House of COMMONS











Wednesday 8 October 2008


Evidence heard in Public Questions 402 - 487





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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 8 October 2008

Members present

Mr Phil Willis, in the Chair

Mr Tim Boswell

Dr Ian Gibson

Dr Evan Harris

Dr Brian Iddon

Mr Gordon Marsden

Ian Stewart

Dr Desmond Turner



Examination of Witnesses

Witnesses: Mr David Lammy MP, Minister of State, and Mr Stephen Marston, Director General of Further Education and Skills, Department for Innovation, Universities and Skills, gave evidence.

Q402 Chairman: Good morning, everyone. Good morning to you, Minister. Can we say how delighted we are that you are with us this morning, we did not quite know whether you would be here. Thank you and congratulations on your new post looking after higher education. Can I, on behalf of our Committee, formally thank you for the work you have done on skills.

Mr Lammy: Thank you.

Q403 Chairman: That is appreciated, even though we are going to give you a hard time this morning! Can I welcome also Stephen Marston, the Director General for Further Education and Skills at DIUS. Welcome to you, Stephen, I think it is the first time you have been before our Committee but we are particularly grateful to see you. Minister, when Lord Leitch produced his report I think there was a fairly sharp intake of breath in that the picture that Lord Leitch painted about UK skills was pretty dire. Do you agree with his analysis and his predictions of what would happen if, in fact, we do not step up to the plate?

Mr Lammy: Phil, I think it is right to say that for the fifth largest economy in the world it is completely unacceptable that there are just under seven million people who have the numeracy skills of round about an 11 year-old and there are still five million people in Britain who would struggle to get a grade G in GCSE English. I think we all know the historical reasons for that. Britain has been a country that has been able to survive with a small proportion of the country going to universities, having higher skills. There have been many low-skilled jobs in the economy, particularly in the north of England with a strong manufacturing base and former industries. We are in that position and we are not going to be in that position for 2020. I think the important thing that I took from Leitch when I started in the job, and obviously it came in as we did our response to Leitch, was that this was a target that at that point was 13 years away, at this point is 12 years away, so that is a long trajectory of travel. We absolutely have to deal with those people. Today I am even more convinced by his analysis and the reason I am more convinced is because, of course, the economic conditions have changed in the period in which I have been Minister for Skills. When I think of the factories I have been to over the course of this last year in the north-east, the north-west, and I was up with former workers from the Rover plant in the Midlands a few weeks ago, I think of those men and women in a global downturn market with lower skills, but I also think of the 2.28 million people who now have literacy and numeracy as a consequence of Skills for Life. This is absolutely the right direction of travel.

Q404 Chairman: I think we would agree as a Committee that the Leitch analysis was a very, very good piece of work. Given the seriousness of it, and the fact that by 2020 our competitors will also be upskilling at the same time, they are not going to stand still while we move upwards, the general opinion seems to be that if we meet Leitch's targets we will just be where we are now in 2020 compared with our international competitors, whether that is right or wrong. Given the urgency of the matter, and we have counted something like 13 different initiatives have come out of the government over roughly the last 12 months, consultation papers, white papers, consultations with employers, where is the roadmap for all this? Where is the sense of direction?

Mr Lammy: The roadmap was our response to Leitch and we have got a lot to do. No-one would suggest ---

Q405 Chairman: With respect, Minister, your response to Leitch was to accept his targets. What we are trying to examine is how you are going to meet those targets. There seems to have been a plethora of reports rather than a real sense of action. You think that is unfair?

Mr Lammy: I think that is unfair. I will bring Stephen in in a minute because, as you can see, I am itching to answer this. I think it is absolutely unfair to suggest that the action we are taking on apprenticeships, the growth we have seen and what we want to see is just a report; it is not just a report, you just have to speak to the young men and women doing apprenticeships to know that. It is absolutely unfair to suggest that the key critical work to Leitch that we are doing, joining up my Department, DWP, ensuring the Jobcentre is not just about getting a job but also about progression and skills as well, dealing with the 16-hour rule, dealing with single mums, is just a report and not action. Of course, that is action. We are moving this system, and remember we are moving this system in response not just to Leitch but also to Foster, to make the system more demand-led and, therefore, Train to Gain, where we are putting our money, that billion spend up to 2011, that is action and you can see that action on factory floors across the country. The extra money we are giving to Union Learn is action. I do not accept that somehow we are navel gazing and producing reports. This is absolutely about action on the ground to deliver against what we know we have got to do.

