievers, and those
who have failed to achieve academically before the age of 16.
While apprenticeships offer a new way to learn, they are not necessarily
an easier way to learn. This is why the entry requirement for
an Advanced Apprenticeship is usually four to five GCSEs at A*-C,
including English, Maths and Science.
26. High level learning has always been
part of the engineering apprenticeship framework, and many Advanced
Apprentices study to degree level at some point in their careers.
The recent EEF Apprentice of the Year awards ceremonies in West
Midlands, East Midlands and Mid-Anglia, Wales, and the South West,
show the true levels of achievement of many young people on apprenticeships.
For example, in the West Midlands awards, all the final year finalists
had completed or were completing a Higher National Certificate
or Diploma, and some had ambitions to continue to university.
A survey in 2003 by the Engineering Technology Board (ETB) of
engineering technician apprentices showed that 92% of them wished
to progress to become a professional engineer.
27. Engineering apprenticeships therefore
need to prepare young people both for skilled technical employment
on completion, but also for progression to appropriate higher
education. There are no figures available for actual progression
from engineering Advanced Apprenticeships to higher education,
but we believe it to be in the region of 10-15%. This could be
increased in the future if Leitch's recommendations on allowing
funding for higher education institutions to work more closely
with employers are implemented. Former apprentices make different
students to those entering higher education directly after A-levels.
Indeed, research from the OCED[2]
points to greater returns to NVQs at Level 2 when obtained based
on work experience and employer-provided training. They may expect
local provision and part-time study to enable them to continue
in employment, often with the company which has supported them
in their apprenticeship.
Funding
28. There is however, a disparity in the
funding of apprenticeship, which could potentially exclude a number
of high calibre applicants. The present practice of providing
less state funding for apprentices aged over 19 at the start of
the framework disadvantages those of this age group. In 2005-06,
of the 171,000 people starting an apprenticeship or advanced apprenticeship,
more than 70,000 were over the age of 19.
29. The reduced funding for these apprentices,
who complete the same framework as younger candidates, does not
reflect the true cost of their training and employment. Moreover,
people who would benefit from an apprenticeship but who are over
the age of 25 receive no funding at all. We believe that the age
cap on funding should be withdrawn, enabling employers and training
providers to recruit the very best candidates.
Framework
30. The value of the apprenticeship frameworks
to engineering employers is in its combination of off-the-job
underpinning knowledge with on-the-job competence-based qualifications.
Engineering has always had this off-the-job element (now known
as the Technical Certificate) which gives young people a broad
introduction to basic principles before enabling them to specialise
in their particular area of engineering. Employers like the flexibility
of having a large number of technical certificates and NVQs to
choose from, although this can lead to complexity in communicating
the "message" of the benefit of apprenticeships to employers.
31. We do not believe there is a case for
wholesale reform of the framework, especially as engineering has
struggled to accommodate previous reforms (eg following the Sir
John Cassells review). Engineering is widely acknowledged as the
"gold standard" and should not have to compromise in
either content or delivery in order to fit with other frameworks.
It is paramount that the national requirements for apprentice
frameworks should be demanding, yet flexible enough to allow individual
sectors to design their own frameworks to suit their needs.
32. However, there are elements of the framework
which could be improved. Key skills achievement, despite their
introduction at employers' request several years ago, should no
longer be a compulsory component of frameworks. Instead, we believe
that the government should ensure that those leaving the state
education system (including those that have five GCSEs at grade
C and above) have key skills at least at Level 2. Frameworks should
not be used to do remedial work, and providers are currently tasked
with putting this deficiency right with funding that provides
only between £165 and £148 depending on age, per key
skill. The new benchmark for schools of numbers of students achieving
five GCSEs at A*-C including English, mathematics and science
is a step in the right direction.
THE SUPPLY-SIDE
33. Currently employers source training
from a range of providers; FE colleges, commercial providers and
in-house training. The Leitch Review identified the relatively
low take up of FE college training provision in its final report.
