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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 333-iii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE education and skills committee
Monday 26 March 2007 MR GRAHAM MOORE OBE, MS MARIANE CAVALLI and MR JOHN STONE MR DAN WRIGHT and MR SIMON WITHEY Evidence heard in Public Questions 199 - 324
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Education and Skills Committee on Monday 26 March 2007 Members present Mr Barry Sheerman, in the Chair Jeff Ennis Paul Holmes Helen Jones Fiona Mactaggart Mr Gordon Marsden Stephen Williams Mr Rob Wilson ________________ Memoranda submitted by 157 Group and Association of Colleges
Examination of Witnesses Witnesses: Mr Graham Moore OBE, Principal, Stoke-on-Trent College, and Treasurer of the 157 Group; Ms Mariane Cavalli, Principal, Croydon College; and Mr John Stone, Chief Executive, Learning and Skills Network; gave evidence. Q199 Chairman: Can I welcome Graham Moore, Mariane Cavalli and John Stone to our proceedings. I should have warned Graham Moore that if he did not behave himself better he would be called back again; obviously, recidivist that he is, he is in front of us again. I think it was October when we saw you, Graham, on the Sustainability Inquiry, but Mariane and John are new to our proceedings. When we do these double-bank sessions, we do have to emphasise, both for the members of our team and the witnesses, that the shorter and more concise they can make the exchange the better and then we get more information for our buck; thank you very much. Shall we get started then. Normally we give the witnesses the chance to say a little bit about themselves and what they think about this area of our inquiry into skills, and because I am an old-fashioned gentleman, I think, I am going to ask Mariane Cavalli if she would like to go first? Ms Cavalli: Hello. I am Mariane Cavalli, Principal and Chief Executive of Croydon College. Croydon is the largest of the general further education colleges in south London, with about 16,000 students, 3,000 of whom are full-time 16-18 students. We are a large HE and FE provider in London and I think the largest also in terms of 14-16 provision. In terms of this inquiry, obviously, I and my colleagues welcome it, in particular the opportunity to look at some of the assumptions which underpin the Leitch Report, and welcome the opportunity to discuss some of those, if that is appropriate. Mr Moore: I am the Principal of Stoke-on-Trent College. I am Treasurer of the 157 Group, and we have presented some written evidence here. I am a Board member of Regional Skills Partnership in the West Midlands, and, perhaps most relevantly, I think we are the largest Train to Gain provider in the West Midlands, so we are heavily involved in this agenda and have a large proportion of our budget in the adult field, as opposed to the 16-18 market. Mr Stone: I am John Stone, Chief Executive of the Learning and Skills Network, which is one of the two bodies formed when the LSDA split into the QIA and LSN in April last year. As such, we are responsible for research, curriculum development and staff training in the broad learning and skills area; we also have a support contract for Train to Gain, so I need to declare an interest in that area. Prior to last April I was Principal at the Ealing, Hammersmith and West London College, one of the biggest colleges in the country, serving the communities of Acton, Southall and Hammersmith, in west London. Also I had a number of other interests, which came to an end at that time. I was a Board observer on the LDA, so reasonably familiar with the London scene, and Chair of the Association of Colleges, London Region. Q200 Chairman: A tremendous breadth and depth of knowledge in the skills sector; so let us get started. Can I ask, first of all, what are your major concerns? You have read Leitch and you must have had that instantaneous kind of reaction to it. Was Leitch the kind of thing that you had been waiting for, for years, and no-one had ever come up with that kind of report and those recommendations; what was your reaction to Leitch: Mariane, would you like to start? Ms Cavalli: I think probably very many of us have wanted something like the Leitch Report for a long time, because it has put a really high-level spotlight on skills and the relationship between skills and the economy. Several aspects of the Leitch Report I welcome; a couple of things I query: the focus which Leitch places on the higher-level skills, when, in particular, in London, we have got issues in relation to entry and Level 1 provision, and the lower-skilled workforce with which we are having to deal. Whilst I do not disagree with the fact that he is putting an emphasis on higher-level skills, I think there is a concern that if there is an overemphasis on higher-level skills we will lose some of the building-blocks which we need to have in place, and keep in place, in order to enable our learners to progress. I think also there are issues there in terms of his interpretation and the relationship between qualifications and skills and the assumptions which are made that if you have got one you have got the other, which I think is something we could argue about, but also can lead to distortions in terms of the data we are looking at. The other aspect I think is in relation to what I feel is a tension between what he is saying about reducing the micro management of FE colleges, in particular, and the need for a central planning role to continue, although to be slightly reduced. I think there is a tension there between empowering and enabling those of us who work locally to be able to come up with local solutions to Government priorities and problems, whilst at the same time working within a planning framework which makes that hugely difficult to do. Q201 Chairman: That is very succinct. Graham? Mr Moore: I also welcome Leitch. I think the focus on skills is absolutely crucial for our economy. It is one of three things; skills is one of them, capital investment is another and leadership and management I think is absolutely crucial, and there is a sort of triangle. You have got to get all three points of the triangle right, and if you get one of them right without giving attention to the other two you may have a problem, particularly leadership and management. Leitch was right in saying 'demand led' and I think there has been a lot of focus on providers in the past and their ability, or otherwise, to respond, and no doubt we are going to spend some time talking about that today, but I think we have to recognise that there is still a major task to get the demand side up and running. There are lots of blockages in our economy which ensure that employers are not as strong in their demand for the skills which the economy needs as you would expect. I can give a number of examples of that. For example, in the hospital service and in the care service, they do not want to go to Level 3 qualifications because they will have to pay their staff more; Level 2 will do. If you look around the economy, there is quite a lot of "Level 2 will do," and therefore, as an economy, we do not take people on to the next higher level; there is not enough ambition in companies. We can all do business with large companies, most of them are well geared up to training and development, they understand the agenda; we have found SMEs difficult, the new brokerage network is finding SMEs difficult. I do not think necessarily it is because the provider side is creating the problem there, I think it is in the nature of these sorts of organisations, many of which the staff have grown up themselves. We have some fundamental issues, of how we engage SMEs, the people who are going to be our future successes, the companies which are going to grow into large companies, and Leitch has not quite given us the answers there. He suggested that if things do not improve he needs to take more action, 2010. I think we are very interested in the licence to practise; just as the Government has recognised that if you want people to stay on until 18 it is probably a good idea to require them to stay on to 18 in education or training of some sort. Also, if you want to raise the skills level in the economy, I think you have to recognise that things like the licence to practise, perhaps led by Sector Skills Councils, may be a key element in raising that skills level. Once you have got to do it then, surprise, surprise, companies invest in it, and if you have not got to do it, if they have got the choice, they will bring in the overseas labour, or they will try to recruit from somebody else down the road, and that still is a problem for the British economy. Leitch has hinted at the answers, but whether he was brave enough, to have said wait until 2010, I would counsel this Committee that 2010 is a long time to wait when this is an urgent issue. Mr Stone: I have a similar reaction really. I think we welcome the drift, which started with Foster, to refocus the system on skills, and it has been given a big boost by Leitch. I suppose my main concern is that I think the Report rather muddies the water, as Mariane says, between skills and qualifications. I think we need to be obsessed with skills and not quite so obsessed with qualifications; all the difficulties in making international comparisons which you have heard about, I know, in some earlier sessions. If anything, I think the system needs to flex up, it needs to become, to coin a phrase, more demand led, demand led perhaps more in the established, dictionary or economics textbook definition of the term demand led, by individuals and by employers. I think the system is still too top-down dominated by PSA targets, which, in a sense, have sucked a lot of the flexibility out of the system, and, although it talks about employers and it talks about individuals, in reality a lot of the flexibility is not there when it comes to making decisions on the ground. I think then what we will see, as I know you have heard from others, is a move away from full-fat Level 2 into other areas, not necessarily full qualifications, modules, perhaps allowing more flexibility at local level, to which Mariane referred, to build those local eco-systems, where the skills match available in a locality actually matches the demand which the communities and employers need in those areas. The danger that we are seeing in London, very starkly, at the moment, is of so much room for manoeuvre being taken out of the system at birth that it will take some time to develop. Q202 Chairman: So much flexibility being taken out of the system? Mr Stone: At the point of funding, if I can put it that way, with the situation in London at the moment, which I am sure you will come on to, and I am sure it is all across the country, where by the time the PSA target is catered for there is very little room for manoeuvre left for what people need on the ground to be attended to. Q203 Chairman: What is your reaction overall to the kind of major part played by Train to Gain: John; you have a vested interest? Mr Stone: As I said, really I think Train to Gain, a bit of that vested interest in supporting it; although it is badged Train to Gain, it is actually an initiative to support colleges which are seeking to improve their employer engagement per se, so it is not only restricted to the Train to Gain funding mechanism, which is very, very particular. I think we welcome Train to Gain, inasmuch as it is a much needed, demand side initiative, it is there to encourage employers to take more interest in training, and the age-old game of trying to find ways of doing that. As I indicated in my previous remarks, my problem is, it is the sort of demand led you get in your Russian supermarket, you can have anything you like as long as it is Level 2, anything as long as it is potatoes, whereas employers, Sector Skills Councils, providers, are all screaming actually "This is not what people want." It seems, for Train to Gain to be a success and to be a true demand mechanism it has to get a life, it has to get out more, it has to start living up to its name and finding a mechanism to address the demands which are out there, and I think it has got some way to go on that score. Q204 Chairman: Thank you, John. Mariane, what do you think of the criticisms of some of the trends coming out of Leitch, and perhaps beyond, which go back to a system which we saw many years ago, of a very big premium, 50 per cent paid to a college, up front, when you sign someone up for the course, then 50 per cent only on completion with a qualification? Do you have any worries about that kind of thing; it has been criticised in the past with previous programmes, what do you think about it now? Ms Cavalli: I do not have worries, in principle. We have gone beyond the point now where we think we will get allocations given to us, irrespective. Provided that is tied with the colleges which are being commissioned, as being the colleges which have got a reputation for delivering that high quality provision, then I think it is not inappropriate to say that a significant part of your funding comes with your ability to enable that learner to succeed. Provided the learner is on a programme he, or she, wants to be on, is on a qualification aim that he, or she, is committed to, and that we are not in a situation where employers or other brokers are sending people to us on the basis that it is good for them and then we have got to deal with the skills delivery while also trying to motivate them and encourage them to continue with