House of COMMONS





ON AFTER LEITCH: implementing skills and training policies)






Wednesday 25 June 2008



Evidence heard in Public Questions 172 - 278





This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.



Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.



Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.



Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.


Oral Evidence

Taken before the Innovation, Universities, Science and Skills Committee

(Innovation, Universities, Science and Skills Sub-Committee

On After Leitch: Implementing Skills and Training Policies)

on Wednesday 25 June 2008

Members present

Mr Phil Woolas, in the Chair

Mr Ian Cawsey

Dr Brian Iddon

Mr Gordon Marsden

Ian Stewart

Dr Desmond Turner


Examination of Witnesses

Witnesses: Chris Humphries, Chief Executive, UK Commission for Employment and Skills, Teresa Sayers, Chief Executive, Financial Services Skills Council, Tom Bewick, Chief Executive, Creative and Cultural Skills, and Frank Lord, Chair, Alliance Employment and Skills Board, gave evidence.

Q172 Chairman: May I welcome our first panel of witnesses to our inquiry entitled "After Leitch: Implementing skills and training policies". We have Chris Humphries, the Chief Executive of UKCES, Teresa Sayers, the Chief Executive of the Financial Services Skills Council, Tom Bewick, the Chief Executive of Creative and Cultural Skills, and last but by no means least, Frank Lord, the Chair of the Alliance Employment and Skills Board. Welcome to you all and thank you very much indeed for giving evidence to us this morning. The whole of the Leitch report is peppered with a theme about demand-led education and training. What does that mean to you? What is your understanding of that, Chris?

Chris Humphries: To me demand-led refers to the need to ensure our employment and skills system understands and is responsive to employment needs. To me that comes from an understanding of what we think the likely direction of travel for sectors and employers is, where the priority skills requirements are going to be in the future and aligning that to the capabilities, needs, skills and requirements of an area and the people who live in it. It is about creating a system that is responsive on a number of dimensions. It can never be as simple as saying, "Let us meet employer demand". It has to bring together employer demand, local and regional priorities and individual capability and opportunity and create a system that is more responsive to that. For me it sits around the area of employment. My remit as an employment and skills organisation is to focus on the extent to which the system meets the needs for economic competitiveness and increased employment.

Q173 Chairman: The previous systems have been demand-led. Unless somebody applies for the training then it does not happen. What is the difference?

Chris Humphries: There is a difference here between whether or not the individual is able to enter a course they think they want and whether or not the outcomes at the end of that programme both for the employer who hires them and the individual who wants it are what they were expecting and hoping for. There is significant evidence to show that many of our learning programmes are out of touch with modern industry developments, that education and training is finding it hard to keep pace with the pace of change in many industries, not just in the technology-based industries, and that it is too easy for our learning programmes to lose their currency and their fitness for purpose in a world in which change through globalisation, as we all know, is dramatic and rapid. That is why almost every country in the OECD is undertaking a review programme at the moment, to try and understand how to ensure that their education and training system keeps pace with the rate of industry change in order to ensure their competitiveness. That is what people are concerned about, the extent to which the system in its design and approach has fit for purpose training programmes available within it, ones that meet the requirements of employers as they are changing over time and are responsive to tomorrow's industry needs as well as today's.

Q174 Chairman: In Lord Leitch's report the demand-led system equates to employers who actually create the demand when in reality what is actually happening is it is the government rather than employers that is deciding which areas you can train in and where they will get the funding from. This is really the government being the demand-led rather than the employers.

Teresa Sayers: I think the creation of sector skills councils and allowing sectors to have a vehicle through which to channel the needs of their individual sectors has been a significant improvement over the last year. With all sectors there is an element of what is called generic or employability skills that employers are looking for and inevitably there is an element of sector specific skills that employers are looking for. I truly believe that employers now have a better opportunity to shape the delivery and the content so it is more tailored to meet both the generic needs and the sector requirements as well.

Q175 Chairman: I would expect you to say that as you represent a sector skills council. Is that what employers are actually telling you, that the packaging of the training programmes is in fact what they want because we are getting evidence which is to the contrary?

Teresa Sayers: Certainly the evidence from our consultation with the employers and our research to date is saying that many employers are, and continue to be, dissatisfied with the quality of new recruits into the market and they are looking for the educational system to fix what is wrong because they feel slightly disappointed that they have to do that when young people come into the marketplace. Certainly in the sector that I represent the vast majority of employers are very reliant upon professional qualifications and they have been for well over 100 years. I think they feel that through that mechanism they have a greater opportunity to shape the content and the quality of that.

Q176 Chairman: We have a huge amount of national, sectoral, regional, subregional, occupational-led targets and initiatives. This smacks of a control system rather than a demand-led system. How can you have a purely demand-led system when you have so many organisations with a finger in the pie organising it for everybody?

Frank Lord: It is extremely confusing for the business community. We could learn lessons from large organisations like Toyota who have a global strategic plan that will go on for decades. That is probably why they are so successful as an organisation worldwide. With employment and skills within the business sector there have been so many changes that have happened, from TECs to LSCs, to the Skills Funding Agency and the changes with the National Apprenticeship Service, that it is very, very difficult for the employer to understand, particularly the small employer.

Q177 Chairman: But they are in charge of all this.

Frank Lord: Most small employers still go to their accountants as the first port of call for assistance. The latest survey of the Small Business Federation showed that over 50 per cent still go to their accountants. Most employers are micro or small businesses and providers normally chase the targets of the larger organisations. If we are going to get to the Leitch targets, which are very, very stretching, we will really have to make sure at a subregional level the business voice is heard. That is my main concern with employment and skills boards and education business links, that with the new changes in the framework to local authority and unitary services the business voice is being diluted and not heard.

Q178 Chairman: We will come back to some of those issues in a second. Tom, at what point do you think the state should plan the skills agenda? Should it be at Level 1 or 2 or should it be at Level 3 or 4? Where is the point at which the state should plan that because it is a common good and where should employers take over?

Tom Bewick: Perhaps I could answer that by referring back to the question about demand-led because I think therein lies the answer. In answering that question I think we need to ask the question "Whose demand are we talking about?". I would argue that we have a demand-led system. It is a system that is led in part by Government, but the vast majority is led by parents and by students. For example, in the creative and cultural industries we have as many people right now on 180,000 courses as we do in the workforce, that is approximately half a million in the further and higher education system. You could argue that is a demand-led system. Students are very attractive to the creative industries and that is probably driven by Saturday night shows like The X Factor, but nevertheless they demand a place.

Ian Stewart: What is that?

Q179 Chairman: They do not have it in Scotland!

Tom Bewick: In terms of this issue about state planning, the state has a role in setting the strategic framework for skills, for economic performance and in particular for productivity. In a sense why the sector skills councils are such an important innovation since 2001 is that what they provide is that reality check on whether or not the state's strategic aims and objectives are really in tune with both the short- and long-term economic needs of the country. That is why all sector skills councils have at their heart, as industry-led and industry owned organisations, credible and senior employers who can provide that reality check on government policy.

Q180 Chairman: Teresa, the whole agenda appears to be driven by achieving the Leitch targets, but do you feel that they are owned by the employers or is that purely a government mechanism?

Teresa Sayers: I would say that employers take little notice of targets that are set by government. If those targets happen to relate to what drives economic performance in their sector then that is great. Quite often the difficulty is that targets do not relate to what drives economic performance and financial services. What employers are principally concerned with in financial services is how they meet the regulatory requirements, how they drive performance by having higher level skills in IT, maths and mathematical analysis, those kinds of things. That is what drives them and what concerns them. I think they actually have little concern or regard for government targets.

Q181 Chairman: Do you think the Leitch targets, which the government has accepted plus an additional one for Level 3, have any relevance for the people you represent?

Frank Lord: No. If you did a survey of the employers you would find that still the issues for employers are around the basic skills of numeracy and literacy that they wish their employees to have. If you look at the surveys that are carried out, that always comes out as one of the top answers. Also, in terms of attitudes towards work and aspiration levels of people in businesses, it is something in surveys that always comes out that needs to be improved. It is all very well having these targets that we have set that are aspirational, but to engage people in learning in the workplace you have to look at how you can reach them to get them to begin to learn. It is difficult to see how things like bite-size learning and the kind of support that has been there in the past fits in with the new structures. Employee development centres, for example, within clusters of small enterprises could be a very good vehicle to engage adult learning which would then be demand-led because they would take that back into the learning place to encourage their employers. We have got to have many approaches as to how we get a change in culture. For a change in culture you have to take people with you. You cannot take change and implant it on them.

Q182 Chairman: Frank, you will not get any funding for the model you have described.

Frank Lord: I would campaign for it because that is where change happens, at the coal face, with real people learning more about themselves and about how to work as a team. Just having faith in learning in general without targets is very, very important. That is how you get cultural change.

Q183 Ian Stewart: This is very interesting to me personally. If that cultural change that you are talking about is to take place then surely that will need the providers, FE and private providers, to go to the workplaces and deliver the training more than they do now.

Frank Lord: Yes.

Q184 Ian Stewart: And that would be welcome?

Frank Lord: Yes, and a follow-up to it would be welcomed as well. If you are in a service industry now you will get a text message or a phone call the next day asking you what the service was like. Do we do that with the provision that we provide? Do we ring learners up the next day? Do we ask them what their experience was? Do we take that feedback on board in that kind of real-time environment or do we wait for years for reports to come out to assess things? We are just not flexible enough and quick enough off the mark to help to engage the changes that are needed, it is far too bureaucratic. If we lose the local input, the strategic and the sub-regions, then I am very keen to see how employment and skills boards can link in to the Commission for Employment and Skills and how ESBs and our EBLOs can link into that. I believe that the voice of the employer is being lost in these new structures. You can now go to employment and skills boards that would not even have an employer representative on them from the private sector. To me that speaks volumes.

Q185 Chairman: Can you give me an example of one of those?

Frank Lord: Yes, Derbyshire County Council would be an example. I think they are still seeking to get an employer on their board.

Q186 Chairman: Are you content with the rate of progress to achieve the Leitch targets? Do you think we will be there by 2020?

Chris Humphries: No, I am certainly not satisfied with the rate of progress at the moment, but we will issue a formal report on that in March next year, it is a part of our remit. The whole thing about the targets is that they are quite consciously structured as a way of measuring the behaviour of the supply side. Frank is right in saying employers do not care about them but actually most employers do not know about them. What they will tell you very clearly is we need basic skills and key skills addressed, we need employability skills addressed, but we also need higher level skills because there is not enough of a focus on the skills that are going to drive us up the productivity ladder. By the way, we are likely to want more people at Level 4 and higher as well because that is where the economic challenges of the next ten years are coming from. They may not reflect numbers in the way that Sandy Leitch's targets reflected numbers but they hit all the same buttons. The messages for employers about what the big skills challenges are today are actually consistent with the issues, priorities and gaps that Sandy identified, but business will never know those targets. Why should they? What would it take and what would the value be of them knowing what the target would be? What they want to see is the system changed to deliver those things and that is where your rate of progress question is completely valid. The latest evidence from the OECD is that both in terms of the proportion of our adult population that have got secondary education and in terms of the proportion that have got tertiary education we are going backwards compared to our major competitors in the OECD, not forwards and I think there is a real need for a sense of urgency around this.