Q406 Chairman: You have mentioned there were two areas of risk to the execution of the post-Leitch agenda. One was engagement with employers, trying to make sure that employers actually took it up, and today you have got one in ten employers who are actually involved with apprenticeships. The second was to get individual workers, either in work or out of work, to engage with that. That was the other big danger. Do you feel the strategies you have got in place are actually coping with those dangers or are they still real dangers in terms of the success of this agenda?

Mr Lammy: I would say in a measured way that Train to Gain is two years old. It came into shape in April 2006, really got going in September 2006, and that was a wholesale transformation in meeting that concern that you know employers have had, "The colleges are not running the courses we want, it is not responsive to what we need", there is a disconnect between the local college and what the employer really needs. We also want Skills Accounts and we are piloting and moving to Skills Accounts. We also want an adult careers service and we are piloting and moving to an adult careers service. I do not want to say that the demand-led landscape is completely finished, it is not, we are on a journey, and Train to Gain is a big part of that journey. It is only two years old as a programme but in those two years it has achieved a lot.

Q407 Dr Gibson: I was going to ask Stephen, how will you know when it is working? Vision is one thing, strategy and priorities, all that stuff is very admirable and great, but how do you know when it is working because many great schemes just stutter to a halt and have not been picked up early enough? We are talking in generalities. How will you know whether it is working or not? When will you hit the button if things are going wrong? What would make that happen?

Mr Marston: There are two ways in which we will know. The first is that one of the most important things about the Leitch Report was that it had quantification in it, it set targets. To pick up one thing the Chairman said, Lord Leitch absolutely did not recommend that we carry on as we are and remain middle of the pack. One of the most important things he said was that is not good enough and we need to get into the OECD upper quartile, eighth best in the world. We have got targets that track year by year by year through to 2020 on what we need to do if that is what we are going to achieve, so we know whether it is working in terms of whether we are on track to achieve those targets.

Q408 Dr Gibson: Kind of league tables, is it?

Mr Marston: There is a very international comparison in it. That was one of the most important bits. The wake-up call from Lord Leitch, in a sense, was for years we had been looking internally at our own national position and that was the first time when a really rigorous comparison had been done internationally across all members of the OECD. That was the wake-up call. We are way behind, we are not narrowing the gap, other countries have a much better skills base, and if we do not do something dramatic about it we will not be economically competitive. That international benchmarking, combined with targets that over the next 12 years will get us to that OECD upper quartile, is a key way in which we can track are we getting there or not.

Q409 Chairman: Are we on target at the moment?

Mr Marston: We have met our interim targets so far, yes, but some of these trajectories - forgive me if I get a bit technical - are not flat lined, they pick up in the later part of the period. Although we are meeting our interims so far, and David referred to the Skills for Life success, 2.28 million adults and the Level 2, we are on track for those, it gets steeper and harder from here so there is a lot to do to keep meeting those targets.

Q410 Mr Boswell: Obviously I am aware from my previous experience of the intractability of all of this and I just happened to fish out for idle curiosity the national targets for 2000, which I have carried ever since I was a minister. It is not easy, as we all know, although it is entirely worthwhile. Something you said, Minister, that was interesting was you were talking about the difficulty of getting employers to engage with colleges directly, and clearly that has been uneven and is part of Leitch's concern. Your suggestion was that you needed an intermediary in the shape of Train to Gain to do that. Also, through the decisions which are coming through now, for example the aftermath of the LSC, you are creating a number of other additional bodies. Are you sensitive at the same time to the problem about proliferation and confusion and clear pathways for the employer faced with all of these bodies, most of which I cannot remember what they are and they are not experts on it, particularly if they are SMEs, to try and find out the path whereby they can help you contribute to the targets?