something to which they may or may not feel committed. If I may pick up on the Train to Gain point, I think you introduced that by saying the great part which Train to Gain is playing and I think that is something which is challengeable because it is not playing a great part at the moment. In London Train to Gain is underperforming against its targets by round about 80 or 90 per cent, and colleges have embraced the concept of having some of our funding removed, for it going to Train to Gain brokers and then for us to bid to have that funding returned to us through the route of Train to Gain. In London it is not working; in London the broker system is not working. In London, brokers are either not sending leads to FE colleges, or when they are sending people to us we are finding that they are not eligible to take advantage of Train to Gain courses. John mentioned the Russian supermarket model. I talk about the fact that I feel like I am Henry Ford; it is anything you like, as long as it is Level 2. We have got issues now, for example, where we are talking directly with employers who still want us to do courses and provide training for them, but we have to say "Go to the brokers." They may come back through the broker system, they may not come back through the broker system, but we are trying very hard to make sure that we contribute to London's Level 2 targets but we are doing it around and outside the broker system now, I have to say, with the consent of the LSC, who now really need us to come up with any way that we can do it. There are very fundamental issues, on the capacity and the strength and, I think, the connections which the current broker services have. They are continuing to be funded, of course, but I think there are issues about what they are being funded for and how we are quality-assuring them, and how we can seriously get behind them to make sure that together we deliver the Train to Gain agenda. Mr Stone: We have just done a survey of our HE senior staff and return times of people engaged in colleges in Train to Gain, and over 80 per cent said they had got next to nothing out of the brokerage network. Another significant concern was the amount of accreditation of existing skills which is going on, because of the 'funding on outcome' model; again, on that return, admittedly it is a reasonably small sample but it does give cause for concern. Something like 60 per cent were accrediting more than half of what they do, rather than new skills acquisition, and that does put a question-mark about whether the model is adding sufficiently to the skills base of skills UK. It comes back to that skills or qualifications point; yes, we may be creating qualifications but it does not mean necessarily that we are creating skills. Q205 Chairman: Is that a problem of dead-weight then, Graham? Mr Moore: I think there is a problem of dead-weight. If you point the FE sector, colleges, providers, at a target, by and large we will do our best to hit it; in this particular case you are giving away training because that is what Train to Gain is all about, it is free training. For quite a lot of this training we used to get a handy income from employers because they were willing to pay for it; now, of course, the Government says that it is free. I think the Government is paying out money unnecessarily into those (a) through the brokerage network, and I can fully support John, I have got information from all the 157 Group members and I would put it at no higher than about ten per cent of the leads come from brokers. Most of the rest is self-generated by the providers, and I am sure that if you speak to the private providers they will tell you a very similar story. You are spending money on a brokerage network which is not adding a great deal to the situation. Also, for a number of employers, you are telling them that the stuff they used to pay for they can now have free, and that again is dead-weight. They will not pay in areas where it is a requirement of the job that you have the qualification. It is the point I alluded to earlier, if you move down the road of saying, just as if you are a doctor or an architect or you are working in the care system, you have to have qualifications, if you broaden that out through the Sector Skills Councils then the Government will not have to put quite as much money into the pot there, as it is doing at the moment. It could redirect that perhaps to help individuals who are not supported by companies to continue their education and development; companies should be able to look after themselves, and individuals perhaps are the ones who are better served by the support. Having said that, I believe that the colleges and providers have worked extremely hard to help the Government meet the target, and the position in the West Midlands is a good deal stronger than I think it is in London, there is evidence that Train to Gain targets are being met. Very interestingly, at Level 2, when it is free, there was a pilot in the West Midlands at Level 3, where 50 per cent of the cost was to be provided by the employer, and that was going very badly indeed; so the higher-level skills, the Level 3 skills, really are not taking off. That, I think, is something that Leitch will be very upset about, because if you look in his Report he is really wanting to up the ante towards Level 3 and Level 4 and there is not a lot of evidence that is happening at the moment. I do worry about the dead-weight issue that you are suggesting. Q206 Mr Wilson: Before we move on to what really I want to come to, I would like to clarify something you said, Graham, in an earlier answer. You seemed to be suggesting that employers try to hold employees down to Level 2 qualifications because they do not want to pay them more; do you want to elaborate on that or confirm that was what you were saying? Mr Moore: That is exactly what I am saying, and I think in the Health Service, which is obviously a bit tight for cash at the moment, that is very obvious. There are pay scales, particularly in the public sector, where if you get a higher-level qualification you pay more, so if you do not want to pay the staff more you do not encourage them to get the higher-level qualifications; it is a very simple process but not a very desirable one. Also, if you look at the construction industry and areas like that, where the certificate to practise on site is a Level 2 qualification, there is not a great deal of incentive again to get brickies and carpenters and others on to a Level 3 qualification. We have not built into the system, it seems to me, a lot of incentives to get up to the technician and more advanced levels, and so we are dealing with the deficit model at Level 2 at the moment. I am not certain we have got a structure in place which will take us to where we want to be, which is more Level 3 and more Level 4 people still, except individuals, because individuals care about their future, they want to get on, they want a better job, and it may well be they who are pressing to get the higher-level qualifications. At the moment, you are increasing very dramatically the amount they are going to have to pay for those qualifications; the policy of 50 per cent, that is where they are moving to, and Leitch endorses that, 50 per cent of the cost of Level 3 qualifications paid for by the employer or the individual, and I suspect, in many cases, it will be the individual. In some parts of the country those individuals are not very well placed to pay that, and it is rather speculative, from that point of view, they do not know whether they will get a job which requires Level 3 or not but they thought they might give it a try. If it becomes very expensive, in areas such as Stoke, which has got a very low income level, and many other similar cases, lots of people would not be prepared to put substantial amounts of their salaries into getting a Level 3 qualification and paying for it in the way which is suggested. Q207 Mr Wilson: You are saying that the impact on the employee basically is to hold down their skills over a period of time? Mr Moore: I am not saying it is always, but quite often it can be, and you can point out sectors where that is the case. Mr Stone: There is another impact, which is the diversion of funding, which is also a very significant issue; certainly we heard ALI talking in November about a lack of provision at Level 3, because of the concentration on Level 2, actually reducing provision at Level 3 in construction in order to fund at Level 2. Currently we are seeing in London quite significant reductions in ESAW, which Mariane might know more about, because of, again, money being shifted for an extended Level 2 target, for which there is limited demand. It is not a zero-sum game, this emphasis on one particular area of the skills system, and, of course, it is the area of the skills system which shows the lowest rate of return, with some NVQ Level 2s showing a zero rate of return, so it is slightly curious, in many ways. Q208 Mr Wilson: That is very interesting. I think we had better move on to what I am supposed to be asking you about, which is responding to employers. In your submission, Graham, of the 157 Group, you suggest that responding swiftly to employer demand is a very frustrating experience due to funding and measurement systems, which make it very difficult to deliver anything other than full qualifications? Mr Moore: If you can pay for it, not a problem; if you are an employer who is going to pay the full cost then we will do whatever you ask, there is no difficulty about that. As soon as you drop in to, if you like, the funding mechanisms, as soon as you move from a situation where the employer does not mind how much it costs, or the employee, then you have to jump through a whole host of hoops. Obviously, the amount of time that takes can be quite frustrating to a particular employer. We would say, if you have a Level 2 qualification already then clearly you will have to pay for that, so some staff will get paid for, some staff will be free. If you want a full qualification then you might get the funding; if you want only a part qualification, you will not get the funding. It is quite difficult for employers to understand those distinctions. We might all say, "Well, you're not in a priority area; this is not where the local LSE thinks the money should be spent. You happen to be an employer who unfortunately falls outside of those priority areas and they want us to put the money into other things." You might even say, "Well, the qualification you want is not the qualification that the Government, the LSC, is prepared to fund, so you can't have what you want but you can have what we want." This is the Ford model, or the potato model. There is a fair amount of bureaucracy, because there are lots of different funding streams, each one of which is organised in a different way, so if you are doing ETP you set up one set of forms, if you are doing work-based learning apprenticeships it is a different approach, and if it is mainstream funding it is a different approach again. If it is European social funding, it is a different approach; if it is through Jobcentre Plus, it is a different approach again. There are lots of different bureaucracies. As colleges, we try to make it as simple as possible, because we deal with all those different funds; we try to hide that from the employer, but sometimes there is quite a lot of work they have to do to complete the paperwork, because we get audited, and so on, and that has all got to be in apple-pie order. Q209 Mr Wilson: Obviously, it is a very bureaucratic, overcomplex system. What are you asking for, a simplification, or are there other things that you want? Mr Moore: One funding stream or one set of rules would make life much simpler. After all, the objectives, at the end, are to provide education and training for either employers or individuals. Is it not possible for us to devise a system which has one approach rather than multiple approaches and one which gives overarching targets; a discussion with a local provider, for example, saying "These are the problems in your local community, your local economy. We believe you are an organisation well placed to deal with them. What can you do for us?" You give an outline of how you can help to transform the skills, and you say, "Right, go away and do that. There is a funding stream associated with that; this is what we can afford, we want to see some results in 12 months' or two years' time;" so we are accountable but we are not accountable in very fine detail. What we should be looking at is the overall picture of whether there is a genuine shift, there are more Level 2 or Level 3 qualifications in that community, that particular priority areas are being addressed. If you can do that, you should be able to have a much simpler system, a lighter touch. Q210 Mr Wilson: You are saying there that the overall thing you should be judging by are Level 2 or Level 3 qualifications; but, on the other hand, you are saying that you do not want to be judged by qualifications? Mr Moore: I am not saying that we do not want to be judged totally by qualifications, because clearly we are in the market of educating to a particular standard and qualifications are probably the only way we have of recognising that standard. If it is a full-cost opportunity then clearly qualifications do not matter, you do what the customer wants; if it is the Government's money, the Government has to have some way of understanding what they are getting for their money and qualifications is a shorthand way. This