Q187 Dr Turner: You have already alluded to the number of people with fingers in the pie. Is it indeed reasonable to describe the thing as a system anyway? It does not seem to be terribly coherent. Has it become too complex? Have there been too many changes? The government is still spewing out policy papers at the rate of one a month or even more frequently. Is there not a need for some simplification so that people can see an obvious way through the system before we get results?

Chris Humphries: Given that that is one of the explicit remits of the Commission I guess my answer to that must be yes! I think you are absolutely right. The system has got more complex over the last six months, not less with the changes in the machinery of government, the splitting of the departments, the move to devolve part of 14-19 to the level that 19+ is operating at. All of those things have brought more organisations and interrelationships and partnerships and co-ordination roles into greater demand. What is certainly true today is that I do not think there is an employer in the land who understands what the elements of the new system are. Undoubtedly complexity is a big issue. On top of that, employers report that it is incredibly hard to get the answer you want out of the system because so many organisations are actually remitted to create a public and visible brand for themselves and so every organisation is actually challenged to make sure employers have heard of them and each time they do that and each time another letter arrives from yet another organisation on their desks they start to worry about disengagement. Mike Rake said it when he was first appointed. Sixty-seven organisations with skills in their remit wrote to him to tell him it was essential that the Commission worked with that organisation because they were the heart of skills development in that particular sector or area and Mike had not heard of any of them until that point. Are there too many organisations? Probably. Do we make it harder for employers to find a way round it by requiring each of them to present themselves separately and independently? Not only do we have complex wiring on our circuit board but we publicise each part of the wiring rather than trying to hide it so the employers and individuals get it simplified.

Q188 Dr Turner: It sounds a bit like a job creation scheme for administrators.

Chris Humphries: Education is complex. It always has been and it always will be. Anybody who thinks it is going to be a simple matter just needs to look at the different functions that an educational system has to perform to understand that it will have a degree of complexity. To me it is about whether you design the system to make it easy and simple to access or whether the way you set it up works against that goal. I think we have started to work against our goal of simplification and I think it is a big challenge. The biggest request we get from major employers is to simplify the system so employers can find their way to the right place and get the right person as and when they need it.

Q189 Dr Turner: These are devolved matters across the country and yet your organisation is a UK-wide organisation. How do you mesh in with the devolved authorities?

Chris Humphries: I think it provides a great opportunity. We know there is a different pattern of employment, unemployment, social inclusion and exclusion, productivity and competitiveness in different parts of the UK. There is not a common UK economic structure or economic situation, things vary by geography. One of the things the four nation approach of the Commission offers us is the ability to monitor and learn from a number of different laboratories in which different things are being tried in order to get the system right. I do not believe there is a country in the world today who would say they have the perfect system post-school. In fact, most countries are asking radical questions about how to change them. The first value to me is that we have a chance to learn from each other. The second one is to say there may be a need to look at the lessons of areas of the country with 3/4/5 million people in as a model for running the system. There are many observers. For example, the World Bank in a seminar last week commented that one of the things they are beginning to believe is that running an education system in population groups of 3-7 million may be the way to ensure quality, progress and effective operations. They were asking me as a representative of the Commission whether we had a view yet on that issue. I think there is a real opportunity to learn from the ways in which different parts of the country respond to the different challenges they have when using employment and skills as drivers to get the whole system to perform better, but we have to find a way of doing those things that should be done nationally at a high level, those things that are best done regionally or on a country basis and those things that are best done locally. I do not think we have got that clarity of framework yet.

Q190 Dr Turner: I was going to ask you at what sort of regional level you think these issues are best addressed. You have obviously got different problems in different areas and if you do sector analyses you will come up with different answers in different regions. Who do you think is best placed to do this work and lead this work? Do you think we have got the balance right between the responsibilities of the sector skills councils and the RDAs for instance? Should we be thinking of shifting resources towards the RDAs rather than the skills councils? What do you think are the answers?

Chris Humphries: The skills councils do not have anything like the level of resources of the RDAs. They are short by a factor of at least four. I do not think there is an answer there. The fact is that there is far more resource at a regional level than there is at a sectoral level.

Q191 Chairman: Are you suggesting that we should change those resource allocations? It is all right making a comment about it ---

Chris Humphries: It was just because the suggestion was that there was an argument for moving it. I do not think there is quite enough investment into the sectoral side of things. I think we are asking SSCs to do more than we are resourcing them to do, but I do not think it is a major big issue and I would not be suggesting moving the delivery of resource, which is what I think should be going down on a devolved basis, back up to the national level. I think the sectors play a critical role in helping us to understand those things that are common across sectors and industries and understanding global trends, understanding what our nation's businesses have to do to keep pace with the world and keep competitive. You then need to look at and act at a sub-national level and I think there are some big unanswered questions around that. We have a very confused system. We have RDAs, we have regional skills partnerships, we have employment and skills boards that are operating at a sub-regional level and we have multi-area agreements that are operating at another level. We have not yet anchored on an appropriate sub-national structure and we are in a process of change. I think the concern people have is that they are not sure where the end destination is on all of this. Again the view would be that if you are going to use employment and skills problems to solve social exclusion and productivity problems then you have to work in sensible economic areas, you have to work in labour market areas, rather than either artificial regional boundaries or individual local authority boundaries where those organisations are part of a bigger economic unit. The move at the moment is towards trying to service economic units. We are seeing city regions increasing their approach because they make up more coherent economic areas than the current regions as we have structured them. Even in places like Scotland, Northern Ireland and Wales there is a recognition that they may have to behave differently for certain parts of their country than in other parts of their country. They have a sub-national approach as well. What I think we are working out at the moment is the right form, but we need to get on with it because at the moment most employers are very confused about what the spatial operator levels and requirements are.

Teresa Sayers: I would agree with a lot that Chris has said. Employers are not just confused but extremely frustrated. If you consider firms which operate in a global context, the complexity of operating within a UK context is absolutely mind blowing for them. Sometimes they may latch onto an initiative. For example, many of our employers like the skills academy that we have created. Why do we not have one in Scotland? It is a different policy context that we are operating in there.

Q192 Dr Turner: How have we got into this situation? We do seem to have a national talent for over-administrating things to the point of complexity where they do not work. It is not just your sector of education where this applies. How did we get here?

Tom Bewick: I think we have a national obsession in this country with structural reform - I have to plead guilty myself as someone who is a former ministerial adviser - and reaching (?) inside the policy framework for a new organisation or a new structure. The truth is, when you look abroad at other complex employment skills systems what you do see are very complex and at times controversial debates about how best to serve the population in terms of employment skills but you also see far more across-party consensus. It is not the institutions that need to change, it is the behaviour, it is the attitudes and it is the outcomes that need to change as a result of shifts in technology, shifts in employment and other changes in society. My first job was for this man, Mr Humphries, here at the TEC National Council 12 years ago. During that period I have worked for the national training organisations and I have worked for the Learning and Skills Council. You could say I just cannot keep a job down, but I have been in my current role for nearly four years now! There is an obsession with this structural reform. The former Secretary of State Mr Blunkett said in 1998 that the system was like a Soviet warehousing operation and, I have to say, you could still level that accusation at the system today.

Q193 Chairman: Do you agree with that?

Frank Lord: Yes. I do not think we are going as far forward as we think, we are going backwards because the sub-national review, rather than necessarily getting down at sub-regional level, is moving towards local authorities and unitary arrangements. The things that were working on a sub-regional basis were working across boundaries local authority areas. That is where our Alliance and Skills Board has had the most impact. There is not a duplication of resources, there is joined-up thinking and we are able to involve the commissioning of things across areas where employers work. We seem to be moving away from that and relying on the RDAs now linking through to the local authorities. I feel that the business voice in this is beginning to get lost and I am very, very concerned about it. It was much stronger before with the LSCs.

Q194 Dr Turner: If you look at the educational institutions that used to be involved, it is within my lifetime that there were polytechnics which were run by local authorities, which delivered an awful lot of the training that we are talking about. They are out of the picture now because they have been taken away from local authorities. Most of them have been transmogrified into universities and they do not want to know. Is that where it started to go wrong?

Frank Lord: I do not know. I went to a polytechnic myself. I am not sure where things started to go wrong. Change for change sake is not healthy and transformational change in itself is not always a good thing. We should be thinking about how we can take things forward incrementally and design things from within what we have to take it forward. As long as we have knowledge and an understanding of what it should look like and we can move towards that then you should work with what you have got because employers just get confused. I tried to do a mapping exercise last night of the changes and it was absolutely mind boggling when I looked at how simple it was before and how it is now.

Q195 Chairman: The record shows a mind boggling chart!

Frank Lord: We have had the RDAs, business support, the Skills Funding Agency for adults and skills post-19, then the National Apprentice Service, the National Employee Service, the Adult Advancement and Career Service, the link with FE and providers, then the LAs to the 14-19 entitlement, the Young People's Learning Agency for the 16-19 provision, the 14 to 19 ---

Q196 Chairman: Enough!

Frank Lord: Exactly.

Q197 Dr Turner: Do you think there is a case for tearing it all up and starting with a clean sheet of paper, if you could do that?

Frank Lord: What we have was just beginning to work. There were signs coming through.

Q198 Dr Turner: It was just beginning to work?

Frank Lord: Yes, I think it was just beginning to work.

Q199 Dr Turner: But that has now past.

Frank Lord: Never say never!

Q200 Dr Turner: A lot of people have suggested that there should be more of an interface between sector skills councils and RDAs. Do you think the RDAs have the capacity within themselves to make a useful contribution? It does not seem to me to be their prime role.

Frank Lord: I think the RDAs do have a role to play, particularly around business support and business development. It is important that the RDAs are able to link in to what is happening at the sub-regional level through the SSPs, the Sub-regional Strategic Partnerships. That bit worked quite well.

Teresa Sayers: One of the keys to solving this problem is around clarity with regards to the remit. If these organisations are very clear with regard to what their remit is and we can avoid duplication and the repetition of activities --- From an employer point of view, there is more than a degree of fatigue on their part at constantly being bombarded with requests from a whole array of organisations. In our experience employers just want effectively a one-stop shop where they can channel their requests and information through and then get through to the appropriate organisations because they are fatigued by being inundated with requests.

Q201 Chairman: Tom, how about another job move and we get rid of the sector skills councils and put it all in the RDAs? Is that a sensible way forward?