Mr Lammy: Tim, as I would expect, there are quite a number of issues to unpack in your comments. I think the first thing to emphasise is what guarantees have we put into the system for employers over the last short period that perhaps did not exist in your period in your time. We have got the new Commission, of course, and you have heard from Chris Humphries. Have you heard from Sir Mike as well in relation to that?

Q411 Chairman: Yes.

Mr Lammy: That is an independent voice in the system representing employers at the top table and unions are on board with them in the Commission to keep us real to what we say we need to do in terms of Leitch. That is the first thing. The second thing that has changed dramatically since your period is that you would have presided over 100 national training organisations and there was an unbelievable amount of fragmentation in that period, I think, that we were coming out of and we now have 25 Sector Skills Councils. They are only five years old. In a sense, it is easy for us around this table sitting here nationally in Whitehall, but there are two dimensions to what we are saying that are really important. One is to say that some sectors are stronger at qualifications and skills than others.

Q412 Mr Boswell: Yes.

Mr Lammy: If I go to some of the motor manufacturers within manufacturing, they have a strong history of investment in this area. If I am talking to the IT sector, they are doing fairly well. E-skills are doing very well in this area. Other sectors traditionally have not been investing and part of getting them into the Sector Skills Council arena is to say, "This is serious. You have got to get serious about this". I am talking about areas like logistics. I have had conversations recently in terms of the railways and some of the investment that we need in terms of staff there. Differences between sectors is the other thing. I also want to say there are big differences regionally. I go up to ---

Q413 Chairman: Yorkshire?

Mr Lammy: I was going to say the north-east. There are quite deep connections between industry that is there and local people and schools and we are seeing bigger take-up within Train to Gain. I then come to London or go down to the south-east and there is much more fragmentation, coastal towns, a very different picture indeed. That employer engagement looks different in different parts of the country, it looks different across different sectors, but the important thing is to put the money in that place, to have brokers who are independent negotiating with companies, to have unions driving this agenda. It is hugely important to have that voice in the system. It is all of that that gets us to where we want to be.

Chairman: We will explore some of those issues as we go through.

Q414 Dr Turner: Do you think the UK is going to meet the Leitch targets?

Mr Lammy: As I leave this post, yes, I do.

Q415 Dr Turner: Can you back that positive statement up with some evidence and tell us where the students are going to come from to meet these targets?

Mr Lammy: The students?

Q416 Dr Turner: Where are you going to get them from?

Mr Lammy: I am sorry, I am not with you on that.

Q417 Dr Turner: How are you going to recruit the students to train to meet the targets?

Mr Lammy: Do you mean in terms of the teachers of ---

Q418 Dr Turner: The students.

Mr Lammy: I do not quite understand the question.

Q419 Chairman: The people, either the students coming out of schools to be skilled or people already in the workplace, where are they going to come from?

Mr Lammy: That is happening. In relation to the young people, we have a big commitment to apprenticeships and there is an appetite there. It fits with what we and colleagues are doing in the Department for Children, Schools and Families in relation to their diplomas, and that is happening, the appetite is there. In relation to adults, you just have to look at the success of Union Learn, you just have to look at the numbers who have grabbed the opportunity presented by Skills for Life, the success of advertising campaigns that we have run around the gremlins and now "skills is in your hands". The appetite is there, adults are coming forward and taking up these courses and there is this rejuvenation of training in the workforce, so in that sense I have to be optimistic because I have seen the results of it.

Q420 Dr Turner: That is very pleasing, but if there are any difficulties who is actually taking responsibility for owning these targets and who is accountable for making sure that they are actually achieved? Is it yourself?

Mr Marston: Yes, we are accountable. The Government is accountable and DIUS is accountable. We set the targets and we are accountable to the public and yourselves, but obviously we are partners in this enterprise. The Commission is a partner with us, the Learning and Skills Council in a sense has been a success, it has met the targets we have asked it to meet, but we are moving into a different horizon. Just to touch on the other aspect of Tim's question, that different horizon is a horizon where the Bill I took through with Jim Knight was about raising the leaving age in terms of young people in employment or training up to 18. That is a new horizon and that is why it is right to put local authorities in the driving seat of these arrangements, but also moving to a more slim-line system building on the success of Train to Gain, so we have got a new funding agency, more streamlined, more attuned to the needs of business and, therefore, ensuring the money gets to places quickly and can drive up those skill levels.