is where we bring in Sector Skills Councils and their focus on what are the core requirements of a particular industry, and that core requirement maybe is where the Government funds, where it puts the core of its money, then each company has its own particular slant on that, they will want additional specialisms perhaps. What the companies pay for are those specialisms to build round the core and it is a partnership then, but it is a simpler partnership. The Qualifications Framework should be a fairly tight and clear arrangement, to which most companies would agree, and then the bigger, full qualification, if you like, the one that we are being asked to provide at the moment, with all the things that employers do not want, as well as all the things they do want, could be handled more easily, I think. Q211 Mr Wilson: Can I move on to you, Mariane, because this may not be true of Croydon but in many colleges the majority of work is focused very much on 16-19 year olds. In general, do colleges have sufficient capacity to liaise with employers about the training needs, as well as the other things they do? Ms Cavalli: Croydon is not untypical of a large GFE college, in that 16-18 actually constitutes the minority, although an important minority, of our provision. I think, if I were sitting here five or six years ago, I would say the answer would be quite a resounding "No." Having said that, I think it is not just the Leitch Report or the introduction of Train to Gain, or even current Government targets and a Government agenda which is behind colleges already having built their capacity to be able to work with employers. Therefore, it is not untypical now, in large general FE colleges, to have sales forces, to have a key account approach to working with major employers, to be out working with employers on a regular basis. One of the points Graham made was, in relation to our providing what employers want, there is a fairly big piece of work which needs to be done before that, with employers, about helping them to work out what it is they need. I think we are highly developed in terms of our ability to be able to work with employers, to anticipate and to work with them planning their training needs as well. The introduction of Train to Gain and the added impetus around employer engagement no doubt has focused those college leaders, that were less familiar with the way, internally, colleges have to be organised, and needed to be reorganised, in many ways, it has focused their minds to enable them to do that. To give you an example, in anticipation of the changes that we are facing now, my own college reorganised so that structurally we are no longer organised around the products that we produce, i.e. courses and qualifications. We are organised around the particular markets that we serve, and therefore we are able to keep a very strong customer focus in relation to whether we are dealing with 16-18s or the skills agenda or higher education. I think capacity has built. Going back to the points which Graham made, in relation to working with employers, yes, there is an issue about whether they are prepared to pay for Level 3. Also there is an issue, and it comes back to this one about whether they want the skills or they want qualifications, very often they are happy for us to help them to upskill to Level 3 but they do not need the full Level 3 qualification or need to pay for the full Level 3 qualification either. In terms of what it is we need, what we need, in the way that Graham has just described, is it would be hugely helpful if we could get rid of the complexities of those different funding streams. It would be particularly helpful if we were able to work to deliver a more flexible Qualifications Framework, and it would be especially helpful if we could have some local discretion, in terms of what we are delivering. At the moment, for example, working in Croydon, my first part of London, creative industry has got a huge skills demand. We cannot talk to any of those employers because the creative industry is not an LSC priority area; there are just no conversations to be had. We need to be able to marry up the national agenda and take account of the fact that in different localities there are different priority areas. Going back to the Level 2 issue, I think we are heading for a crisis with the focus for Train to Gain, work-based learning and main FE qualifications having to be focused around that, at the huge expense of other, very important provision. Q212 Fiona Mactaggart: You are heading for a crisis, which is quite strong language. If I have got you right, and it seems to tie up with what John was saying earlier about resourcing skills rather than qualifications, are you saying that you would like to be able to offer, particularly to students who are not engaged necessarily in the kind of normal things, slightly more flexible, slightly more bite-sized stuff that can get together, or have I misunderstood that? That is what I think I did not quite understand. Ms Cavalli: FE colleges have been crying out for that for years, an ability to be able to do that. Equally, we have been talking for years about needing to work with revisions to the Qualifications Framework so that we can offer those bite-sized pieces of learning within a framework which enables that learning to be put together and to be accredited. The crisis I am referring to there, I do not know if it is a London issue but there are quite a lot of learners in London so I am happy to be speaking on their behalf, in terms of the 2007-2008 allocations, FE colleges have been made to be very clear about the fact that there is a huge stretch target for full Level 2 qualifications which colleges need to deliver, in the context of reduced adult funding. I chair the London Capital Colleges Group, which is the group of the 13 largest GFE colleges, and I chair the South London GFE Colleges Group, and there is not one college, within any of those which would be an exception to this, in order for them to deliver their Level 2 target, having at the same time to absorb the funding cuts which are coming next year, they and we are having to remove from our portfolio provision which is non-PSA target-bearing. In London, that means that amongst the London Capital College Group, just by way of example, we are looking to remove entry Level 1 and Level 2 ESAW to the tune of round about £15 million, with the provision they have to take out. That might not be an issue if you are concerned only with PSA targets, but we are concerned around social cohesion issues and around the fact that, a particular problem I think in Croydon, we have got the Home Office in the Borough. We are told that asylum-seeking status gets sorted out in weeks; we know we have got students who have been with us for two years plus, who are still trying to have their asylum-seeker status sorted. Irrespective, this is across the board, where, if we are not delivering entry Level 1, Level 2 courses, we are cutting off the future supply for being able to deliver entry Level 3 in full, which is a PSA target. Around all the colleges at the moment they are trying to balance the unbalanceable, because we know we have got to deliver this significant Level 2 target. It has to be at the cost of something, because the adult funding is being reduced; therefore, we have to reduce provision which is non-PSA target-bearing. Because we have already cut out what used to be called 'other provision' or because we have been very good at making sure that we are only delivering things which have got those qualifications attached, now we are at the stage where we are having to shave into those non-PSA target-bearing courses, which FE colleges should still be delivering, in terms of being able to grow the capacity of students of low levels of achievement, to be able to work with them and get them to the point where they are ready to do Level 2. That is why I think there is a crisis looming, and that is the pincer movement of Level 2 in respect of our allocations, Train to Gain. Q213 Fiona Mactaggart: I wonder if either of the other two witnesses would like to comment on that specific point, then I want to ask about advice and guidance? Mr Stone: The figures at my old college, the cut next year is £1.4 million, they believe, and that is 1,000 ESAW learners, and we are talking about Somali women living at home, with no basic skills, who are completely isolated by their lack of English, with all that means for social cohesion. Currently they have the students, the demand led is there for that, and they have been asked essentially to replace that with a stretch target of an additional 450 Level 2 students for which currently they do not have demand. I think these are distortions you get when targets are set outside the system, in the Treasury, and then ripple down through the system and create what is an unintended effect. The Government does not want to hurt Somali women living at home but actually wants ESAW to be a priority; but this is the impact of a rigid target system. Mr Moore: Bill Rammell has presented to the House on a number of occasions the number of students in FE, and has had questions asked about that; you will see a significant jump in the number of adult learners in FE. The answer to that which the Government gives is that it is about refocusing the effort on substantial learning amounts for people doing Level 2, so there is a very strong focus on the economic agenda; the country needs both an economic and a social agenda. Employers have got a very large say. I am worried that individuals are losing out on this, and we must get the balance. Q214 Fiona Mactaggart: In your evidence, you describe the information, advice and guidance system, you say: "is available from most colleges and Connexion services. Learndirect on-line provides a nationwide coverage. A broad range..." it goes on. Actually, reading this paragraph, about your reference to information, advice and guidance, I was rather taken by the evidence we have received from VT Education and Skills, which says: "There is recognition that in England this is somewhat fragmented," because I thought your description was of a very fragmented service, "and many are comparing this with the more coherent approach to careers information, advice and guidance in Scotland and Wales." I am not asking you to be experts on Scotland and Wales, but what is your view, is it coherent; you do not say it is incoherent, in your evidence, but it sounded incoherent? Mr Moore: Obviously, there are a lot of angles there. Are we talking about for individuals or are we talking about for companies? Q215 Fiona Mactaggart: For the individuals, for the students? Mr Moore: If we are talking about it for individuals, students, where would they normally come; for a student who wants advice, very typically, in most towns, they would come through to local FE college to see what was available. They might go to the Careers Service, as they used that when they were younger, and many career selection services now have an adult arm. There is a role, it seems to me, for local authorities, whether that be their local partners, which would tend to be colleges, for example, with a long-term presence in that community, to provide that advice. If they were matrix-assessed, in other words, they were tested to show that they were giving impartial advice, and that was audited, or if they were giving advice about all of the opportunities that were available, you have a ready-made system. After all, every college in the country, as far as I am aware, has teams of advisers that are available there already to help individuals, and most local authorities have teams; you probably do not need to go much beyond that for advice and guidance for individuals, I would suggest. Q216 Fiona Mactaggart: You think it works; you think it does not need to be more coherent? Mr Moore: I do not think necessarily it works; it has not been particularly well funded, and so on, so it is a Cinderella provision at the moment. Mr Stone: It is patchy, I think. All the information I get is that, yes, there are patches of good advice and there are patches of no advice at all, and I think probably that is a reasonable summary of where we are on it. I think the whole Connexions partnership ideal was rather too complicated an agenda for a large, sprawling partnership to deliver; you need something which is much more focused and, frankly, much more managed, but at the moment it is patchy. Chairman: We are moving on, to national policy issues and Leitch. Q217 Mr Marsden: I was going to ask all three of you to what extent your work was target-driven and what you saw as the negative and positive consequences of national targets, but I think we have been over that ground quite fairly. Perhaps I could put it round another way, and perhaps, for the moment, I can put myself in the position of a beleaguered minister. We are told frequently by ministers and by people in DfES that they are not against a broader provision, in terms of adult students, but what they want to see is progression. Can I can start by asking you, Graham, to what extent you feel, given that the work, as you have said, is very time-driven, you can give progression in adult studies beyond the narrow targets which are given, or not? Mr Moore: I think it is our job to build a curriculum which provides the opportunities for progression. I believe very much in lifelong learning, that further education should be there for you whenever you need it during your career, and we have done as much as we possibly can, and I guess