Tom Bewick: I would not like to start and write a new policy here in front of the Committee. I do feel that in the end it is not the multi-agency world that is really the problem. It is a complex world out there. I think it is about who is purchasing training and employment and skills support. At the moment we are trying to purchase apprenticeships through the National Apprenticeship Service, bespoke business support through the regional development agencies and all those purchasers are people like me in the sense that they are administrators. They are proxy consumers if you like. They are second-guessing what the market needs on behalf of the client, in this case the state. I think we have got to go with an old idea which is starting to come back, which was around in the late 1990s with the Individual Learning Account concept and that is the idea of putting purchasing power in the hands of the individual. I would go a step further and say maybe we should think about employer company-wide learning accounts as well. If we had that sort of system where in the end employers and individuals were driving the system with good information, advice and guidance around it then I suspect a lot of the institutions we currently have would either have to change to respond to that new market demand or would wither away and we do not have that at the moment.

Q202 Ian Stewart: I am interested in the Commission itself, in re-licensing sector skills councils and regional representation. Chris, how will the establishment of this Commission improve the relationship between employers and the education/training supply chain? By the way, what does this Commission bring that its predecessors did not have?

Chris Humphries: This Commission has a very different remit to the Sector Skills Development Agency and I think it is worth touching on that, but I will focus initially on the SSCs. I believe that the sector skills councils are an appropriate policy response to a need for any education and training system these days to be able to keep pace with the rate of occupation and industry change. I would think that because it was a recommendation of the skills taskforce which I chaired in 1998-2000, so I admit my conflict of interest and bias here! Equally, it is a concept that is increasingly being brought into play across countries all over the world. Both the OECD and the World Bank's biggest sets of enquiries at the moment are about how to maximise employer engagement in our education and training system in order to ensure that it is more responsive to future and evolving need. I think there is a great sense in having an effective vehicle through which you can get a better understanding of the way in which industry and sectors are evolving. The system will never be perfect because industry changes on a regular basis, the boundaries between traditional industries become fuzzier and so the system will have to evolve over time. Biotechnology was not something that existed ten years ago. It is now one of the most important evolving, leading edge business sectors of tomorrow. Those things will mean that our system will always have to evolve and change, it will always have to work in a way that is responsive to industry change. Their point is really to do two things: one, to bring a stronger sectoral development voice into the state and to help the state understand how to ensure that its institutions and organisations respond more to it; and secondly, to face out to employers and encourage the employers to understand the value that can be gained by them from developing the skills of their workforce; in other words, to face in both directions and to encourage more effective co-operation between the two.

Q203 Ian Stewart: Earlier on you highlighted the tensions between a demand-led system and strategy. Are you sure that the Commission and all the structures will be flexible enough to deal with real demand-led situations?

Chris Humphries: I think there is always going to be a need for a bit of a dynamic equilibrium between industry as a representation of some of the important demand and the supply side in terms of a set of organisations and people that have to respond to a whole variety of different agendas. If that is not constantly in dynamic change then the system is probably locking itself into the past. Am I confident you need both? Absolutely. All the evidence is that economic development best results from an effective integration of spatial and sectoral activity. Almost all of the work from Michael Polder onwards on building successful and competitive economies is based upon getting an appropriate mix between the needs of a region or area and the sectors that are most appropriate for the development of that area. I think SSCs are one important part of a long-term strategic process which we need to get right.

Q204 Ian Stewart: Let us now move on to the re-licensing of sector skills councils. How do you see that supporting the Leitch agenda?

Chris Humphries: I think it is a critical part of it. If a sectoral dimension is one part of an integrated approach to economic and social improvement then you need to have a strong and effective sectoral organisation to do these things as far as I am concerned: to have the confidence, approval and support of principal employers in this sector, to have very good leadership and management which ensures that they are efficient and effective in the way in which they capture and work with and respond to the changing needs of their sector, and thirdly, to demonstrate that they have had a major impact to the benefit of both the skills within and the productivity and performance of its sector. Those are the criteria which are built into the new re-licensing process and that means the Commission taking some tough judgments if needs be about organisations that we do not think are up to the job. If we do that then we can bring forward recommendations for change. Equally, even where we see SSCs performing well we need to try and set a forward agenda for them or help them agree a forward agenda which builds them towards becoming world-class organisations.

Q205 Ian Stewart: Do employers feel happy with this?

Chris Humphries: I was not sure about that.

Frank Lord: The sector skills councils are really under-resourced. In the employment and skills board that I chair we have tried to do work with sector skills councils. We have undertaken all the work within the logistics area ourselves and we found that there was very little input from the sector skills councils. Through the EBLO we have had some sector skill involvement around Semta on the engineering side of things. I am really concerned about the link sector skills councils will have with the Skills Funding Agency, particularly around apprenticeships and in looking at what employers want from apprenticeships and how the sector skill councils make sure that from a curriculum point of view those things are brought together.

Teresa Sayers: Certainly our experience is that our employers and indeed the employee representation on our board feel frustrated about what appears to be yet another hurdle that we have to go through. They struggle at times to understand the environment in which we are operating. The landscape is constantly changing. They are looking for a degree of stability and an opportunity to build on what has been developed and take that forward. I think there could potentially be a loss of momentum.

Tom Bewick: I think my employers see re-licensing as an opportunity. We are into year three of a five-year licence and over the next year now with the UK Commission we will go through this new process. What is really important is that the Committee understands that the level of resource that sector skills councils are expected to deliver in this newly reformed and re-licensed system is static compared to where it was when SSCs came about a few years ago. The old National Training Organisation Network represented at that time a quadrupling of resources to the new sectoral network. What we are seeing this time round is a re-licensing process that is expecting more of sector skills councils but on, in effect, less money.

Q206 Mr Marsden: Teresa, in response to an earlier answer you used the word "mind blowing" about the attitude of some of the big employers in financial services to the layers and complexities. Have we got the right sorts of actual employers, successful, dare I say, employers on sector skills councils as opposed to people who are slightly out of touch and maybe slightly over the hill?

Teresa Sayers: Certainly from the industry that I represent, we are coming from a starting place where they have not necessarily engaged with initiatives that come from government. They tend to do their own thing, think that they can do their own thing and have done so for many, many years, so actually to get them to a position where they are looking to engage more with government initiatives, I certainly think that that is the case we are getting now.

Q207 Mr Marsden: So you have not got the right sort of people involved?

Teresa Sayers: No. I would say we are certainly building momentum now and we are now able to attract more and more of the big players, the high-street players who now are beginning to understand better the opportunity that the sector skills council brings them in terms of influence, so they are becoming more engaged.

Q208 Mr Marsden: So you are getting there. Tom, can I just hone that in a bit particularly with your sector, and you may want to answer that direct question or not. Have we got the right sort of SMEs involved in sector skills councils, and I say this with particular relevance to yours because of course the area that you represent is 90/95 per cent, or whatever the percentage is, SMEs, is it not?

Tom Bewick: The figure, Mr Marsden, is that 95 per cent of our employers employ less than ten people. There are 62,000 businesses across the sectors that we represent.

Q209 Mr Marsden: So how do you persuade some of those really big, dynamic micro-businesses to spend time sitting on your sector skills council or putting input into it?

Tom Bewick: Well, let me come back to that because I actually do not think the measure of success for engagement with small firms is sitting on a sector skills council. When my Board first came into being, and we are in some ways one of the few examples of a sector skills council that is an organisation that has been built from scratch, not built on any predecessor body, what was priority number one, I think, for our sector skills council was to get the National Trust on our Board, was to get the Royal Opera House, EMI Records and M&C Saatchi, one of the world's largest advertising agencies, because what those employers do that I work with, all of whom are at chief executive or managing director level, is that they provide the strategic leadership for the sector, but in the end what they also understand as being the measure of success for us as a sector skills council is: from this September, does every theatre, does every arts organisation have the opportunity of participating in a creative apprenticeship and do these small organisations have the opportunity of being a part of our National Skills Academy to plug the skill shortage in back-stage skills? In a sense, we need to separate, I think, the strategic leadership role of sector skills councils from what Chris was, I think, referring to as a third element of a relicensed SSC, the impact they are having on those ----

Q210 Mr Marsden: Are you saying then that it does not matter that you have not necessarily got a number of people on your council from the SMEs because the leadership which is overall given by the people that you have benefits the sector overall? Is that what you are saying?

Tom Bewick: The Charities Commission will tell you that the ideal size of a board is 15 places. There are 62,000 businesses, the vast majority of whom are small firms, so I think ----

Q211 Mr Marsden: Is that a yes?

Tom Bewick: Yes, it is a yes. I think it is important to get the leadership right.

Q212 Mr Marsden: Chris, can I just come back to you and come back to some of the things that Frank and other people have been saying about employability. The UK Commission for Employment and Skills, presumably a key aspect of it is employability and skills, and a lot of things have been said, not least in previous sessions by people like Alison Wolf and others, about the way in which there is a danger with all the targets that pieces of paper qualifications become proxies for actual employability or the acquisition of skills. Is that an argument or is that a danger that you recognise?

Chris Humphries: There is no doubt that employers are looking for both, and Teresa said it. They are looking for both the appropriate technical skills and the right attitudes, behaviours and talents that are actually appropriate for being able to work in a 21st-Century organisation. I think what we have failed to do is address enough how to build those employability skills into the work of developing technical skills by the way we teach and help them learn. These skills are about the way people do things, not about knowledge, and you can easily integrate those developments within our existing qualifications and learning programme structures, and actually that is the work of the Commission on this. Our first output will be a report on how to embed employability skills into the way in which people are taught and learn their technical skills, so we do both at once.

Mr Marsden: Good.

Q213 Ian Stewart: When we look at your remit as a commission, employer-led, responsive to employers, employer demand, in that system government has a voice, employers have a voice, but how do the individuals have a voice?

Chris Humphries: It is a concern that I share as well. We have three good, very strong trade union reps on the Commission. We have Brendan Barber, Dave Prentice and Graham Smith from Scotland TUC. We have a very strong piece of work being undertaken with the support of all members of the Commission, employer and trade union, into what are the barriers to employee engagement and employee demand, and we are very keen to make sure that we understand the customer journey, the individual journey in all of this so that the individual voice gets reflected into the system as well.

Q214 Ian Stewart: That is fairly similar to what Lord Leitch said when I asked him the same question. Why is it, in your view, that there is little or no mention of trade unions in the literature?

Chris Humphries: I think there is a danger of not giving enough recognition to the need to have an agreement, a compact here between the individual, who is working for the employer, and the employer, who is seeking to give them work, and of course we have to recognise the individual in all of that. We know trade unions can play a key role in that, and there are enough examples of good practice over the last decade in all of this to know that, when working in partnership, they can really bring change in the skills arena. I am very much supportive of getting strong trade union engagement in this, but also we have to recognise that significant parts of the workforce are not participating in a trade union, so we have to give the individual voice recognition too.