This is particularly the case among small and medium sized companies.
34. Earlier in this submission we highlighted
a perceived lack of appropriate training provision as a barrier
to firms offering more training opportunities. EEF research suggest
that public providers are often not in tune with needs of employers
and that courses are sometimes not available or appropriate. The
complex way in which the supply of training is determined is a
major factor in supply failing to meet demand.
35. A number of agencies and bodies have
been established in recent years to understand business skill
needs and inform provision. Sector Skills Councils (SSCs) are
tasked with understanding employer needs in the sectors they represent.
And in partnership with business they are to construct Sector
Skills Agreements which are intended to map out what skills are
needed and how they are to be supplied. In addition, Regional
Skills Partnerships (RSPs) were established to bring together
key stakeholders in business and education and skills to plan
the strategic skills priorities for each regional development
agency (RDA) region linked to their Regional Economic Strategies.
Once these priorities had been determined, RSPs would then interface
with the regional and local arms of the Learning and Skills Council—the
body responsible for organising and funding provision. In theory
this is an employer-led system—provision is determined by
a network of regional and sectoral bodies which understand the
factors driving business skill needs and influences decisions
on training provision.
36. EEF's analysis[3],
submitted to the Leitch review, identified a number of problems
with this "predict and provide approach". Taking a broad
overview of the post-16 education and skills environment, there
is a very substantial separation between policy makers (government)
and end-users (employers and individuals). Research by Hodgson
et al (2005)[4],
illustrates the extent of this separation. At the top of the tree
there are government departments, such as DfES, DTI and HM Treasury,
whose main function it is to determine national priorities, targets
and budgets. The national LSC, as controller of post-16 learning
budgets also plays leading role in the government's skills agenda.
Moving through the system, there are the sector and regional bodies,
the various regional and local divisions of the LSC, learning
partnerships (where appropriate) and, of course, training providers.
Without a high level of employer engagement and perfect information
flows, we believe that this approach will not lead to an optimal
supply of training provision.
37. Furthermore, it is unclear how successful
many of these intermediaries have been at engaging with employers.
While these bodies are intended to be led by employers, for employers,
some, particularly in the regions appear to be dominated by public
sector representatives from the learning and skills sector, such
as the regional LSC, Job Centre Plus, Higher Education, the Government
Office and the RDA, among others.
38. The research on skills needs also varies
in both depth and ambition across the different regions and sectors.
However, a number of common themes have emerged. Firstly, much
of it is based on employment forecasts by sector and occupation.
While this type of manpower planning has its place in giving an
indication of the types of jobs that will exist over the next
decade, it is unclear what it really say about what type of education
and training is needed.
39. The outcomes of Sector Skills Councils
(SSC) and RSP research show that relying on this type of analysis
is little or no substitute for engaging with business and understanding
the economic changes that underpin shifting skill needs. For example,
some SSCs have identified generic skill deficiencies, such as
management and leadership, general IT skills, communication and
customer handling skills as priority areas for development in
addition to unspecified technical and practical skills. While
we are not suggesting that this analysis is wrong, it is too general
to provide an accurate picture of the types of skills firms need
now and in the future to inform training supply.
40. In addition, the complexity of the learning
and skills infrastructure makes it difficult for employers wishing
to engage with these organisations and the work they do. The need
for employer engagement is often maintained as essential to underpinning
the work of RSPs and SSCs (and in future Skills Academies). Yet,
it is not always clear to a small or medium sized company that
did want to influence policy where to go and how to get in contact.
41. Together these issues raise questions
about the current supply-driven approach to training provision.
Firms are finding that the labour market intelligence being used
to shape training supply is not contributing to a responsive learning
and skills sector switched on to the needs of modern manufacturing.