many colleges have done the same, trying to preserve that range, working with local authorities as well, which have the adult and community learning budgets. Remember, those are being protected but not in real terms, only in money terms, so you can progress from those ACL courses, the community courses, which again have been restructured to identify progression routes in them, on to college courses. If you take out some of those steps, because the money is being rationed, if you take out some of those entry-level steps and Level 1 steps, which there is a danger of taking place, then there are some gaps in that provision which people will fall through, they cannot leap the gap. Certainly, the Government has talked about the foundation levels of learning as a priority for it, and they are trying to put something in place, but it has not really happened. What is happening with the FE budget is that 16-18 numbers that is the first priority so money goes into that, everybody is guaranteed a place 16-18, one way or another; adult funding is residual, it is what is left after that money has been allocated, and within that is this very high priority on economic focus. We have to hold up our hands, as the FE sector; if you looked at the balance of the work we did, we did not do enough on the economic front and we did quite a lot on the social front, and it is a rebalancing. Of course, whether we are going from one extreme to the other now and not providing those social routes through, I think there is a danger you go from one extreme to the other. Q218 Mr Marsden: You may be throwing out the baby with the bath-water? Mr Moore: I think that is the case. Q219 Mr Marsden: John, can I come to you and ask you perhaps a broader question about targets and how they have done, because, again, one of the things we are hearing a lot in this inquiry, and it has been talked about a lot outside, is vital enabling skills, soft skills, call them what you will, how far are they catered for, in the sorts of targets that you are set currently, and if they are not should they be more so, is it feasible to do that? Mr Stone: I suppose they are catered for in targets in the sense that they are part of a full qualification. Certainly there is a lot of discussion around the new Diplomas, what is coming back from employers about what they want in personal learning and thinking skills, and I think, on an international stage, there has been a drift in what employers want, away from specific vocational and more into that area, that tends to be more what they ask for. I think though it is a big leap to say that you need full qualifications to deliver that. In some of the earlier evidence, I think the Chairman mentioned a scheme in east London where people were given just a small amount of soft skills, which was making people employable. I think it is an illustration, in a way, of how you can do a fairly small-scale initiative and just put in that extra amount needed to be creative. 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 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 straightjacketed? Mr Stone: I think it is too straightjacketed 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 per cent 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 per cent 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 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 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 per cent 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 at 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 ESAW 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 then the work 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: Those referred, when we have checked them back, we work closely with private sector providers so we are able to find out, 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 kinds 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. Q240 Jeff Ennis: Have the other witnesses anything to say on that? Mr Moore: As a point of competition, usually they have to refer to three providers and you always assume that one of the other two providers has got the business, but actually, if you contact the other providers, you will discover that most of them are having the same experience as you are. I think most small businesses are coerced into having a training needs analysis, if you like; somebody rings them up and says "We want to come and help you," but most of those firms, on mature reflection, do not bother to take up the offer. I think that is what is happening too often; so you are getting the tick on the broker's box but you are not getting the result that you want. Q241 Jeff Ennis: What do we need to change to make sure that does not happen in future, Graham? Mr Moore: You want a much tighter supply-chain relationship, like you would have in any other situation. As training organisations, we are there to work with the people who want to use our services, and if we have been in the business for many years and are in the locality and are well known, our reputation will be known and either we will be respected or we will not, and if we are respected they will come to us and if we are not they will go to somebody else. Q242 Jeff Ennis: We have not got a complete loop, as it were, from the college to the broker back to the college; basically, that is what we are saying, are we not? Mr Stone: Working within a model, a long-established relationship between an employer and a provider is seen as a bad thing, because they do not have the ability to go somewhere else. There is an argument there, but also there is an argument for saying that people do need to work together over an extended period of time to get to the route for what they want from the relationship. Mr Moore: There is a fundamental problem, which is that, by and large, SMEs do not take up training. We have struggled with that over the years and now brokers are struggling with the same problem, and you might say it is unfair to criticise them for failing at doing something we had great difficulty doing. All of us can make strides with large companies because the large companies are organised, but, small companies, we have not cracked it yet; we have not cracked it, brokers have not cracked it, whether Sector Skills Councils can crack it I do not know, but the nation has still got a serious problem there to solve. Q243 Chairman: Does the private sector do better than you? Mr Moore: Sometimes it does, but again in a very selective fashion. Health and safety training, management training, and so on, they will go in and do a good job in a particular field. It does not galvanise a company necessarily to look at the breadth of their workforce, the four or five people who perhaps want to go on to a technical qualification; it is expensive. Think of the cost of going into a company for one person who wants a specific area of training, and the funding model you would need to support that; we do not have a funding model which well supports that at the moment. Q244 Helen Jones: Just to go back to something we were talking about earlier, is this reluctance amongst companies to pay for Level 3 training a result of the free Level 2 training on offer, or has it always been there; is it any different now from what it used to be? Mr Moore: I do not think it is a lot worse. There has always been a pyramid, with quite a good bottom but too narrow upper reaches. People come in at Level 4 through the degree route, they go academic university into companies, but, by and large, not into small and medium companies; most of them go into big companies or the public sector. Actually developing the workforce from the ground up is not something which we are that good at, beyond Level 2. I think employers have this mindset. "If you come straight from school into employment, you are not going to be in a top job perhaps, so we won't bother with the extra training. Maybe, as employers, we're not ambitious enough at developing our workforce, we're not thinking about it." That is why I say leadership and management. If the Government is going to put money in somewhere, and I am speaking with a Regional Skills Partnership hat on now, leadership and management of the small and medium companies is where you start. You have got to convince those people leading those companies that there is real sense in working with their force and developing it, and then I think you will get the follow-through. Ms Cavalli: I think it goes back as well to a point which was made earlier. They do not want necessarily and need a full Level 3 qualification; they need to upskill various aspects of different employees' skills to a Level 3 level, they do not need to put them on a one-year Level 3 course. This brings back into play again the need for us to look at the Qualifications Framework, modularised provision and the ability for us to give them credit for what they have learned. Q245 Helen Jones: This is a question perhaps for Mariane or Graham, about the role of the LSC in all this. What does the LSC bring to the party, if anything? Mr Moore: It brings money to the party, which is quite helpful. I also have a hat as, until very recently, a Learning and Skills Council Board member, in Staffordshire, and they do look at what the needs are. There are a number of organisations, LSC is one, local government is another, the RDAs another, which look at what is the pattern of demand. We were hearing, in London, that they are not funding-creative; they have taken a decision that creative industries are lower down their priorities. You may or may not agree with that but somebody is saying "Money is scarce; we have to put it in particular directions." Whether you think that is a necessary role or not, it is something the LSC tries to do with its local development plans. Q246 Helen Jones: Perhaps Mariane can answer this: how good are they at assessing the demands? Because of this system, it depends upon them getting those predictions right, does it not; do they get them right? Ms Cavalli: It strikes me that the LSC has assessed demand at a national level. The LSC has made the decision that what will be funded will be PSA target-bearing. The LSC provides regional plans but they do not translate into a sub-regional framework at all. Graham said the LSC brings money, which obviously is helpful, but I think what we struggle with at the moment is that we have got a sub-regional structure which exists currently, with decisions being made on a regional basis within the context of priorities which are set at a national level. In London, I can speak only for London and talk about the fact that we are not quite sure what the role is of the sub-regional LSC offices, except we know that is the route through which we talk to the region, there are a number of people employed as partnership managers, but it feels to us that if the LSC were lighter, in terms of its local structures and employees, we would still be able to achieve the same thing at a regional level. The bit we do not get through the LSC is the possibility of any local flexibilities, which we appear to have lost with that very, very top-down, central planning and almost micro-management approach, to which I know the submission of the AoC has made reference for the Committee. Q247 Helen Jones: You are asking for a different structure which allows us to plan more at the sub-regional level? Ms Cavalli: I am asking myself what is the value which is added by a national, regional and sub-regional structure, and I think I and my colleagues feel that we have got a structure which is heavy, which is resource-hungry and does not add the value it might do, given the cost. Q248 Helen Jones: That brings me on to my next question, because we have got this whole raft of intermediary bodies involved in this; we have got Sector Skills Councils, LSCs, RDAs, and does that simply make life more complicated, or does it allow us to plan better? Is there any evidence that having all those people involved gives us better planning, or does it just make it difficult for colleges and other training providers to navigate their way through all this maze? Ms Cavalli: I think it makes us think we know more than we know. We know that the Sector Skills Councils know what they know, but also we know that small employers and small businesses do not necessarily think the Sector Skills Councils know what it is; really they think they need to know. The LDAs and the RDAs obviously have got a huge amount of local intelligence, but currently there are variances and mechanisms for bringing together that information with that of the regional LSC. I hope, in London, the regional Skills and Employment Board will have some responsibility for pooling that information, but I would say, obviously, again there are regional differences. What we have got is a large number of organisations with a huge amount of information, but if the funding for skills is just going to fall down the PSA target-bearing route you may as well not have it. Mr Stone: One of the central conclusions of Leitch was 'the centralised planning of skills does not work' and I think every generation has to rediscover this for itself, and here we are, talking about a whole plethora of planning bodies at regional and national and local level. I think the implication of Leitch, and indeed some of the responses, is that the LSC, and indeed others, is moving more into a regulatory role and I think making demand led work, not making it a realistic phrase, building up need from individuals and employers, and, while they are removing this fig-leaf, that we can, in some