Q215 Ian Stewart: Getting that balance right. Frank, what can the ESBs add to the value and to the delivery of the Skills Agenda and are they an employer body too far?

Frank Lord: Too far?

Q216 Ian Stewart: Do we actually need you?

Frank Lord: Absolutely, you need us, very much you need us because what will be important is that the employment and skills boards can feed back, and it is looking at what those mechanisms are for feeding back now because it is less clear how they will feed back, but, if they do feed back and they need to feed back, what they will be able to do is to pick up on a local basis exactly what kind of skills are needed, what the demands are for skills in those areas and help to influence.

Q217 Ian Stewart: But are the employers making a good enough contribution to this and, by the way, who is monitoring what the employers do with the money?

Frank Lord: Well, the partners around the board and the partners around the board are made up from Jobcentre Plus, from RDAs, from all the voluntary sectors as well as all the agencies, so it really is a meeting of minds with business partners around that board.

Q218 Ian Stewart: Is that robust enough?

Frank Lord: It is because the actual delivery and commissioning of the work then is joined up through the agencies and the commissioning body, and there are executive groups of that that go away and report on those activities and those outputs.

Q219 Dr Iddon: Let me stay with you, Frank, and put it to you that the Government is going to expect employers to co-fund quite a significant expansion of Level 3 and Level 4 activity.

Frank Lord: Yes.

Q220 Dr Iddon: In your view, are they prepared to do that? Will it work?

Frank Lord: I think that, for that, you have to engage them in the whole field of learning and, for me, that comes back to engaging individual adults through employer development centres, as I gave an example earlier, through to making it easier for employers not to be confused, as there is confusion now between Skills Pledge, Investors in People and between Train to Gain; these are all confusing things for employers.

Chairman: You have not answered the question.

Q221 Dr Iddon: Are they prepared to put real money in to get their employees trained? That is the basic question, is it not?

Frank Lord: I think that is the real, big question.

Q222 Chairman: What is the answer?

Frank Lord: I think the question is more interesting than the answer. I do not know what the answer is to that, but I would be quite happy to ----

Q223 Chairman: They are not going to?

Frank Lord: Well, I do not know. I am quite happy to reflect on that and put a note to you on that.

Q224 Dr Iddon: If they do not, Level 3 and Level 4 provision will not expand, as the Government is expecting, will it?

Frank Lord: No.

Q225 Dr Iddon: The Skills Pledge, McDonalds and a few well-known employers have signed up to it, but it has not been very successful so far, has it?

Frank Lord: No, it has not.

Q226 Dr Iddon: What do we have to do to get more employers to sign up to the Skills Pledge?

Frank Lord: Well, I think there needs to be some lack of clarity[sic] around what is behind the Skills Pledge for employers and to actually understand that we have Investors in People as well as the Skills Pledge and we have to understand what we are trying to achieve with the Skills Pledge. If it is to engage employers to develop a plan to invest in the training of their people, then just getting them to sign up to a pledge is not necessarily going to make it happen. It is what happens after that, and what is important is how this links in with business advisers on the local business support services, and how they engage employers in that Skills Pledge is going to be very, very important and critical, but it is confusing at the moment for employers with Skills Pledge, with Investors in People and Train to Gain; they all seem to merge together.

Q227 Dr Iddon: The Government is going to expect a legal right for employees to have time off to go and get some training. Is that going to have a significant impact on the expansion of training, do you think, or are employers going to react against that?

Frank Lord: I think there will be a reaction to that from employers because what employers want in terms of time off, businesses will be looking for some kind of compensation for that or some kind of incentive. If you want to create this kind of change, unless you are going to legislate for it and make training compulsory, which might be the case in terms of the Leitch targets and achieving them, I think that debate will go on, and at what point you might need to enforce something, I am not sure.

Q228 Dr Iddon: Let me ask other members of the panel. Tom?

Tom Bewick: I have not obviously seen the detail of the legislation, but, if it is anything like the legislation already in place, for example, for employees to request flexible working and family-friendly working, then of course I think this is a really positive move, and actually good employers, certainly the employers that I work with, do this already. What I would just say about any sort of system that gives, in a sense, the employee the right to request, the employee himself has still got to be motivated enough to want to demand the training, so I think there is still that question about how do we, in the workforce development and lifelong learning system in this country, sufficiently motivate demand at the level of the workplace to take up training. In my own organisation, and obviously, being a sector skills council, we want to lead by example, we allow all employees to take up to five learning days a year in addition to any annual leave entitlement. I think it is very, very revealing, those employees that take up that entitlement within my particular organisation and those that do not, so I do not think the right to request in itself is really the whole answer to generating more demand at the workplace level.

Q229 Chairman: Teresa, do you have a comment on that?

Teresa Sayers: I would simply add that financial services is a sector that does do a tremendous amount of training. The challenge that we have here is to encourage employers to do things wider than simply meeting regulatory requirements, that it is about the development of other skills. I completely agree with Tom in that the demand also has to come from the individuals and, if it is an individual that works in an environment where they have to already undertake a lot of training simply to meet a regulatory requirement, there is a tendency to not want to go forward and do any more.

Frank Lord: Just going back to that question, in the East Midlands 99 per cent of employers are small businesses employing less than 50 people and, of those, 95 per cent are micro-businesses employing less than ten, so I think we have to take the points that are being made within that context, and it is important to bring the learning into the workplace for those businesses to enable that to happen.

Q230 Dr Iddon: I think we have got that message quite clearly from you, Frank, this morning.

Chris Humphries: If I may, I completely agree with Frank about the need to capture SMEs and I completely agree about the idea of employee development centres in business parks and industrial centres where they cluster, but, remember, it is still true that 73 per cent of the UK workforce works in firms, 34,000 firms, with more than 50 employees. If we have to actually have strategies that reach the bulk of the workforce who are in our larger firms, the 50-plus, and strategies to develop to reach the other 28 per cent, the other quarter of the workforce that are in SMEs, that probably means doing these things differently. It probably means treating the larger and the smaller firms in different ways, it certainly means reaching the SMEs through clusters, but it does also mean recognising that 34,000 firms employ almost three-quarters of the UK workforce, and we also, therefore, have to have strategies that work for the big national employers and the big companies who span the whole of the UK.

Q231 Dr Iddon: We have heard that the SSCs are not well-resourced and yet, Tom and Teresa, you are expected now to play a new role in qualifications and accreditation of the qualifications. If you have not already got the resources to do what you are already doing, are you going to be able to do that as well?

Teresa Sayers: It certainly will be a challenge. It is about, firstly, understanding what is going to be required of us in the new world, and it will be a case of prioritisation about where we put our resources to first meet those requirements of the SSC licence undoubtedly.

Q232 Dr Iddon: Tom, in your sector, do you think you can cope with this new role?

Tom Bewick: In short, no, in terms of the current envelope of resource. The core resource, on average, to a sector skills council is between 1.5 to just over 2 million a year. We are expected to operate across the nations and regions of the United Kingdom, we are expected obviously to collect world-class labour market intelligence, and we are expected of course to raise employer ambition and ensure that there is real impact on the ground in terms of the skills and workforce development profile. Therefore, the short answer, just doing the sums, is no, but what I would say, and this, in a sense, is where the sectoral response will differ and where it will come in, is that in my sector, for example, we are looking at qualifications reform from the point of view of informing the consumer who goes on, for example, one of these 180,000 courses predominantly in FE and HE with market intelligence about the employment rates and the pay rates and whether or not there is demand for those particular courses and qualifications, so we are not going down this sort of Ofsted-style route of saying that it is about having the resource to send people into colleges with clipboards and to check whether or not a qualification is fit for purpose. However, having said that, there are other sectors where a licence to practise operates where actually that sort of approach is needed, so I think we need to look at the resource quite intelligently.

Q233 Dr Iddon: My final question concerns the interface between FE and HE. It is beginning to get blurred with foundation degrees at one end, and I think we have heard throughout this inquiry that there is a difficulty there with that interface. Have you anything to add to what we have heard previously about those difficulties? Do you see that there are difficulties or not?

Tom Bewick: Well, difficulties or challenges, I think we just need to be realistic that the higher education system in this country historically has been difficult to engage with because of the special status, the autonomous status that higher education institutions have in terms of their own awarding powers, et cetera. It is very interesting that the UK Commission's remit of course, and this is to be welcomed, covers higher education, but I do think it is going to be an uphill challenge to persuade, not all elements of higher education, but certain elements of higher education to really take up this challenge. You are seeing it around the diplomas and recognition of the new diplomas in England and you are certainly seeing it around recognition of apprenticeships as a passport and a progression route on to university degrees.

Teresa Sayers: I would certainly add that employers in our sector have already voiced their concerns over the responsiveness of the higher education system through the Chancellor's high-level group that was convened to look at competitiveness in the financial services, so we have developed a sub-group working both with employers and universities, so there is now increasingly a willingness to sit round the same table, to understand the language that both sides are talking and to bring about some real results and improvements in the system.

Q234 Dr Iddon: Are the universities being responsive enough in this Skills Agenda?

Chris Humphries: No, I do not think they are. I think they have only just very reluctantly and very recently understood the need to sort of have a better focus on this. I think the other area we have to look at is the poor levels of progression that operate between FE and HE. If you look at Canada and America, the progression between community colleges and universities is part of the system designed in and we have not got that yet.

Q235 Dr Iddon: Are you in favour of one funding council, Chris?

Chris Humphries: I think there is an argument for exploring tertiary education in concept and in operation.

Chairman: Thank you, Sir Humphrey!

Q236 Mr Cawsey: I want to ask a bit about government agencies and programmes. We have spoken a lot already about how many there have been and how they have changed over the years, and, Frank, you mentioned the fact that you thought there were signs that the system was just beginning to work in and we are going to change it all again. How do you think employers feel about the abolition of the LSC and its replacement by the Skills Funding Council? Do you think they welcome that or do you think that they think it is a backward step, or do you think they are just trying to run their businesses and there is just general apathy to what happens at that sort of level?

Frank Lord: Apathy and it hacks them off, to be honest, the changes, because they get involved, as I say, with the employment and skills boards, they just get involved with them and things are moving forward, they get involved with education and business links and the whole scenery then begins to change and there is uncertainty about the future, and that really hacks employers off, so it does not engage them.

Q237 Mr Cawsey: Is that the general view from the employers that you talk to?

Chris Humphries: Very much so. Even many of my commissioners have been meeting with ministers, saying, "You have just made far more complex a system that you have asked the Commission to try and simplify, and that is going to pose real challenges".

Q238 Mr Cawsey: I was going to go on to ask how is it going to affect your organisations, but you would say that it is going to make it more complex?