Instead, the emphasis by DfES on targeting particular groups may
in fact be distorting the supply of provision as the LSC aims
to fulfil targets on learner numbers within key groups. This top-down
approach to planning and funding does not ensure a match between
training supply and demand. Furthermore, even if the information
flowing from RSPs and SSCs was comprehensive in its analysis of
skill needs by region and sector, the LSC has little discretion
to fund priorities identified, outside of national targets. The
current framework for funding and planning may have contributed
to the lack of movement in improving intermediate level skills,
for example.
42. There have, nevertheless, been some
welcome developments. The roll out of Train to Gain, and in particular
the brokerage element of the initiative, is a small step towards
a more demand-led learning and skills sector. Funding is more
effective if it puts greater purchasing power in the hands of
informed customers. This means giving employers and individuals
the tools and support to establish skill needs, and then allowing
providers the flexibility, enabled through the funding mechanism,
to deliver it. This includes allowing private training providers
to play a role in skills delivery.
43. The Employer Training Pilots (now Train
to Gain) had a significant impact on an important aspect of training—that
of flexibility of provision. Employers involved in the pilots
valued the way in which providers were able to fit delivery and
assessment methods to the employer's working practices, thereby
reducing disruption to core company activities.
44. That said, the UK lacks a properly functioning
market in skills training. Employers struggle to make informed
choices on training, while providers fail to understand or respond
to their needs. We are hopeful that the skills brokers being introduced
under Train to Gain will be able to advise companies on the best
provision to meet their needs. However, we do have concerns that
these brokers will lack the ability to advise companies on sector-specific
training. It is likely that brokers will be assigned by geographical
area, which will mean they are dealing with a diversity of companies
on their patch. It remains uncertain how these individuals accumulate
enough specialist knowledge to advise an engineering company in
the morning, a care home in the afternoon, and a family-run shop
the next day. The answer must lie in their training and in creating
an infrastructure to keep them informed. Secondly, it will be
counterproductive if brokers were given learner targets and incentives.
Employers will only value this service if it is impartial as well
as knowledgeable.
45. EEF welcomed the Leitch review's recommendation
to move further and faster towards a demand-led system of training
provision than current targets. We also agree that the government
should make a radical change from the current system and adopt
a sector-driven approach. Sector Skills Councils are best placed
to identify the skill needs of the business they represent and
which will vary significantly from sector to sector. They need
to use this information to input into qualification frameworks,
ensuring apprenticeship frameworks are up to date and maintaining
national occupation standards.
46. In order to do this SSCs must firstly
be adequately resources and secondly, headed up by teams of influential
people with a detailed knowledge of their sector. The final report
of the Leitch review identified a possible conflict of interest
for SSCs in delivering services to employers in their sector and
becoming self-financing by 2008. A reduction in the number of
SSCs could cut duplication across the SSC network, freeing up
additional resources for SSCs to concentrate on sector-specific
issues. The recommendations in the Leitch review could lead to
this happening through market mechanisms. Importantly, SSCs should
be released from their restrictive framework, which places unnecessary
emphasis on labour market forecasting at the expense of employer
dialogue.
DEMAND
47. The Leitch review's recommendation to
move towards a more demand-led system of post-16 training was
perhaps one of the most significant. Routing a much greater proportion
of funding through mechanisms such as Train to Gain and Learner
Accounts is one method of achieving this. Intervention by government
is necessary if firms are to be informed of available provision
and if providers are to understand the needs of business and individuals.
The government can therefore bridge information failures between
the demand and supply sides.
48. In order for this to happen there must
be rationalisation of the bodies involved in skills policy development
and clarification of their roles.
Figure 1
A STREAMLINED SKILLS INFRASTRUCTURE
49. Figure 1 illustrates how this simplified
infrastructure might operate in practice. The policy development
process in this model should clarify the roles of each stakeholder
and how they would be expected to influence at the national and
sub-national level. Furthermore, under this proposal much of the
bureaucracy that distances learners and providers from decision
makers is swept away. This should ultimately lead to a more transparent
relationship between central government departments and the Employment
and Skills Commission.