mystical and magical sense, predict what things are going to be like in the future, which we cannot do. I remember going to a presentation at the LDA from the GIA Forecasting Unit, which was precursored with the words "This is a forecast, therefore it will be wrong." I think they were very wise words. Q249 Chairman: Thank you very much for what has been an excellent session. Will you please remain in touch with the Inquiry and the making of this report. If you feel frustrated, as I am sure you do, that you did not get a chance to say some of the things you wanted to say, will you communicate with us, because we want to make this an excellent report and we need your help? We have engaged with you in this very brief hour and 15 minutes; we want to carry on the dialogue. Mr Moore: I have some DVDs here, engagement between further education and employers, which you might like. It is 15 minutes, if anybody wants them. I will leave those behind. Chairman: We are grateful for those. Thank you very much. Memoranda submitted by Protocol Skills and Training and VT Education and Skills Examination of Witnesses Witnesses: Mr Dan Wright, Managing Director, Protocol Skills and Training; and Mr Simon Withey, Managing Director, VT Education and Skills; gave evidence. Q250 Chairman: Can I welcome Simon Withey and Dan Wright. I apologise for the delay in bringing you in, but you will understand that we have had a very good session but have tried to cram an awful lot into a short period of time. Can I welcome you and thank you for your time, and you get the same chance to give a thumbnail sketch for two minutes, and saying why you think we invited you in? Mr Wright: My name is Dan Wright. I am the Chief Executive of a company called Protocol Skills. We are involved in the delivery of work-based learning nationally; we contract with all nine LSCs, Scotland, Northern Ireland and Wales as well. We are probably one of the largest private providers in the country. We focus largely on the areas of hospitality, retail, business administration and law. Mr Withey: Simon Withey, Managing Director of VT Education and Skills, part of the VT Group, which is about a £1 billion revenue company, with a long heritage in engineering. We have now a much broader base and employ about 13,000 staff, so we have some understanding of some of the needs of industry, I would like to think, and skills. Q251 Chairman: From memory, VT is Vosper Thornycroft? Mr Withey: Vosper Thornycroft is our heritage in shipbuilding, that is right, yes. These days though education and training is about 25 per cent of our business, across a number of different sectors. Within that, rather like Dan's organisation, we are one of the largest providers of work-based learning, very active on the Train to Gain programme, a role in careers professional advice and guidance to young people and adults, and quite a large education consultancy business primarily to schools. Very recently we have been successful in two Building Schools for the Future programmes in London as well, with which we have been delighted, so hopefully we can cover a number of the angles coming out of Leitch and Foster this afternoon. Q252 Chairman: You two hungry guys from the private sector, you would like to get rid of all this paraphernalia and have just a sheer market, get rid of the LSCs, and all that, you would like just a market red in tooth and claw for training and skills, would you? Mr Wright: Yes, I think so. I think there is a lot of complexity in this marketplace and one of the surprises for me, coming into this industry a couple of years ago from the hospitality industry, was just how complex it is, and indeed to make real progress and to get simple things done actually is quite difficult. Q253 Chairman: Hospitality seems to have a reputation of low skills and low pay; what do you train people to do? Mr Wright: I think it does carry that reputation, but it is a broad range of skills, ranging from very basic skills, quick-service restaurants being a good example of that, to the very highest skills in Michelin star restaurants, so it is a very broad-based industry. I think one of the issues with the hospitality industry as a whole is that it is trying to cover a whole plethora of skills. The Sector Skills Council for the hospitality industry deals with caravan sites, bingo halls and Michelin star restaurants, so it is a very diverse area. Q254 Chairman: Simon, the private sector goes for the soft, low-hanging fruit, does it not, by and large, not the tough, difficult stuff? Mr Withey: Being a shipbuilder, I think probably we go for the tough end as well, Chairman. In terms of Government business, and you say bureaucracy, I think quite rightly so, actually, it is public funds that we are spending here, providing the training education, and checks and balances have to be in place; there is quite a lot of that and some of that has been removed over recent years, we are pleased to see. Ninety-five per cent of our Group's business is in Government sectors, so we are very used to working in partnership with the Government, with various different departments, and the voluntary sector. It is a sector we are very comfortable to work in and the sorts of arrangements we are comfortable to work in as well. Q255 Fiona Mactaggart: If you had a completely marketised system, how would what you do look different; what would you be doing, for which there is demand, which currently you are not doing, and what would you not be doing, which currently is subsidised, which you are doing? Mr Wright: I think it goes back to the demand led debate you were having earlier, which is that in conversations with employers you are quite restricted in terms of what you can do for them and with them. If you are driven by targets and driven by restrictions on what you are allowed to do then you can offer certain qualifications in some areas for employers at a certain age range but not for other parts of their workforce. I think you would have greater flexibility and be able to come up with a whole solution to an employer's training needs than currently we can give. Q256 Fiona Mactaggart: Can you give us a specific example which will help me? Mr Wright: I have an employer, for example, which covers several regions and I do not have a contract for a Train to Gain contract in one of those regions, therefore I cannot offer that employer any Train to Gain provision whatsoever, simply because I do not have the contract. This means that some of his workforce can get it, if they live in the West Midlands, and they cannot get it if they live in Yorkshire and Humberside. Q257 Fiona Mactaggart: You could partner organisations there, could you? Mr Wright: We could partner organisations, absolutely, but if the employer says they want to work with me, as they do, and we are the preferred supplier of those services, what we are saying is we have to subcontract to them; it makes it a more difficult contracting arrangement. Mr Withey: I think, at that point, we do partner with quite a large number of FE colleges to give us some national coverage, because we have certain skills and they have others, I think they are complementary. We would like to be more involved, to answer your original question, in the FE sector; we think the private sector has got a lot to bring to further education. Again, from us, our model is partnering so we would look to work with colleges, provide some efficiencies and some commercial best practice, along with their skill base. The sort of top to tail offering, perhaps I could give you an example of what we have done as an employer, rather than as a training company; we are back in our shipbuilding business. Shipbuilding is very cyclical, it is feast and famine, you win a great big contract, you have not got enough staff, then it is finished and you have got to lay them off, or do something. For about four years now we have been running a Skills for Life programme, which has got superb Government support for it, we brought in the unions, and they were a bit concerned as well, to start off with, where we provided a range of basic skills for the workforce, IT, literacy, etc., so that when things like the aircraft carrier programme finish eventually and the downturn comes, albeit it is ten years' time, the workforce will be empowered and able to do other jobs, not necessarily in our company either, they could go elsewhere. It is the longer-term, sort of top-to-tail type view that we would like to be offering. Q258 Fiona Mactaggart: Are employers more or less willing than they used to be to pay for training? Mr Wright: I am not sure they have ever been particularly willing to pay for training, to be honest; it depends. There are some enlightened employers out there but I think the whole notion of employers paying for qualifications, to me, is a very difficult thing to say to them, and we are looking at other ways that we can explore them outsourcing more of their training to us, so that we can add on to that some of the Government-funded training to broaden their programme. If you talk to an employer, really, the majority of employers I talk to, about whether they are prepared to pay for training, the answer is, pretty much always, no. Some do, and as they see people develop through their programmes they can see that the natural progression is to move it on. In terms of their overall training strategy, my experience, from most employers, is that they believe, certainly for the big employers, their internal training programmes are enough to carry them through. When you get to the very small organisations, they are loathe to spend anything at all on training, and that really is an issue, and that is why this notion of free training engages them in the process more than the development of their workforce skills. Mr Withey: I would agree. I think it is not only size; the larger employers tend to invest, as a broad-brush statement, more than smaller employers. I think also it depends by sector, so the hospitality sector, in which we both provide training, the staff move through much more quickly, and a small employer probably will not want to invest anything, actually, in training the more junior staff, in hotels and pubs, and so on, or restaurants. The bigger chains we find are more interested in it, but a local pub, round the corner, just would not invest at all. The larger engineering companies and sectors like that, yes, indeed, and we have got some big contracts with the likes of Network Rail and others, who put in a lot of their own money as well as Government funding. Q259 Fiona Mactaggart: One thing which seems to me to connect from what you have been talking about to the evidence we had from the last group, who were talking about a framework for qualifications, is that I have encountered this thing about employers wanting bespoke qualifications, a little bit of this and a little bit of that; Waitrose engineering guys have a qualification which takes little bits. Do you ever spend time with employers trying to get them to rejig their bespoke qualifications so they become Level 2, or others? Mr Wright: Some are doing that actively now, some of the bigger employers. Q260 Fiona Mactaggart: Who are they? Mr Wright: I think it is still in its infancy; there are not many that are doing it. It is difficult for us to get under the skin of those employers and really start to persuade them to rejig their training programmes in order to use them as accredited qualifications. What they would say is, "Why? What's in it for me?" Really, the attraction of qualifications is that they are giving something to their workforce which you can hang your hat on, and that really is the way that we drive those in. I think there is a lot of work to be done with employers generally in order to get them up this curve of saying their own in-house training programmes can be accredited and they do have a benefit to the profit and loss account, to the retention of their people, and all the rest of it. There is a different audience here. You have got the bigger employers much more enlightened and ready to talk and smaller employers very difficult to persuade. I would say also it is very difficult to hit the right level of management as well, in employers; it is very rarely you get engaged with the chief executive of a major company on issues such as training; it tends to be devolved down to the HR function. It tends to be quite a junior level you are negotiating at, and they have great difficulty in moving this up through the management chain. Q261 Helen Jones: You said you would like to see a greater role for the private sector in FE, but what kind of FE do you envisage companies like yours taking on? You are not going to take on the Somali women who cannot speak any English, are you, or the people who need basic access courses? Mr Withey: Our model for working with the FE sector is working with the colleges, and we will bring some industry best practice, if I can call it that, so we will provide some of the services more cost-effectively than they would themselves perhaps, running their own campuses, such as management, and so on. There are things that we could do together, perhaps bringing in third party income, and that could be Train to Gain contracts which together we could deliver which they could not on their own, or just standard apprenticeship programmes. Also we can provide some investment, because if we have a long-term relationship with a college we can take a long-term view on investing alongside their own investment, LSC funding, into there to provide bespoke training facilities