Chris Humphries: This is now one of the biggest discussions going on around the Commission table, how we offer proposals on simplification in a system which has suddenly got more complex.

Q239 Mr Cawsey: And how is it going to affect your organisation, Teresa?

Teresa Sayers: I would agree. I tend to think that employers, on the whole, simply do not care about what the landscape looks like and all they simply want is that it is going to work for them and be responsive and deliver what is needed, so that is my comment with regards to that; I think it has become overly complex.

Tom Bewick: I must be clear, that many of the same people end up, because of employment, being transferred to these new organisations, so there is not always as much of a hiatus as people make out, but I think what does happen, and I see this now with all the changes and machinery of government changes going on, is that the talk around town is not anymore about the agenda, about skills and about lifelong learning, about life chances and opportunity, the talk around town is one of, "Well, what job have you got?" or "Where are you going to be in the structure?" and that is what keeps on happening at the moment. Every few years, as we move around the deckchairs, we change the plaque on the wall and the debate becomes internalised about the system rather than about actually the agenda.

Q240 Mr Cawsey: I want to move on to Train to Gain, which obviously you will be very well aware of, and we have had written submissions about the difficulties with that scheme. What do you think are the key difficulties of Train to Gain, are they repairable or is that yet another one where we need to go back to the drawing board and think again?

Frank Lord: There just seems to be a little bit of a fuzz between brokers and providers around Train to Gain where you will have some providers that maybe have got targets to meet, so they are going very, very specifically to look at what outputs they need to meet, and you have got brokers that are going in to signpost employers to where they should go for the training and then those follow-ups from that provider can be quite patchy and selective, and I think there are issues around that.

Chris Humphries: I think Train to Gain was an idea designed to try and address some of the demand-led issues which are still actually getting better. I think the new sector compacts, as they are described, do provide a more responsive package of opportunities, but, if you were going to ask me, I would think there is yet more to be done in the extent to which Train to Gain actually responds to a coherent training plan from the organisation and offers a tailored response rather than operating on very rigid rules about qualification levels which just too often do not align with what the employers' real strategic, long-term needs are. I do not think it is a bad idea in concept, but I think we actually could do a lot more to develop its effectiveness and its value and return.

Q241 Mr Cawsey: We have already had some evidence that compacts are just going to be another thing that is going to make no difference and end up being put on the shelf. Is that a fear that you have and, I suppose from that, what difference do you think they are going to make?

Chris Humphries: I think the concept behind sector compacts is to try and give employers a better choice, a better way in which to link their strategic needs with their training requirements with the system. I think the weakness at the moment is that it still does not try to start from the needs of the business in relation to strategy and skills and, if it did and what we designed was a response that met their needs, but tariffed in such a way that it gave meaning to Brian's suggestion earlier about getting employers to pay for those higher-level skills that they get most return from, in other words, if you had a tariff and a tripartite responsibility built into the funding regime around a training plan from the company, you could create something that still sticks to many of the concerns about basic skills and moving up the higher-level skills ladder, but does it in a way that is responsive to it and, therefore, produces a better impact on the business.

Q242 Chairman: Is this the honest truth, that you cannot give away money, as far as Train to Gain is concerned, that you cannot give it away, and that sector compacts is just another idea of trying to get rid of the money?

Chris Humphries: No, I think it is a slightly bigger and different problem. I think we have designed a system with too many rules, that the employer experience starts with the broker who is incentivised on getting to the next stage, so could exaggerate what is on offer and the employer then finds from the provider that actually what is on offer does not quite meet the employer's needs, and we do not have a system that offers an all-through service.

Q243 Mr Cawsey: So what would be the measure of the effectiveness of the compacts? How are you going to be able to show in the future that they actually made a difference?

Chris Humphries: As long as the operation of the compact is based around responding to a strategic plan and looking at the skillsets, you can actually look at it both in terms of the achievement of the individual and you could even relate it, over time, to the return to the business of that activity. You cannot do that with Train to Gain in its current form, but you can do it in a system that is designed to buy a training plan and fund on the basis of a shared responsibility between the State, the individual and the employer, and I think you could create a much more effective system.

Tom Bewick: You asked the question about the measure and, obviously knowing that the Committee is taking an interest in Train to Gain, it is worth saying that 30 per cent of our workforce currently are below Level 2, and it was very difficult actually getting information from the system about our sector and where we were in terms of broker referrals and actually numbers of people who benefited from Train to Gain. I was astonished at the figure across the broader creative industry, and I should qualify that, not just those covered by creative and cultural skills, but it would include media and publishing, there are currently only 100 people who have benefited from Train to Gain across those broad industries, which represent, by the way, 8 per cent of our economy. Therefore, I think if you have got 30 per cent already under-qualified below Level 2 and there is an ambitious Leitch target around Level 2, then we have got a serious issue here which we need to address, so I am looking forward to the discussions with the Learning and Skills Council about the sector compact because one of the things I will want to say to them is, "How do we go from 100 people to a figure that is far more representative of the scale of the challenge for Level 2 within our sector?"

Q244 Mr Cawsey: This is to Tom and Teresa really, the Alliance of Sector Skills Councils has expressed particular concerns about programme-led apprenticeships. What are those concerns and what should be the priorities for changes in the apprenticeship scheme?

Tom Bewick: My short response to that is that they should not exist really. They do not in Germany and other countries. The whole point of an apprenticeship is that it is an employer and an employee, albeit an employee who is at the start of their career, who is going to learn on the job or partly off the job in a particular occupation or area. The idea of putting people into sort of cold storage for 12 or 24 months and calling that an apprenticeship, I do not see the sense in that, personally.

Teresa Sayers: I would absolutely agree with that. I think the value that an apprenticeship scheme can bring is taking the technical knowledge and applying that in a workplace context, and that cannot be done unless the individual is actually in that workplace context.

Chris Humphries: I would say that any apprenticeship is good, so I would not draw the distinction against programme-led. What we need to integrate within them are personal learning skills, thinking and creative skills and self-management skills, and we need to include them in the new qualifications and credit framework, particularly on the 14 to 19 Diploma to count and vice versa so that they are integrated, and, as far as HE is concerned, accredited for UCAS points. They are the things I would say.

Q245 Mr Marsden: Chris, with hundreds of thousands of fewer young people in the next ten to 15 years and an emphasis on reskilling of the adult workforce, have we yet reflected that in the priorities for the National Apprenticeship Service and, if we have not, what is your Commission going to be able to do about it?

Chris Humphries: We are undertaking some work looking at apprenticeships as part of our year one work programme. You are right, I think that there are some real issues around the demographics challenge over the next ten years. It does not mean that we should reduce opportunities for UK apprenticeships, but what it does mean, I think, is that we have to recognise that we are going to be more dependent than ever before on drawing adults of working age not currently in work into the workforce, and we do not yet have a coherent offer to service that group of people who will need significant updating in modern work skills and requirements and, equally, traditionally have a poorer learning record and academic success record and, therefore, are harder to train. My big concern is that this big decline starts in two years' time and runs for the whole of the next decade, if the ONS is right, and we do not have yet policies that really seek to address that directly.

Chairman: Thank you very much indeed. Chris Humphries, Teresa Sayers, Tom Bewick and Frank Lord, you have been a splendid panel this morning. Sorry we have overrun on your section, but thank you very, very much indeed.

Examination of Witnesses

Witnesses: Steve Broomhead, Chief Executive, NWDA; David Cragg, National Director, Adult Learning and Employment, LSC; and David Hughes, Regional Director, LSC London, gave evidence.

Q246 Chairman: Apologies for starting this session late, but we welcome our second group of witnesses: Steve Broomhead, the Chief Executive of the North West Development Agency; David Cragg, the National Director of Adult Learning and Employment at the Learning and Skills Council; and David Hughes, the Regional Director of the Learning and Skills Council London. If I could begin really with you, David Hughes, RDAs have a central role in implementing the Leitch Agenda, but are they up for it?

David Hughes: Yes, I think they are. We, in London, are very fortunate because we have got the Mayor.

Q247 Chairman: You are very fortunate?

David Hughes: Yes, Ken to Boris has been quite an interesting experience, but what we have had throughout the last 18 months is the London Employment and Skills Board, led by the Mayor, but very much business-dominated. That Board is now about to publish its strategy which is due to come out in a couple of weeks' time, and the fantastic news is that there is enormous continuity in thinking about what is needed for London between the old Mayor and the new Mayor, and what we are able to do, because of that, is get the LDA, the London Development Agency, working with us on a proper joint investment plan.

Q248 Chairman: But the RDAs have a clear role, in your view?

David Hughes: Yes, absolutely a clear role.

Q249 Chairman: The same with you, Steve?

Steven Broomhead: Yes, absolutely. Since 1999, we are probably one of the most stable organisations around in a sea of change. We have ensured that skills is an integrated part of regional economic strategies, it has been given focus and priority, we have linked skills to competitiveness and productivity, but, not only have we done that policy work, we have also taken some specific action on the ground, which perhaps I will talk about later on, Chair.

David Cragg: Just to add a little to this just so I do not mislead you at the start, I am taking on a dual role at the moment. My normal day job has been as the Regional Director for the West Midlands and I am, 50 per cent of my time currently, overseeing the transition to the Skills Funding Agency within the national operation, which is why you have got a national badge on me. Can I say, with my West Midlands hat on, that I think that not only is the relationship with RDAs working well, but we have made enormous strides in recent times. If I look at that through my own kind of prism of the West Midlands, we have now got a fully integrated approach with skills embedded firmly through a really profoundly and collectively developed Regional Skills Action Plan embedded firmly within the Regional Economic Strategy; it represents the best step forward we have seen since the RDAs were established.

Q250 Mr Marsden: That absolutely sounds wonderful, but I am just slightly curious, Chairman, if it is so wonderful, why it was that, when we had Professors Unwin and Wolf before the Committee and they were asked what role had the RDAs had in the Skills Strategy, they said there was none, which, I think, surprised some of us. I do not know whether you feel there is a mismatch between your perception of what you are all doing and the perception certainly of commentators in the outside world, but could I ask, on the back of that, is it appropriate that every region should be trying to address all the issues in its Skills Strategy for Leitch, or in fact is it more appropriate that there should be a sort of informal divvying up of championship of key areas? Steve, I do not know if you want to start off on that.