50. While we envisage greater business involvement
across the learning and skills network through increased representation
on regional and national boards, the main point of engagement
should be through sector skills councils. Importantly, this should
also result in an improvement in the quality of information flowing
between stakeholders. The analysis of skills needs carried out
by SSCs should be underpinned by more comprehensive dialogue with
employers.
INCREASING INVESTMENT
51. Previous EEF research[5]
highlighted the lack of strategic planning by some firms when
deciding who should receive training and identifying appropriate
training. This has a direct impact on training outcomes. Training
that is not sufficiently linked with business strategy will not
deliver the same degree of improvement in productivity as training
that is. A priority should therefore be assist firms in investing
more strategically. This would further reinforce the view that
the introduction of compulsory measures would not have the desired
impact on skills and productivity if planned training is not driven
by business objectives.
52. Currently there is little in the way
of practical guidance for business. There is a role for the new
regional skills brokerage service—the advice and guidance
element of Train2Gain—but firms may benefit more from receiving
guidance from experts familiar with the environment and challenges
of the industry. There is a potential role here for the Manufacturing
Advisory Service (MAS). We welcome the fact that MAS is currently
looking at its position in the marketplace and how its remit could
be expanded.
53. Another useful mechanism in helping
firms to think strategically about training is the Investors in
People (IIP) standard. Our 2005 research showed a link between
those firms with or working towards the standard and the productivity
benefits from training. The IIP standard sets a level of good
practice for training and development of people to achieve business
goals. Some of the key elements of the standard involve linking
training to business plans, communicating strategies with the
workforce, measuring performance and continually looking for ways
to improve the way people are managed and developed.
54. Despite a good level of awareness of
the framework, take-up remains relatively low. Given the problems
with employer training that we have identified, IIP can play an
important role in helping companies to train more effectively.
We welcomed the Leitch review's recommendation to review the role
and remit of IIP. There should be a renewed effort to promote
to business the benefits of participation in IIP.
QUALIFICATIONS
55. There can be no doubt that employers
can be confused by the range and diversity of qualifications which
are available. However, awarding bodies create qualifications
to meet market needs. Therefore, any qualification must once have
been in demand, even if it has now fallen into disuse. The system
needs to be flexible to take account of qualifications and frameworks
that have low demand/take up. Certain sub sectors are niche sectors
and will never be able to produce a large number of learners,
yet they still should have access to qualifications and frameworks
that are adequately funded.
56. We accept that there may be a fair degree
of overlap between qualifications, and are hopeful that the Framework
for Achievement will rationalise the number of modules without
reducing the flexibility of the qualifications structure.
57. Employers may also wish to be able to
effectively create their own qualifications, drawn from various
structures, to match more closely the skills required in the modern
workplace. For example, by selecting modules across NVQ frameworks.
We agree that whole qualifications are of value (particularly
in terms of transferability), but in practice if an individual
is taught modules which they do not use regularly, that learning
is not necessarily useful in future employment. It is preferable
for both individual and employer that qualifications can be tailored
to a certain degree, to provide the skills necessary for the individual
to be successful and productive in their current job. The Framework
for Achievement should allow employers to adopt this modular approach
within a funded system.
58. We have yet to see the benefit of the
Qualifications and Credit Framework in engineering, and are working
with SEMTA (the Sector Skills Council for Science, Engineering
and Manufacturing Technologies) to help with its implementation.
CONCLUSION
59. EEF welcomes this timely opportunity
to contribute to this inquiry into post-16 skills training. The
Leitch Review has generated a crucial debate concerning how we
tackle the skills gaps that are acting as a drag on the competitiveness
of the UK economy. It is important we ensure this debate helps
to deliver the truly demand-led skills and training system which
the business community requires, in order that manufacturing is
better able to meet the challenges of ever heightened global competition.
January 2007
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Hodgson A. et al (2005) A new learning and skills landscape?
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EEF (2005) Skills for Productivity: Can the UK deliver? Back
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