for our other customers. I will give an example, if I may. We are an international company, we have a lot of customers in the Middle East and the Far East, we do a lot of English language training, in fact, and providing cost-effective, professional delivery vehicles for those, which meet our customers' specific requirements, is a key issue for us. It is that type of thing we could do together, just to give you one specific example, if that helps. Q262 Helen Jones: Really you would be cherry-picking, would you not? Mr Withey: No, not at all. I think we would be complementing their skills. We work with the leading colleges, we are working with four or five from the 157 Group, also some of the medium-size coasting colleges, where, in fact, typically their areas of weakness that I would be reporting would be on employer engagement, where they do struggle to get local employer engagement for their programmes and courses. It is the sort of understanding that we have of employers' needs that we could bring to such a relationship. Q263 Helen Jones: That is interesting, but, Dan, you have just told us about how difficult it is to get SMEs engaged in training, and that is just as true, it seems to me, for your companies as it is for the colleges. What makes you think that you would be more successful in getting those types of companies, which is often, the gap is in training, engaged in training? Mr Wright: I can speak only for Protocol. We work very hard at building relationships right the way across the country and we work on a database of small to medium-sized employers and we spend a lot of time getting out there and talking to them. In terms of our contact with those SMEs, we are pretty good at doing that. I think, getting them fully engaged in a training programme which requires their investment is a different matter. Q264 Helen Jones: That was my question, you see, because you may have the contact base but do you have any evidence to give to the Committee that you are any more successful in getting SMEs engaged in training than are the FE colleges, or any other providers? Mr Wright: Again, I can quote Train to Gain. We know full well, and I think Simon is in the same position, that, with the success we have had in bringing learners onto the Train to Gain programme, we are probably the two most successful providers in the country for doing that, simply because we have the contacts, I have a network of people out there talking to them all the time. To go back to the brokerage issue, which we touched on earlier, we have not used the brokerage system at all; we do all of that assessment with the employers and then we refer back to the brokers, so actually it is a level of bureaucracy we could live without. Q265 Helen Jones: Can you give us the figures for that? What percentage of those people on Train to Gain comes from small and medium-size enterprises? Mr Wright: I cannot, off the top of my head, but I can get back to you with them. Q266 Helen Jones: If you could get them for us, it would be very useful. Protocol say in their evidence that, in your experience, most learners are not actively looking for training but are referred by an employer or a friend. Again, that seems to indicate that there is not recognition out there of the benefits that training can have for the individual. Is that what you are finding; when people are referred, are they hard to convince that they should take up the training on offer? Mr Withey: I think, in our experience, you get all ends of the spectrum, quite frankly. You get the employer, for a start, some of whom are very keen and some who give minimal support to the employee, when he, or she, starts a learning programme. Looking at the individual, I think you get the same thing, you get some people being dragged into doing it and some who see it as a career opportunity. Most of our trainees have done a Level 2; we do quite a lot of Level 3 as well. I guess there is a difference by the time you get to Level 3 on that column where clearly they do see it as a good opportunity for them. Our experience is you can get a whole spread of attitudes. Mr Wright: My view on that is, if the employer is a supporter of these programmes, and generally it is the local management which will support it when it is driven through, these tend to be managers who have been through the programmes themselves, if they have been on that programme, more than likely they will endorse having their people go through it; but you have got a very mixed bag from one site to another, it tends to be driven locally. Q267 Helen Jones: Leitch proposed a much more coherent, national careers service for adults. What are your views on that and how do you think it should work, because he was suggesting something on the Learndirect model, I think, was he not? Mr Withey: Yes, indeed. We are a large provider of career services through the Connexions partnerships and we see quite a variety across the country. We have been hooked up with all the London boroughs, all of the South East, some in the Midlands, some in the North, so it is a fairly good coverage but it is not uniform by any means. There are some similarities, in terms of things like targets for NEETs tends to be a very, very key requirement on our Connexions contracts, so there are some threads going through, but actually the priorities and, if you like, the personalisation are very different from contract to contract. One of the concerns we have got going forward is, with the Connexions contracts coming to an end, certainly by next April, and going under the Children's Trusts and Children's Services through local authority control, the concept of which I think is fine, I think there are a couple of issues there. The impartiality of advice has to be completely integral, and if some of the local authorities deliver careers advice down at school level, and maybe college level, I think there is a concern that it will be very local advice, very local knowledge will be strung, but it will not get the coherent coverage across the country. We are quite lucky to have the 20 areas that we cover. Q268 Helen Jones: Can I stop you there, because if people are getting advice like that in their local area, talking there about younger people, they will not be going to the other side of the country, will they? What they want is advice on what is available in their local area, surely? Mr Withey: If they wish to stay local, yes. One of the concerns may be, if a school provides advice, there might be an emphasis on staying on to the sixth form, for example, which may be not the most appropriate advice to provide for that young person; it is that type of thing. There are a large number of national employers and the local view for those national employers might not be representative of the company's overall strategies, and so on. Again, that is another reason, I think, for the coherence which is required and it is something I think we should keep an eye on, as they transfer over to local authority control. Chairman: Thank you very much for that. Paul will move on to intermediaries. Q269 Paul Holmes: Just as background to what I am going to ask you, both of you started off by saying that really you would like a free market in this, and I notice, in particular, in the written evidence from Protocol, they say there are always frustrating caps on funding, there is too much demand for this area and not enough somewhere else. It is not a free market, is it, because the normal strength of the free market is what the customer will pay with the cheque-book, and in this case it is the taxpayer who is paying, it is not the employer, it is not the learner, so really we cannot have a free market in operation on this, can we? Mr Wright: I think you are right and I think it is difficult to be a completely free market. The issue is who is your customer here, is your customer the learner or is the customer the Learning and Skills Council or is the customer the taxpayer, and that is the difficulty you have. Inevitably, what you end up with, as a provider, is dancing to the tune of managing those funds in the right way, and it is very difficult to influence that in any other way, which means that, from time to time, you know that you are working to the detriment of the learner, or the employer, to some degree. I think the industry has become absolutely obsessed with managing the minutiae of this, rather than looking at some of the bigger picture. It is very difficult to determine a good training strategy with an employer which covers more than one region, when you have got different demands region by region. Q270 Paul Holmes: The example you gave a little earlier, that you had an employer coming to you saying "We want training for this," and you say "We can't do that because it is not in the Government or the LSC criteria," but the employer can always say "I'll pay for it; do it anyway," if they really want the course? Mr Wright: What they will do is just moan about that, "Why can I have it here free and not there free?" In fact, it is a very difficult argument to defend with an employer. It is not as cut and dried as that, but I think employers still see this largely as something to which they are entitled and why do they not get it everywhere. Q271 Paul Holmes: You have a limited amount of public money, whatever the Chancellor makes available, and it has got to be planned and regulated somehow, but everybody who submits evidence is saying it is just so complicated, that you have got all these different levels of regulators and funders and inspectors and brokers and Sector Skills Councils. How would you simplify it; you cannot sweep it away because it is not a free market, but how would you simplify it dramatically so that it would work more efficiently? Mr Wright: I think a degree of flexibility, in going back and being able to debate with the Learning and Skills Council about where money could best be spent. What tends to happen is you are given a contract allocation; that is monitored to death. You get to the end of that contract allocation and you say, "Well, there's still a greater demand here," then you end up with this bartering process of trying to move money around. You can end up, at a year end, being underspent on one qualification or age range and overspent on another. A couple of years ago there was quite a furore in the industry because any overspend which had happened was just not paid, and quite rightly, in my view. Actually what you tend to end up doing is really looking at this, managing it so that you do not overspend or underspend anywhere, and I think you can miss some of the bigger picture. How it would work in practice, I think a degree of flexibility in an area, I think there needs to be a bit more commonality from one region to another, and I think there needs to be currently a bit more dialogue between one LSC and another, to see where they can share some of these funds around. I do accept it is a very difficult thing to manage it more strongly. Q272 Paul Holmes: Again, there is a tension there between what you have said and what some of the earlier evidence was, that, on the one hand, people are saying we need more regional flexibility and more local flexibility, because we heard that in London creative industries are out, and yet in Croydon there is a big issue that you want creative industries. On the one hand, you want more local flexibility, but, on the other hand, you are saying you want more national, innovative conduct? Mr Wright: I suppose there is a bit of reflection of the type of business I am in, because if you look at any of the priorities across nearly all of the regions, hospitality and retail are way up there, so they always appear, certainly in the Strategic Area Review, which happened a couple of years ago, hospitality, retail and construction indeed were well up there. We do not see huge regional differences in those areas. Q273 Paul Holmes: The bureaucracy and the checks and balances you have been talking about, they are there partly to make sure that there is not fraud in the system. One of the first things we looked at in this Committee when I joined it, in 2001, was Individual Learning Accounts, where the Government deliberately tried to avoid all the bureaucracy and it was just wide open to being ripped off, and it was ripped off. How much of the bureaucracy is essential to avoid that and how much can be streamlined? Mr Wright: I think a lot is there to prevent fraud, and I think that is driven by historical experience, and clearly I think we are still living with some of that. It is an intensely paper-driven system; the amount of paper and forms and stuff that needs to be filled in on a daily basis is quite overwhelming, frankly. The amount of infrastructure that one needs to put in place to cope with that is huge. I think one of the areas where you could tidy it up, and I mentioned it in my evidence, was moving towards using IT better, using an electronic platform better, getting the information sent through electronically, rather than having to capture it on paper everywhere. I have offices throughout the country full to the brim with bits of paper that are used in an audit trail, so I think that is one of the ways that we can do it; but I accept fully that there needs to be the full check and balance on the way that the money is spent. Mr Withey: I concur with much of what Dan has said. I wrote down some signatures. We have 17 forms to fill in when we take on a learner and that takes over two hours before we have even started and we lose a number of people because they just cannot be bothered