Steven Broomhead: Well, I cannot comment on why academics do not recognise actually what is going out on the ground in terms of RDA involvement in the shaping of policy and the delivery of skills, particularly around employability and economic growth; I think that is plain for all to see. In answer to your question, I think all the RDAs share the Leitch ambition and Leitch Agenda about demand-led, and that is demand-led from employers, but also, I think, demand-led from individuals, and sometimes that whole area is not given enough importance, particularly in the workforce development and the very important role that trade unions play in that particular area, so we share the ambition, I think, for the nine RDAs. What, I think, is different, RDA and region by region, is that we have different sectors which will produce economic growth, so in the North East it is different from the North West, and perhaps our relationships with those sectoral organisations needs to be differentiated. For instance, we are making a great deal of effort in the North West to ensure, around the creative digital industries which are going to be very important to both Manchester and Liverpool and will have a ripple effect out across the north of England, that we have got a real focus around that particular area with that particular sector skills council, so I think it is sector by sector, but also increasingly, because of SNR, it is place by place. We have got to differentiate the sorts of skills developments we want to see in certain places compared to others, so it is a differentiated approach, it seems to work well and I think we have got coverage across the 23/24 SSCs that exist.

Q251 Mr Marsden: David Cragg, perhaps I could put that question to you. It is interesting, we have three RDAs here this morning that are actually fairly tightly focused ----

David Cragg: No, one RDA and two from the Learning and Skills Council.

Q252 Mr Marsden: Yes, but the West Midlands, London, the North West are quite strong, coherent, identified regions and other regions are not the same. How do you deal with regions that do not have that coherence in terms of an LSC strategy?

David Cragg: I think the point you make is a very fair one, but surely the whole basis of having a regional approach is the absolute necessity to differentiate local context and local circumstance. I would take you back to some of the earlier discussions you have had this morning. I think the most important work we have done in the region in developing this joint Skills Action Plan, forget the mechanics of all of that, was that actually it defined roles and responsibilities for all the organisations, not just the Regional Development Agency and the Learning and Skills Council, it positioned sector skills councils very helpfully as supporting all the qualifications reform, the introduction of much greater flexibility, it positioned the spatial dimensions sub-regionally, so it had the full support of local authorities and the Local Government Association, it had the support overwhelmingly of the employer organisations, so, as part of the process of developing that, we had a new partnership around employer engagement. You have talked a lot about the confusion for employers and I can tell you that all ----

Q253 Chairman: Sorry, can I just stop you there because the question you were asked was not about your region which is successful and which is clearly identifiable, but it was about those regions that do not have that clear identity, so have you anything to say about those?

David Cragg: Fine, I take the point, Chairman. I would say, if you get clarity of roles and responsibilities in a region, if you have a very clear shared intelligence base within a region, which are common features, and if you look at the spatial economic geography of a region, all those components will give you the opportunity to address the very specific employment and skills needs and the contribution they need to make to the regional economy. That is my point and forgive me, Chairman, if I went into too much detail about my own region.

Chairman: I think we were thinking of the South West.

Q254 Mr Marsden: I was thinking of one or two other areas actually, Chairman, but you are absolutely right to make that point. David Hughes, if I can hone it on London for the moment, yes, we know that the circumstances and the structure are exceptional in terms of the way in which these things are delivered, and we are also aware, in terms of what witnesses said earlier, that within London you have the whole gamut of needing to address higher-level skills as opposed to some very basic literacy and numeracy-level skills. Now, how can that be delivered best in a London context or indeed in other contexts? Is it best done on a sectoral basis or is it best done on a geographical basis?

David Hughes: It is both, is it not? You talked earlier about systems and what we want to try and create is a system where we have got clear economic opportunities, so in London we have got some massive opportunities around the Olympics and Crossrail, for instance, and around that level there will be jobs at all levels that are required and there will be skills shortages at all levels, so the system needs to respond to that. In London, we have got all of the business organisations, the CBI, London First and the chambers of commerce, working with us with employers. We have got Jobcentre Plus, LSC, the Regional Development Agency and local authorities working on the other side putting together that opportunity with the barriers that are stopping people getting those jobs, and the barriers are not just about skills, they are about childcare, they are about transport, they are about housing costs, they are about all sorts of issues and you need a partnership approach to that, so you need to do that through a systematic approach and you need to pull people together in the right geography. If you go back to the earlier question, it is probably more important in the South West that you get that geography right to get the systems of people coming together than it is in London because London is broadly one labour market with a massive number of people, in excess of one million people, not accessing it.

Q255 Mr Marsden: Steve, can I just take you back to the North West for the moment and, if you want to comment more widely outside the North West, please do, but how are you coping, as an RDA in the North West, between the tension of doing those two things, hitting the higher-level skills, and obviously you have got a good relationship with the HE sector in the North West which works well together, but also some very fundamental and alarming skills gaps still right at the Level 2, particularly in places like Merseyside and other parts of the region?

Steven Broomhead: I think, as you quite rightly say, we have forged broad enabling links with the 15 higher education institutions that are in the North West, not just on issues around the economy, but issues around research and development and the Science and Innovation Agenda. What is important, I think, is the third leg in terms of the universities outward-facing in terms of providing support for the development of small businesses, and I think we have done that. How have we done that? I think we have done it by a process of continuous dialogue and being reflective about each other's needs and making sure that the universities were taking account of changing circumstances and, in particular, account of the Lambert Review, which is only three years old, which encouraged universities to make sure they were facing up to the real issues, so we do have that. We have also, I think, developed a policy of working particularly with local authorities in sub-regional partnerships to ensure that we have got policies around social inclusion and community cohesion, so we are emphasising that skills is about Level 1 and Level 2 employability, and indeed it is only recently that the Government, through DIUS and DCSF, ensured that we could actually perhaps move away entirely from Level 2 to Level 3. We have always wanted to be about Level 3 actually because Level 3 is about basically ensuring that you grow your economy and those are the skills for improving productivity, so our arrangements, I think, have worked well. We have had a very strong universities association, we have got strong enabling relationships with our 46 local authorities through sub-regional partnerships, and the development of a regional skills partnership, which is again inclusive of all parts of my region, has helped in that way.

Q256 Dr Turner: We seem to have a whole lot of people falling over themselves to plan for this area, and it includes the RDAs, regional economic strategies, sub-regional plans, local area agreements, MAAs, ESP plans, sector skills agreements. What does all this planning lead to? What is the outcome and is it not all just too complicated?

David Cragg: I think you have had the debate earlier. I think complexity is something which certainly is inherent in the system. If you accept that we have inherited a relatively complex system, and we may be about to make it more complex, I think the absolute essential part of that is to be clear about roles of individual organisations and especially to be clear about, I think as Chris Humphries said to you earlier, what needs to be done nationally, what needs to be done regionally and what needs to be done locally. One of the great benefits, I think, we have had working regionally is, for example, we have had one place where everybody has effectively co-commissioned or pooled their analytical and research capacity. I think that is a sensible joining up of how things work. For example, again if you look, and I am not mentioning the West Midlands, Chairman, but perhaps at another area, if you look at the work in Greater Manchester, which Steve would point to, in the creation of a multi-area agreement, I think the roles and responsibilities of individual agencies in a single coherent approach to employment and skills is a genuine benefit. Ultimately, accepting that complexity is probably excessive or probably unquestionably excessive, the problem really occurs if there is a lack of clarity as to what the roles and responsibilities of individual organisations are. If we suddenly think, for example, that we want a local authority to start taking on a commissioning role in training and skills, is that a good idea? That should not be a product, for example, of local area agreements or multi-area agreements. If we can get that clarity and especially if we can get a layering, so, to come back to your debate about sector skills councils, I would contend that the primary role of sector skills councils is at a national level and to be able to articulate the overall sectoral needs, skills needs, of employers in that sector and to support the development of the right qualifications framework. Any role at a regional level will be about mediating that in a regional context, not duplicating, for example, employer engagement as that would seem, frankly, a very, very serious waste of public resource and a huge confusion to employers.

Q257 Dr Turner: Would it not be better if there were just one clearly identified body in each region or sub-region that co-ordinated all of the activity so that an employer knows exactly where to go to and a would-be student knows exactly who to go to?

David Cragg: Well, simplistically, if you will forgive me for putting it that way, I would probably agree with you, and I would say, if, for example, business support is through a single route, and we have been very, very clear with our RDA that we want to accelerate the whole process of creating a single focus for business support, I think that is right. If the commissioning of certainly all skills training, especially workforce and workplace training, is done through one agency, which, frankly, it overwhelmingly is currently through the Learning and Skills Council, I think that is a benefit and I think you then start to get a clarity of the route into the system. I would add one other thing. If we are going to engage employers, we have, I think, very foolishly overlooked the legitimate representative bodies for employers. The best benefit and the best step forward I have seen in recent times is the level of engagement we have secured recently with chambers, the CBI and the Employers' Federation and even the Federation of Small Businesses because, if you can get a route to market and use the natural representative bodies which work with employers as opposed to, arguably, artificially created and created by the public sector, which, you might argue, sector skills councils have been, I think you will be in a better place.

Q258 Dr Turner: You mentioned your Learning and Skills Council, but there is a big question mark over the future of the learning and skills councils, so there is more upheaval to come, is there not?

David Cragg: There is more upheaval to come and I have got either the enviable or unenviable task of steering through our side of the work on the transition to the Skills Funding Agency. We do seem to be very preoccupied with structural change in this country and it seems to be a phenomenon. What I would say, and I would say very loudly to you, is that the key thing we should all be fixated on is that we have got again a proper alignment of whatever we do on 14 to 19 and with whatever we do on 19-plus and, most importantly, if we are changing some of the bigger geography, especially around the role of the RDAs, then we have got to see where this fits with the Sub-National Review because there is no point having a silo over here which looks at economic development and regeneration and another silo over here which looks at 19-plus working-age skills and another silo over here on 14 to 19. Therefore, I would say I am back to the same slightly cracked record, Chairman, which is that, unless you have got a clarity of roles and responsibilities and, most importantly, locally and regionally a spatial alignment, then you will get it wrong.

Steven Broomhead: On your first question, I think we have a very complex duplicating mess at national, regional and sub-regional levels at the moment in terms of planning, and what we should have is evidence-based prioritisation and inclusivity about what those policies are at a regional level, and we do not have that and it is likely to get worse. The Government's consultation period on Raising Expectations, changing the machinery of government, has just closed, so obviously consideration must be given to what is going to be said, but I very much regret the fact that the LSC is actually going to disappear by the end of 2010. Through the change agenda that the LSC has gone through in the last few years, I think they have moved much more away from national targets, but keeping national targets at the forefront, to regional employment and economic issues, they have put the right structures in place, they have got the right alignments in place, they have got the right enabling structures in place, they have got relationships now quite well-established around local authorities and particularly around the sixth form funding of capital schemes, and yet all that is to go in the air to be replaced by two separate agencies, two different types and two different departments which are new and the communication structures between those two departments are not always as good as perhaps they should be. Employers are hardly mentioned in the Raising Expectations document and employers cannot believe what is going on. They do get involved in the wiring and it would have been quite simple, if you wanted to empower local authorities and devolve resources and planning and commissioning to local authorities on a sub-regional or even on a local level, you could have done that through the existing arrangements of the LSC. You do not need this enormous upheaval which is going to be very costly at a time when the public purse is under enormous pressure, so, if that is my 'Save the LSC' speech to you, Chairman, that is it. We do like to do continuous upheaval, particularly in the skills area actually, and, certainly from my employers who do sit agog with amazement that all this is now changing yet again, you are creating an LSC Board at a regional level which will probably last actually six or seven months, but those structures should actually be nurtured and developed and we should go with what we have got rather than change it in a wholesale way.