Q421 Dr Turner: How do you address the question of skills as against qualifications because they are not necessarily the same thing?

Mr Lammy: Yes.

Q422 Dr Turner: You can have highly skilled people who do not have any paper qualifications and people with the highest paper qualifications in the world who have no practical skills. How are you addressing this?

Mr Lammy: I am really passionate about this question. I want to put my terms in complete politics here. I want to ask the Committee not to unpick the good work that Leitch has done and the consensus that we reached on this. All of us in this room have qualifications. If we lose our seats at the next election we will present our CVs, we will have our qualifications and we will move on and hopefully get another job. I am absolutely committed here politically that we must not deny those millions of people I talked about previously who do not have qualifications. Let us go back before Leitch. In the end what Leitch was challenging was short courses where you got nothing at the end to show for what you had done. What he was challenging and trying to balance was purely the individual business interest of doing something but not actually being able to measure what you have done. This is not just about the Government saying qualifications for qualifications' sake, it is not just about saying we have got to have a benchmark and proxy by which we can see against other countries where we are in the system, it is about understanding that if you look at those people within Train to Gain in the workforce who have taken up courses, they largely come from social economic groups D and E. These are the poorest people in the country. I absolutely stand by qualifications because my attitude is very much that if it is good enough for us, it is good enough for everybody else.

Mr Marston: Earlier in the year we published some research evaluation of the impact of Train to Gain to both learners and employers. When we asked the learners in Train to Gain what they saw as the most important benefit for them, 93 per cent of them said it was about gaining a qualification. From the learner's point of view the qualification is immensely important and, as David said, is most important for the people who have no qualifications yet. The boost to confidence, to motivation, to self-esteem is very, very powerful from getting a qualification and you do not achieve that if you only get the skills and they are not badged and certificated and recognised through a qualification. Just as importantly, when you ask employers what do they see as the benefit, they are also seeing the benefit in their own companies from employees getting qualifications because it changes the motivation, the commitment to the company, the sense that the employer is willing to invest in their own employees and they are demonstrating it through giving the opportunity to achieve qualifications. There is a very powerful synergy and joint benefit if skills are certificated through qualifications.

Chairman: We need to challenge you on that one. We simply cannot let you get away with that!

Q423 Dr Turner: Are you happy that given you achieve both skills and qualifications in the same person those skills are then being put to best use?

Mr Lammy: In the end what I think we are trying to do is make the funding available and the system conducive to people coming forward who have low skills but no qualifications to be able to do that. The measure of success is a trade-off between them and their employer. We know that it makes you more productive, of course it does. Clearly if you can now read, write and add-up, when you could not, and if you can now pursue something at Level 2 or, indeed, Level 3 within your company then it is a success. If you speak to someone like Neil Scales at Merseytravel he will say the qualifications that his employees have been able to do have transformed that business. He will also say it is not easy, they are now more demanding and more challenging of him as the director of that company. I think that is the measure of success.

Q424 Dr Turner: In addition to Train to Gain employees, and that is clearly understood, do you think there is any further need for training and development of attitudes of employers?

Mr Lammy: Yes, there absolutely is. There are two sides to that. One is the new Commission, and clearly the leadership role the new Commission has. Two is the role of Sector Skills Councils, the re-licensing, refocusing of their activity understanding that it is still patchy in certain sectors. I do just want to put this fundamental point on the table before Phil comes back in because I can see he is itching to come back in on this. Let us remember that our business industry organisations spend 38 billion on training every year in this country and we as a Government spend round about 4 billion, so the issue is not us saying that we are the biggest player on training and skills, it is saying we have this 4 billion, how best should we use it to lever in change in the system. It is our judgment post-Leitch that the best way to use that spend is on low skills, to change the system to be more demand-led. That demand-led does not just mean employer-led or we would not be giving the money we are giving through Union Learn to our unions. That is how we should be using those limited funds, taxpayers' money, in the areas where we think employers would not put it, to change the system.

Q425 Dr Turner: How well-informed and accurate do you think the information is concerning both the current skills picture and future skills needs? Who is responsible for obtaining and collating this information?