to go through the process, even though we hold the pen for them, quite often, so just electronic uses would be great. One other thought I have is that if the annual contracts that we get from the LSC were longer; five years would be superb actually. The reason for that is because then you have got some scope to invest in the earlier days, you can put in some innovation, you can get some economies of scale, economies of process, and so on, and I think we would end up with a better product, at the end of the day, if we could take that out. I think also it would save the annual calculations of overspends and underspends, and so on, if we went for longer-term contracts, which are artificial really because it just happens to be the way that they are run. Q274 Chairman: Why are there 17 forms, 17 forms for someone you have taken on for Train to Gain, for example? Mr Wright: I do not know the exact number of forms for Train to Gain but there is a fair few. They each serve a different purpose and part of it is the way that you submit the paperwork to the LSC, some of it on retaining records centrally and some are just duplications, you have to keep one in one place and one in another. You are talking about, a mainstream apprenticeship, certainly that is 17 forms. Again, going back to information capture, which is why we are so keen to see delivery of electronic learning, the amount of errors which occur as a result of individuals sitting down filling in the same thing 17 times is just huge, so the amount of waste in the system is quite incredible. To put it into perspective, I have got something like 50 people who are employed full time on processing bits of paper, which is inordinate waste. Q275 Paul Holmes: That could be consolidated fairly easily into six instead of 17 forms? Mr Wright: We talk about fields of entry, which is the number of bits of information we put in, but probably three forms you could condense it down to, yes. Q276 Paul Holmes: We heard again in the earlier part that you have got 16 year olds coming out of school who are not really getting the advice from Connexions which they used to get from the old Careers Service perhaps, and you have got a brokerage system for the adult end which, we are told, is just not functioning so far. Is that your experience, from a private sector point of view? Mr Withey: I was interested to listen to the FE answers. I think our experience is we work hard with the brokers; it got off to a slow start, the marketing really is not starting until now, it was a slow start, there were a lot of problems which had to be ironed out in the early days. The benefit is, clearly it is going to be as impartial as possible. I think if we provided that service there would be questions. Q277 Chairman: What did you say about the brokers; you have used brokers? Mr Withey: We use them for Train to Gain, and in Train to Gain, to try to keep our numbers up, in the early days when it was slow, just to get the momentum going on some of the new machinery in place, we went to our existing employers and our other contacts and brought them back to the brokers just to start the process through. It is just a matter of working with them. Q278 Chairman: Why not just do the job yourself? Mr Wright: If there are some forms to be filled in, you have to do it, so you have to get what is called a unique reference number from the broker, which allows you then to start the training process. It is a bureaucratic process. Q279 Chairman: You cannot break through the brokerage system? Mr Wright: No. Mr Withey: No. Q280 Paul Holmes: Does the broker do quality control, because again with the ILAs people could say "I've got an upstairs office, with 20 computers and trainers" and these sorts of people, and nobody ever checked and they could claim what they wanted? Is the point of the brokerage that there is supposed to be some sort of "control" which prevents fraud? Mr Wright: Yes. The way that we work it is that is retrospective, so once we have engaged an employer the idea is that the broker will then go in and check to make sure that the employer has all the information, and that is what we do, we give them access to the employer. Q281 Chairman: Would you agree with the colleges, who were sitting where you are sitting, a few minutes ago, who said that brokers do not have any experience of training? Mr Wright: I would agree. Q282 Chairman: They are going to check something of which they have got no experience? Mr Wright: I think also they referred to the tick-box exercise, which is "Have you done X; have you done Y;" does that fit in with the criteria. Q283 Chairman: Who are the brokers then? Mr Wright: We deal with a whole range of them; we have got brokers dotted through every LSC region. Q284 Chairman: Which brokers are they? Mr Wright: A lot of them are Business Link; that is the majority of them, to be honest. Mr Withey: The majority of ours are Business Link as well. Mr Wright: The London Business Consortium in London. Q285 Chairman: Business Link are doing this because they have been so successful with the other things they do they have got plenty of time on their hands? Mr Withey: Yes, I think so. Q286 Chairman: You are smiling, Dan? Mr Wright: In my mind, the whole thing was rushed. When the employer training pilot started, and that was when the brokerage system was formulated, it seemed like a good idea; there was a rush to get the contracts, people saw the pot of money and went for it. I think the system was not in place when the contract was awarded. Q287 Chairman: What was reaching the ears of most of us, when the employer training pilots were on, was that the pilots seemed to be successful; so the Government wanted to roll them out because the pilots had been successful. Was that right, or not? Mr Withey: I think they were successful. I think what we are seeing, the problems with the brokers, I would like to think are teething problems actually. You have got to work hard with the brokers to make it work; you will not just sit there and wait for them to come to you, the learners to contact you, I think we accept that you have got to push them as well. Q288 Paul Holmes: Although that is their job? Mr Withey: Yes, it is their job, but, there again, I think you could ask why FE colleges have to go out and market their capability; learners will find them, or somebody will. You have to deal with them. Q289 Chairman: How much are you giving away? In Train to Gain, there is an employer, sitting there, unable to make up his, or her, mind whether he, or she, wants to train his, or her, employees; you appear on the scene, or any provider, and say, "If you do this training, this is what you get." What are you offering them? Mr Wright: In terms of when we sit down with the employer, it gives entitlement to a qualification which is more available than some of the mainstream funding; i.e., on 19-plus learning, they are quite restrictive on funding, whereas Train to Gain is another area which we can offer, which opens it up to a wider audience for that employer. Q290 Chairman: Just to get to brass tacks, what are they getting out of it? Mr Wright: A qualification for their workforce. Q291 Chairman: How much is it costing them? Mr Wright: Nothing. Q292 Chairman: Why; how much is it worth? Mr Wright: You would have to ask the employers that, I suppose. At the end of the day, what we say to them is, "You're getting a value which is placed on your workforce productivity." We try to convince them that it has benefits for the retention of their people, it gets them better qualified; certainly it addresses some of the Skills for Life issues. Q293 Chairman: I take that for granted; but how much are they getting, how much is this bit of training costing? Someone is paying for it: how much is it costing the Government? Mr Wright: It is about £1,200 per learner. Q294 Chairman: Basically, you are in this terrible market where you have got to go out there and persuade people to accept £1,200? Mr Wright: No. Q295 Chairman: That does not sound like red in tooth and claw to me. Mr Wright: No; no. That is absolutely right. It is an attractive proposition for an employer; but the point is that you are doing it either with the employer or to them, and I think that is the difference, if it is an integrated part of their training programme, and that is the bit of Train to Gain which it is intended to do. Q296 Chairman: You are also giving it to people who, up until then, were paying for it anyway: McDonald's. You were in the hospitality business. McDonald's get it free now, when they were paying for it before, do they? Mr Wright: McDonald's would not be eligible for Train to Gain because of the size of their business, but they are getting a sizeable chunk of funding through the mainstream apprenticeship programme, yes. Chairman: It is a strange world, is it not, this training business; you are going around, encouraging them, saying "You can have this and it's free," and a couple of years ago, or last year, it was not free. There are dead-weight issues there. Q297 Stephen Williams: This is a supplementary to something Paul was asking about earlier. We have heard, both from the witnesses we have before us and previous witnesses today and in previous sessions, the sort of classic acceptance that employers are not going to pay for certain modes of training. I think it was Dan who said, "Oh, they're just moaning about what is free somewhere else, if they cannot get what is free and what they actually want." Yet Lord Leitch has said that he wants employers to pay more and is going to give them until 2010 to up their game; but we know the answer to that already and the culture is not going to change? Mr Wright: I think that is the challenge for the industry, it is the challenge for me, as a work-based learning provider, we know that is going to happen. The effect of that is simply, from what we can see at the moment, what will happen is the 19-plus funding will simply not receive inflationary increases, so unless they pay then organisations like mine will pick up the slack and we will subsidise it because we will do it for less. The driver for my organisation is to make sure that there is a contribution from the employer going forward and that what we have to do is start working with them on a much more strategic level about how they can tie their training programmes into accredited apprenticeships. Q298 Stephen Williams: The Chancellor's answer to this, Chairman, is to appoint Digby Jones to go round prodding employers. Do you think that is going to work; does he frighten you? Mr Wright: I think he will raise the profile of the debate, and that is important. I still think that there is a level of misunderstanding with employers, which is quite astounding really, the lack of knowledge that many employers have about the work-based learning environment and what is available. There is a lot of ignorance there, to be frank; so the more we can raise that the better. How effective Sir Digby Jones is going to be is a matter for conjecture, I suppose. Q299 Chairman: That £1,200, which is going to be spent on that employee, what is your share of that? Mr Wright: It is a pretty low-margin business, to be honest. Our operating margin is about ten per cent. Mr Withey: That is the fee for the training provider to get the individual through his, or her, framework. Q300 Chairman: If he, or she, goes through, that is the percentage? Mr Withey: No; that would be our fee. Q301 Chairman: What is the fee? Mr Withey: Twelve hundred pounds, in this particular example, and it varies depending upon which course you are on. Q302 Chairman: You get the £1,200 and then have to provide the training and you get about ten per cent profit? Mr Withey: Yes. Mr Wright: Yes. Chairman: Let us move on, to talk about apprenticeships. Q303 Jeff Ennis: Can I raise a point for clarification with you, Dan, to begin with; on your evidence document, your address is "Weston Business Centre Stansted, Parsonage Road, Takeley, CM22 6PU" CM, that is Chelmsford, is it? Mr Wright: It is Stansted Airport area. Q304 Jeff Ennis: Then at the bottom it says: "Registered in England and Wales, Unit 9C, Redbrook Business Park, Wilthorpe Road, Barnsley." I am just wondering why that is? Mr Wright: That is my base. I happen to work out of Stansted, myself and a secretary, because I am field-based. Where we registered the office is in Barnsley rather than the West Midlands. Jeff Ennis: What is the sort of operation in Barnsley now? Forgive my ignorance; it is not my constituency, it is Mick Clapham's. Chairman: This is from a man who has a record; I think there has never been a session in this Committee when Barnsley has not been mentioned. Jeff Ennis: It has been twice now; neither in my constituency. Q305 Chairman: One of these days I am going to give you the chop. Sorry about that. Mr Wright: My Finance Director is based there, with the Company Secretary. We have a call centre there, which is where we generate leads for learners, also we have got a regional office which delivers learning in the Yorkshire and Humberside area. Q306 Jeff Ennis: That is very interesting. Moving on to the apprenticeship scenario, Leitch is recommending expanding to half a million by 2020; does this seem like the right target for you? Obviously, this applies to Simon as well. Mr Wright: What I do know is that currently, everywhere, people are struggling to meet the targets that we have in place now, so it will be a very challenging target and it will be dependent upon ability to engage small to medium-size employers. I think it is a very stretching target, to