Q259 Dr Turner: One of our previous panel of witnesses commented that this is starting to begin to work and it is now going to be torn up and turned over again, so, if the learning and skills councils, as you suggest, have finally started to shake down into a role and started to deliver, it would seem that they have a role to deliver, so something very like them will be needed in the future. What is your reaction to that?

Steven Broomhead: My point is that, for whatever reason that these arrangements through the consultation document have come forward, there is no need actually to change the role and the function of the LSC. You can adapt it to different conditions and you can particularly adapt it to ensuring that there is more of a local approach to the 14 to 19 commissioning and planning and you do not necessarily need two new agencies, one of which will be very centrally determined and will probably not recognise regional objectives and regional economic issues, that is the adult skills, the Skills Funding Agency, so why are we going through all these changes? I predict that, if you set these two up by 2011, by 2013 you will be thinking again, and we do not need that. Employers do not need that, learners do not need it, colleges and training providers do not need it when we have gone through a process of enormous change with the LSC, which has been very, very positive over the last two years.

Dr Turner: It is a typically British process and it does not just happen in the education sphere.

Q260 Ian Stewart: We have moved now from the structural stuff to the fact that there are plans. Could you tell me what powers do RDAs or other regional partnerships have to actually implement those plans and ensure their success?

Steven Broomhead: In terms of the RDAs, we create the Regional Economic Strategy and we do that with partners, we do not do it ourselves, it is an evidence base and now I think all RESs reflect the different needs and opportunities of each region, and the LSC and the universities are very engaged in the development of that process. We do not necessarily determine the corporate priorities of the Learning and Skills Council and we certainly do not determine the priorities of a university because, as has been said earlier, the universities are very autonomous and there is no planning that goes on in higher education, it is simply funding against agreed objectives. However, what we do have with these existing arrangements which are about to be torn up, and I am trying to keep emphasising this, we do have significant interface with and influence over those policies and those priorities and it is beginning to work well. We work very closely, to give you a classic example here, with the LSC around capital funding. There will be some capital funding schemes for colleges and other providers where the college cannot quite raise the cash in order to benefit learners in its community, and we have entered, certainly my Agency and the same is so for many others, into a number of projects where we have gap-funded those provisions, so it is not just about the arrangements about policy, it is about also on the ground.

Q261 Ian Stewart: You have actually told us about the limitations of the ability to plan, but that you are quite positive in what has happened in the last few years. How does that fit in with a demand-led provision? There seems to be a lack of confidence in the planning approach and then the intention of Leitch is that it should be employer-led, that there should be flexibility and that it should be demand-led. How, with that lack of confidence in a planning system, can you do both, or can you do both?

Steven Broomhead: I think you can do both. Clearly changes in the funding arrangements, the resourcing arrangements for colleges and training providers, need to be switched and indeed they are being switched under Train to Gain where more and more of the LSC resources are being moved towards the demand-led agenda and the needs of individual employers. I very much regret that employers never really seem to get involved in the detail of the planning arrangements. I have seen lots of them turn up over my career, bright-eyed and bushy-tailed, at planning meetings at a local level, regional level and sometimes even at a national level, only to find that the wiring, the bureaucracy and the dead hand of even the conversations around policy planning frighten them away rather quickly, so I think we have got to think about, and perhaps we do it through the national commission, perhaps they think we do it through the new sector skills councils, how we can effectively get the voice of employers to be engaged in those policy debates. What is the voice of the employer? Is it the sector skills councils, is it bodies like the British chambers or commerce or the CBI? I think there needs to be some fundamental discussion about that because currently there is rather a confused picture about how employers do get involved and how they see their involvement making a difference.

Q262 Mr Cawsey: We heard a lot from Steve there about the LSC and what is happening and, David Hughes, I am quite interested to hear what you think about why the LSC is being abolished and whether you think what is replacing it will be better and more coherent and will anybody notice?

David Hughes: I think people will notice. It is lovely for Steve to say those things, is it not? It is a bit like an obituary and you just want to be able to read it, do you not, before you die! It is interesting that the local authorities are saying the same things. In London, the local London councils have said exactly the same thing and there is a danger that we are going to lose some of that sensitivity to place and some of that understanding of local labour markets. I think it is incumbent upon us to make sure that that does not get lost, that through the change we make sure that there is the ability to work locally with the right agencies, and that has to be with the RDAs, it has to be with Jobcentre Plus, it has to be with local authorities principally, to make sure that we are reacting and responding to the labour market, to the economic development opportunities and getting the planning right so that we are accessing the communities who are not accessing the skills opportunities and who are not able to get into those jobs. It is not that a plan-led approach is right or a demand-led approach is right, but it is actually both, is it not? To get the system to work for the 30 per cent of Londoners who are workless, we need to do a bit of planning and intervention because the market will not deliver to them. They are not out there demanding and they are not going to get into the labour market because the jobs are at Level 3 and above and 600,000 of them have got no qualifications. There has to be intervention, there has to be somebody working and some of that has to be happening sub-regionally. What you need regionally is the framework within which you operate, the direction it sets for the colleges, the providers, the employers, the people on the ground who are acting within that system. You need all of that, so it is a balance, it is a fudge that we need rather than going from one extreme to the other.

Q263 Mr Cawsey: But what is going to happen to regional LSCs under the new arrangement? Are they just simply going to go?

David Hughes: There is a shift, is there not, and some people within the LSC will work for the Skills Funding Agency, some for the Young People's Learning Agency, some for the local authorities, and we have got to get that balance right, we have got to get the functions right, we have got to understand what the roles are, we have got to understand what the roles are vis--vis RDAs, Jobcentre Plus, local authorities and we have got to make that clear, and there is an opportunity within the change. There are all sorts of dangers and risks, but the opportunity is that we get that demarcation right for change and we really understand the role of each of the agencies.

Q264 Chairman: Where is the advantage?

David Hughes: There is always going to be change, is there not, and we have got to find the advantage, but there are risks and there are opportunities.

David Cragg: To answer your question about where is the advantage, whichever way you look at it, there is always more than one way of skinning a cat. There will be benefits if we get this right as a system as a whole on the work with young people, especially around the whole of the 14 to 19 structure where it is arguable that the division currently of responsibilities between local authorities and the LSC needed fixing. Whether you needed structural change is another matter, but one thing you can be sure of is that we could be doing, for example, far, far more on capital and infrastructure to have a coherent approach across Building Schools for the Future and what you invest in further education. Providing that we do not see a completely different geography for the Skills Funding Agency, there is absolutely no reason why, within the framework of what local authorities do locally and sub-regionally, we cannot 'unbed' the role of the Skills Funding Agency, but, if you want an absolutely straight answer to your question, the crucial thing which you, as a committee, should reflect upon is the risk of taking away local presence or sub-regional presence which is currently essential to delivery on the ground under some illusion that a kind of simple funding agency model takes away any need to plan, to organise and to deliver locally.

Q265 Mr Cawsey: I want to move away from structures into programmes really, as indeed I said to the first panel. On Train to Gain, is there deadweight in that as a programme? By that, has the government money, in labelling the skills that people already have, more than moved them on to the skills that they need for the future?

David Cragg: By the nature of the simplicity of the offer, there will be some deadweight. I think there is less and less deadweight and more and more evidence of genuine added value, and I think that comes through all the satisfaction surveys from employers themselves and from individuals taking part in Train to Gain, and we do not say enough about that, and, if you look at the scale of take-up tackling some of the fundamental issues of low-skilled people in the workforce, in particular, then the numbers are now starting to be very encouraging. It is too patchy, we would say, which is why we set about really addressing performance issues region by region because that kind of variability is unacceptable, but, where it is working well and it is increasingly working well across the country, it is really making a major impact, especially on low skills. The long-term issue will be whether we can see more and more co-investment as opposed to the employer investment being over here, not integrated with the public purse, and whether we can see more and more co-investment, especially at Level 3 and at Level 4 because, ultimately, that would be the litmus test as to whether it works.

David Hughes: I would just add a couple of things, and one is that it is still a fairly new programme, it is less than two years old, and the system has been struggling to work out how to make it work. Where it works well, the employer gets a proper needs analysis of its business and it gets a way of working out how to be more productive, and that is fantastic and that is why the employers are saying they like it. I think there are two changes which will be absolutely necessary for it to be successful. One is what is happening with the compacts where it is not just first Level 2 that is going to be funded, so that retraining that Chris Humphries talked about this morning, the need for people to be able to reinvent themselves is what a lot of employers want. The other is about the fullness of the qualifications, and we are seeing again with the compacts an opportunity to deliver smaller qualifications that are meeting exactly what the employers are saying they want, so the qualification reform in all of this is an essential component.

Q266 Mr Cawsey: It is interesting that you mentioned the compacts there because there have been comments about the brokerage service and also this perception that it is a Level 2 system, so it is a general view that the compacts are the way to actually push that on.

David Cragg: It is a new and important bit of effectively market segmentation, is it not? If I gave you a kind of illustration of what I would expect in the compact, we have been working with Semta nationally and regionally, for example, science and engineering, on looking at supply chains and the kind of impact you can have on, especially, the automotive and vehicle manufacturing supply chain. That is really exciting work. We are looking at Caterpillar, we are looking at two major aerospace businesses, Goodrich being one of them, driving down into their supply chain, using the kind of qualifications, knowledge and skills and the national role of the sector skills councils, a well-established one, to actually embed, for example, Level 2 as a minimum employability standard in preferred supplier status. That is the kind of work which we want sector skills councils to do. That requires some detailed design work and that is actually where the compacts can play a really important role. We could look at health, for example, and the work we have done in the health sector where we have worked with strategic health authorities and the sector skills council usually at regional level to again look at joint investment approaches, something which is very specific and differentiated, but it is another bit of the toolkit, it is not an either/or, it is an added-value element which we can bring in, if we work effectively.

Steven Broomhead: There is just one other element in terms of your point about deadweight. All of the RDAs, under the guidance of DIUS and DBERR, are looking towards now integrating the skills brokerage arrangements for Train to Gain with business support, so there are a number of RDAs now where you ring one number and you get one service, whether you are asking about issues about that or you are asking about Train to Gain. Now, why do I think that is important? If you are going to move away from the deadweight training, it is very important that you get to employers, small to medium enterprises, who have no culture of providing that sort of training. If we can just encourage them to come to one place, I think we will start to move that deadweight issue forward quite rapidly.

Q267 Mr Cawsey: You all heard from the first panel some sort of fairly withering comments about programme-led apprenticeships, and presumably one of the reasons we need programme-led apprenticeships is because we cannot get small employers typically to take on actual apprenticeships, so what are you doing, firstly, about dealing with the criticism about the whole programme-led apprenticeship scheme and what are you doing about engaging more employers, particularly small ones, to take on apprentices?

David Cragg: First of all, I think the language is so unhelpful and it creates what is largely a red herring. We need a pre-apprenticeship programme, there is absolutely no question about it. There is not, for many young people, a progression route into apprenticeship. Apprenticeship is 100 per cent in most sectors, for structural reasons in a couple not, but it is 100 per cent employment and that is what we want to see. However, it is clear, looking at a lot of young people, particularly young people in the so-called 'need' group, that you need a progression route into employment and, we hope, employment with training with a full apprenticeship. I think we are at an interesting point in the whole cycle on apprenticeship in that we have seen a decline in apprenticeship numbers in the last three years until 2007/08 and in 2007/08 you have seen a levelling off of 16 to 18 apprenticeship against a background of increased participation in full-time further education and schools, but the most interesting thing is that we have seen a very substantial increase this year, in the last 12 months, in 19-plus apprenticeships and especially in people over the age of 25. It is the most encouraging sign on apprenticeships which we will have seen probably in the last five years and there is no sign that that is just a short-term phenomenon. One of the things we definitely do need is mechanisms for pre-apprenticeship for people who are not in work which give them stepping stones to prepare them properly for work, and that needs to be part of a broader and much more integrated approach. It is the forgotten bit of Leitch, frankly, and we need to be doing far more on integrating employment and skills interventions and that is where pre-apprenticeship ought to sit.

Q268 Mr Marsden: Perhaps I could go to David Hughes and Steve and pick up on the implications of what David has just said. Clearly, as Chris Humphries said in the previous session, apprenticeships need to change rapidly with demographic change, et cetera, but do we need to have, dare I use the word, targets? Do we need to have targets in what we do on apprenticeships for groups like older workers, women, in particular, and indeed ethnic minorities because these are all groups which, up to now, have not been well-represented?

David Hughes: I am not sure you need targets. I think that the nature of the labour market means that employers are going to find it harder and harder to employ young people because there are not as many coming through, as I think you said earlier, so they are going to find it more difficult to recruit from the normal pool of people they recruit from. That means they will start to look more broadly and I think that is when you start to need the pre-apprenticeship bit to get people ready to be employed within those organisations.

Q269 Mr Marsden: So you think the problem is going to solve itself without targets, do you?

David Hughes: Targets can help sometimes and sometimes they can hinder. I am just saying I think there is a natural shift anyway. If we can get people to be employed in those sectors where there is growth, we can get them on that track of learning. The problem we have had in the past is that you either have a Jobcentre Plus approach, which is about job first and job only, or you have a skills approach, which is qualification first and qualification only. What we are trying to do is put it together and say that it does not really matter when you get the qualification, but the qualification is really important, a big impact on individuals in terms of their pay and progression and their progression in learning, so let us get an integrated system where we are saying that actually they are on a skills journey which takes them into work at the earliest opportunity, but the skills journey continues. The apprenticeship can kick in when they are in the workplace.

Q270 Mr Marsden: Steve, your thoughts on those particular groups I mentioned?

Steven Broomhead: I think it is about the presentation, and the nature, of the careers guidance advice that is available to present the apprenticeship options to the groups you said. Obviously, coming upstream soon is the new Adult Guidance Service and I think that is probably where that debate needs to be had, but I would like to see, I do not know whether it is targets, I have a bit of an anathema on targets actually ----

Q271 Mr Marsden: I did use the word advisedly.

Steven Broomhead: --- and what it actually means in output in public policy, but certainly pushing hard around (?) groups to present apprenticeships in a positive way, I think we have a lot of work to do there.

Q272 Dr Iddon: Steve, how difficult is it for you to engage with both FE and HE? Is it easier to engage with one or other or are they just different engagements?

Steven Broomhead: As I am here on behalf of all the RDAs here, I think it is a mixed picture around England. Certainly my own experience is that those engagements are strong and constructive through representative bodies, such as in the North West the Universities Association, and there are similar structures in many other regions, but also through the Association of Colleges and other bodies, particularly the Association of Colleges. Therefore, it is easier for us to engage around policy issues, to get them involved in debates about some of the things we have been discussing today, to get views on Leitch, to get views on the changes in the machinery of government, which, incidentally, both the professional groups I have just mentioned do not support, so I think it is about your attitude and your approach to this. You have to be proactive about this, you have to show that you have got real priority for this in terms of your policy and, as I said, in each of the RDAs now they have put both higher-level skills and skills very much strongly into the RES.

Q273 Dr Iddon: What are the main stumbling blocks for the RDAs in bringing employers together with HE and/or FE?

Steven Broomhead: I am not so certain there are difficulties in bringing people together, it is organising what that conversation will then be and what then comes from it. For instance, the CBI has extremely strong links with the universities throughout the whole, I think, of England for the nine regions and at regional level, so there are certainly strong debates about the importance of higher-level skills, the research and development agenda, science, innovation, et cetera. I think it has become probably more difficult for FE, although all good FE colleges have their own groups of employers and are interlinked into local chambers of commerce, et cetera, to make sure there is that informal and formal link and of course the push on Train to Gain in terms of policy priority, but of course in terms of the resources and making colleges much more flexible and responsible about how they adapt to these new conditions, and that brings them into even greater contact with employers than they have probably ever had before.

Q274 Dr Iddon: Could I perhaps pose those two questions to the learning and skills councils as well, first of all, the interaction with FE and HE and the stumbling blocks being in place together with those two organisations.

David Cragg: Certainly obviously it is our core business to work with FE colleges and I think those relationships in all regions are very well-structured. There will be sometimes the kind of tensions of purchaser/provider, you know, if we have not got enough money or are perceived not to have enough money, but I am delighted with certainly the work there, and especially if you extend that out to the relationship with employers, I think we have got an enormously responsive FE system nationally and certainly that is my experience regionally. I would echo what Steve said, which is that Train to Gain is really shaping very different and new business models. I could show you a small college on my patch, Telford College, which is now operating and doing brilliant work throughout the country operating in nine regions as a Train to Gain provider, with a fantastic success rate and with phenomenal employer satisfaction rates. That is not an isolated phenomenon. It is fair to say that some of FE still has not woken up to the reality and the challenge of a flexible system and, as far as HE is concerned, I think the key issue, for me, is how much can we bring, given the demographics which you have already discussed this morning, a real demand drive into our HE system. I think we have got good relationships jointly with the RDA and the LSC in most regions again for work with HE, but, if you are looking then at one of the big questions for Train to Gain and for business support, if the request from the employer is for a Level 4 or, more importantly, a Level 4 equivalent programme, how do we get HE to respond to all of that? I think the other thing from a regional economic perspective, I hope Steve would agree, is that this is not just about our current graduate population or people taking part in higher education within regions, but higher-level skills is a massive employment issue. We have got this huge drift to London and the South East, which the North West experiences, West Midlands, the northern regions generally experience, and we have got to do far more, from a business perspective, to join up that relationship. Again, I think the CBI and the chambers are doing a very good job in starting to tackle that.

David Hughes: Perhaps I can just add that I think it is instructive to look at how changes happen. If you look at Train to Gain in FE, there was a shift of resource and it required FE colleges to change what they did and they had to start delivering in the workplace a completely different product in a different way and they had to engage with employers to do that. In HE, that has not happened in the same way, so lots of HEIs can carry on doing what they have been doing, fantastic work sometimes, but there has not been that same pressure on them to shift the resource and to change what they deliver, so they still deliver foundation degrees in a fairly traditional way, they do not deliver them in the workplace, they do not make them look like Level 4 apprenticeships, which is where we would like to get to so that you can get progression, even if you go into work at 16, through the apprenticeship programme all the way to degree level. They have not made that shift, and I think we have got to get that level of change and I think they need a bit of pressure to make that.

Q275 Dr Iddon: Well, would it help if the Skills Funding Agency and HEFCE, the other funding agency, were brought together?

David Hughes: Well, it is an interesting thought, is it not, and some of us who might be around in the future might quite like it, but I just wonder how much the HEIs would dominate that discussion. They are difficult to work with for government, they are a powerful lobby and there might be a difficulty in getting that organisation to work effectively across its whole remit if it were dominated by HE, but it is an interesting thought.

Q276 Dr Iddon: Any advantage, David, in bringing those two agencies together?

David Cragg: Well, I suppose I will not be here, that is for sure, but I suppose my private betting would be that the next cycle will seriously look at that. What I have not looked at personally, I have to say, is how it has worked in Scotland, but I see a huge attraction in having a coherent approach. The bits in the UK, or in England especially, which need fixing from an economic perspective are at the top and the bottom. We are not doing anything like enough to equip people who are not in the workplace, especially low-skilled workers, adults, to get into work, which is why the big drive on integration of employment skills and that is right, but we are not doing anything like enough at the top end. The Leitch killer fact was that 70 per cent of the workforce at 2020 has already left statutory education and, if we are not really refocusing on a workplace and work-related approach to higher-level skills, we will not have got it right economically.

Q277 Mr Marsden: Just on that point, and maybe, Steve, you would like to come in on that and where we are going, we know at the moment that 12 per cent of HE is now being delivered by our FE colleges, not least in my own neck of the woods in the Blackpool and The Fylde College. Is there a role for the RDAs and the LSCs as well to encourage and to accelerate that process, given the point that David has just made about this need for seamless progression?

Steven Broomhead: Yes, and we are doing. We are encouraging certainly a dialogue between universities and the FE colleges around foundation degrees and Level 4 and above. There is no reason why Level 4 and above cannot be delivered.

Q278 Mr Marsden: When you say "they", is that the North West or just generally?

Steven Broomhead: Certainly it is region by region, but certainly in my own region that is a very strong dialogue. Where the delivery takes place is irrelevant. I think it is fair to say that universities were somewhat reluctant to see the FE colleges being able to accredit their own foundation degrees, and that led to some interesting discussions, but also to make sure that we are making the appropriate investments as an RDA, to ensure that that learning experience takes place and to upgrade the facilities that sometimes are actually very poor in the FE sector, and there are examples, such as in Burnley where we are doing this, in Macclesfield where we are doing this and indeed in Blackpool where we are doing this.

Chairman: On that note, I am going to call this session to a halt. Could we, first of all, apologise that it has been a very fast canter through a lot of the issues. We did not quite realise, when we began this inquiry, that it was going to be quite so heated and controversial, but we are grateful for your evidence this morning, Steve Broomhead, David Cragg and David Hughes, and thank you very much indeed.