be honest, and I know full well that in a lot of LSC regions, and you have heard it today, particularly London, they really are struggling. In some others it works particularly well; the North West is performing particularly well and a couple of other regions also. Q307 Jeff Ennis: Is that your take as well, Simon, on the target figure? Mr Withey: By and large, yes. I think it is very important though that the jobs match the qualifications and the skills, and that goes not only for Level 2 but for the higher levels as well. I think we need to watch the growth of the apprenticeships to make sure it is matched with the UK's demand, or industry's demand, in those various sectors. In broad terms, I welcome going to 500,000 and I think it sounds right to us. What we will need to watch is that quality is maintained as well, because it is a big increase on current numbers, in a relatively short period of time. I know there will be some stretch on the supply side, so we are very conscious of the quality side. Q308 Jeff Ennis: Were either of you disappointed that apprenticeships were not brought within the Specialised Diploma framework; should they have been? Mr Withey: We see the Specialised Diplomas almost as a bridge between secondary schooling and the workplace, so quite where apprenticeships sit does not worry us particularly. We have been doing quite a lot of work with the Diplomas, mainly on the school side, so to us it is a continuum; and the fact that it is a different funding stream is potentially an issue, but apart from that we do not have a concern over it. Q309 Jeff Ennis: Dan, in your evidence, with regard to apprenticeships, you said, and I agree with this, skills acquired in one sector should be transferable as far as possible. What needs to change to make that become a reality? Mr Wright: The nature of the qualifications is very prescriptive and when you are in a sector, let us call it 'quick service', the number of bits of evidence you need to produce to get that qualification is highly prescriptive. They are not transferable to other sectors, and the problem you have got, particularly with the likes of hospitality, is that a young person coming into the hospitality industry has not made up their mind necessarily where they want to spend the rest of their working life. They do transfer quite a lot between hospitality and retail. You can transfer across only some of the units, which are transferable, there is a lot they leave behind, and once they have left those behind they have lost the funding for that qualification, so they end up without having a qualification at all, albeit that they want to progress their career. I think it goes back to some of the softer skills we talked about earlier, in terms of how business works, how you interact in a service-driven economy with the customer, all those kinds of things, which the qualifications do not address necessarily; I think they try to but do not necessarily, because they are focused totally on the actual skills element and what you need to do that job. Q310 Jeff Ennis: Have you got anything to add to that, Simon? Mr Withey: Only the angle of personalisation of learning, which, from where I sit, is aimed primarily at schoolchildren, but I know it is going to FE and hopefully HE as well, and why not apprenticeships, quite frankly. For me, I think the opportunity is there not only to work at your own pace but also just to pick and mix the most appropriate elements that you can, wherever possible. Q311 Chairman: Can I push you just a bit, Simon and Dan; you did not seem very interested in the new Diplomas at all. Is that because it is not a market sector for you, you are not going to make any money out of it so you are not very interested? Mr Withey: No. We think it is a good opportunity for us, from a business point of view. Q312 Chairman: You dodged the question rather? Mr Withey: I did not mean to. I think it is fairly early days actually; what are they really going to be, are they going to be taken up well, are they going to be seen as, if you like, the poor man's GCSE. I think that is the real worry, that those who cannot or do not want to do an education route go on the vocational diploma route, and if there is any stigma attached to that I think they are dead in the water. I think how they are rolled out is really important. Q313 Chairman: They have got to be high quality from the beginning? Mr Withey: They have got to be high quality; they have got to be seen to be. It is like the early days of some of the NVQs and BTECs, and so on, what will they mean to employers, and they have really got to mean something to employers, just as GCSEs, A Levels, and so on, are recognised by employers. I think it makes good sense for young people who are not academically focused and biased to take a more hands-on professional route in some of their schooldays. Mr Wright: I agree. I think the issue for us is how they are going to work in practice and how employers will see it. For an organisation like mine really to get under the skin of that, you have to put a huge amount of resource into it, you cannot just provide it, so we need to understand how that strategy is going to work and then what resource we need to bring to the party. At the moment, I think it is early days for us. We are looking at it, in one or two isolated areas, but, I have to say, we do not really understand how it will roll out going forward. Mr Withey: I think perhaps this was an earlier question, of where we can help with FE actually. Schools are not going to deliver these Specialised Diplomas on their own; they need to team up with colleges and other training providers, perhaps like ourselves. I think that coming together is an area that we can add some more value to, in these consortia and confederated training organisations. Jeff Ennis: To acknowledge really the point which Simon has just touched on, because if the Diplomas are going to be successful, and we on the Committee all hope that they are going to be highly successful, you have got to have both FE colleges and schools working collaboratively, every secondary school providing a certain level of these Specialised Diplomas. I would have thought there was a niche there for you guys as well to work collaboratively and work with the schools and the colleges. Q314 Chairman: You can do some consultancy in Barnsley. Can I push you on a couple of other issues. What do you think of the Sector Skills Councils generally? Mr Withey: Currently we provide a national view on certain sectors; we deal with, I guess, five or six of those in some detail and I think they have got an increasing role to play. What is important, from where we sit, is that it is balanced with a regional and a local requirement, with one system all across the country. I think it is important to get a balance locally and regionally with the national view, but I think it is important to raise standards, it has had the body like the Sector Skills Councils to do so, and we work very closely, as I say, with a number of those. Q315 Chairman: Do you work well with them? Mr Withey: We have our moments, in terms of some of the changes to the scope of frameworks, and so on, but we have some good, healthy dialogue with them and normally it is very constructive. Mr Wright: I think it depends on the sector; some are more representative than others, I think. Q316 Chairman: Which are the best and the worst then, Dan? Mr Wright: I do not think it is about good and bad, I think it is about the complexity of what we are trying to do. I mentioned People 1st, which is the hospitality Sector Skills Council; it has an inordinately difficult job to do. It is trying to lay out qualifications for a broad range of businesses, many of which are very small; take caravan parks, these are small owner-operators, and how do you truly represent what they need. My experience as well is that whilst their job is to represent the industry it is very difficult for them to do it accurately, and in my experience, running businesses beforehand, I had very little contact with them, very little. It tends to get fed up through the process, but actually, in terms of representing the real needs of what, for example, the hospitality industry wants, they have a very tough job to do. I think they lay down standards, in terms of the qualifications, reflecting what ought to happen, but when you talk to a lot of employers they have very little contact with a Sector Skills Council. Our job is to try to influence them, bring them back to the table, the sorts of things that we hear from employers, and try to influence them in that way. Q317 Chairman: What role is there for quality of apprenticeships; how high a quality? You both said, certainly Simon did, that the important thing about rolling out apprenticeships is that you maintain quality; what is the quality now? Mr Withey: I think there are a couple of measures to that. I guess what I had in mind most were things like completion rates; there are two things, the content and quality of the course and how many courses you get the individual to the very end of so they get the qualification, and I think, if we are going to be, in round numbers, doubling the output, we need to be cognisant of both of those. There is a lot of work. I think, quite rightly, the LSC have put a strong emphasis in recent years on completion rates and they have increased and we have been incentivised by the payment mechanisms to concentrate on that. It used to be just pull the seats out and I think that emphasis needs to stay there, as the numbers grow. Q318 Chairman: We know that, very often, employers give apprentices a job and say they do not want a commitment? Mr Withey: Sweep the yard, yes. I think, again, if you bring that together with some employer funding, which we touched on a few minutes ago, that will drive the employer to make sure he gets some value for money out of the programme. There is actually an upside, it is a challenge for our businesses perhaps, to make sure an employer does partly contribute, but if he is paying for part of the service he is going to demand some quality there. Q319 Chairman: Do you not think it is a strange world this, of training, though, if you take one of my constituents and explain to one of my constituents? I visited a major engineering company recently and they said, "It's dreadful. On the one hand, we haven't got enough skilled engineering people coming through, applying to us for apprenticeships; we do get a certain number but we take only half the ones we need because the Government won't pay any more money for the other half." Is it not a strange world to explain to my constituent, that here is a highly profitable, international business which wants more qualified workers but will not take on enough to fulfil the jobs which need to be done because the Government will not give them any money: what crazy world is that? You are in engineering; is that the sort of thing that Vosper Thornycroft would say? Mr Withey: We have never had that problem, as it happens; we have always recruited and planned, I guess. Q320 Chairman: You recognise the symptom? Mr Withey: I have seen the issue in a number of companies around the country, yes, and obviously it is a result of budget limits, and so on. I guess we are where we are, in a way, on that. Q321 Chairman: A profitable company and an international, global player will not take on more apprentices because the Government will not pay for them. You are red in tooth and claw; you started off saying about the market; but surely a company which does not take on highly qualified people should go to the wall, should it not? Mr Withey: We would not stop recruiting young people just because Government money dried up for apprenticeship training, for the VT Group. If we had used our allocation and we wanted another 20 young apprenticeships, we would fund those ourselves, if that was the requirement of our business, and I think any decent company probably would do that. Q322 Chairman: What do you think, Dan; is it a crazy world? Mr Wright: Almost certainly. I think it is slightly different, because if you take a company like McDonald's, there is just no way we are going to stop bringing people in and training them to do what they need to do. What we do is accredit their training and we give their employees a qualification to walk away with; so it is slightly different. The hot issue in the hospitality industry is that for many years it has moaned about the lack of skills, of really top-class, qualified people coming through, and what they have not done is invest enough in the development of those people from their own programmes, so now I think they are suffering the consequences of that, because of years of lack of investment there. I think there is a bit of a crazy world scenario there and now, openly, the hospitality industry is criticising itself for many years of lack of investment. Q323 Chairman: Do not hold your breath; galloping over the horizon comes the free training for Train to Gain? Mr Wright: Train to Gain will not deal with the level of skills shortage which the hospitality industry talks about. Q324 Chairman: Almost every training programme we are talking about is subsidised by the Government, is it not? Mr Wright: Yes. Chairman: That might not be all. It has been a really good session. Could you keep in touch with the Committee; you have complemented astoundingly and very well the information and the evidence we had in the first session. If that happens, that we get that kind of match, we are always very happy; so thank you very much indeed. |