Mr Lammy: Clearly the Learning and Skills Council has had an important role in this area. We have not yet mentioned the role of Regional Development Agencies who are key partners regionally and perform key assessments of both skills gaps and skills priorities in their regions that we are responsive to. We have now Multi-Area Agreements. In Manchester they are taking skills very seriously, and in Birmingham in terms of their Local Area Agreement they are taking skills very seriously. The system is responsive to those priorities and gaps as and when they emerge. I do want to say to you in the global downturn that we are seeing that of course you would expect us to say that we want to make sure that the taxpayers' money we have is there working alongside colleagues in DWP. Should people be laid off, should there be redundancies, should there be re-skilling, we want to make sure the systems are in the right place for them. We will be doing all we can and we are sitting round the board of the Economic Council to make sure that skills training and money is there and responsive to those needs.

Mr Marsden: I wonder if I could just come back to you on this vexed issue of skills and qualifications because I entirely agree with everything you have said, that it is not a question of qualifications for some of us and vague skills for the rest of us, I absolutely agree with that. I am talking now from having met a group of north-west providers and FE college heads last week who are deeply concerned that what is going on at the moment with this process is that providers are, to a large extent, certificating skills that already exist in the workplace, and that is valuable, but they are not adding to it. There is also some evidence that the target driven nature of Train to Gain is making one or two providers cut corners. I heard one example of an NVQ being delivered in a day, which I thought was horrifying if it is true. How do we move beyond the valuable activity of certificating by qualifications skills that are already there to actually developing further skills which, indeed, in due course may lead to qualifications?

Q426 Chairman: Before you answer, can I just add to that. We heard on Monday, for instance, in our look at the draft Apprenticeship Bill that most apprentices are already in work and what is happening is that those skills and training which they are receiving in work, somebody is now coming in to assess that and moves them on to an apprenticeship, but there is no gain as far as the employer is concerned in terms of skills because they are already delivering them and all this is really just a bean counting exercise to meet government targets. Will you wrap all that together?

Mr Lammy: I will wrap all that together. Phil, who suggested that on Monday? I did not read Monday's papers.

Q427 Chairman: Our witness. You can read the transcript.

Mr Lammy: It is complete nonsense.

Q428 Chairman: Will you confirm that the majority of apprenticeships are actually delivered in the workplace with existing employees?

Mr Lammy: Of course they are.

Mr Marston: That does not mean there is no skills development.

Mr Lammy: It is total and utter nonsense.

Q429 Chairman: I am talking about value-added. We are paying taxpayers' money to improve the skills base.

Mr Lammy: Phil, please, let me just finish on this. I feel so strongly about this. In the Apprenticeship Bill we are seeking to make absolutely legislatively clear the quality we believe an apprenticeship has to be. The first thing to say is that apprenticeships are now operating across many, many more sectors of the economy and, depending on the kind of apprenticeship you do, there is a different balance between how much time you are spending in the workplace and how much time you are spending in college, but absolutely you are spending time in the workplace. The other thing to say is if we want to see more small businesses do apprenticeships then inevitably the apprenticeship contract will sometimes sit with a group training association, if you like, or a college provider structure because the small business has not got the wherewithal, frankly, to take on all of that. Then you get some of our opposition colleagues suggesting that is not an apprenticeship, but, of course, it is an apprenticeship. It is simply understanding that this small 15 man business in Derby needs to be in a real partnership with the local college in order to put on this apprenticeship and have a model where small businesses can partake. That is the second point. The third thing to say is that of course we acknowledge there are programme-led apprenticeships. They are not counted in the figures but there are programme-led apprenticeships where young people who are not yet ready for an apprenticeship - young people who are being supported by the Prince's Trust, by Fairbridge or by the WICA, young people who have drug issues or have had crime issues - are based in the college, of course, in transition to an apprenticeship. We must not somehow throw these young people aside and say this is not an important stepping stone to doing an apprenticeship. Many of these young people are in constituencies like mine, so I feel very passionately about this, but they are not in the figures. There absolutely is a work-based component to being on an apprenticeship. It is not a bean counting exercise, this is a real, real exercise.

Chairman: Very briefly, Stephen, because we must move on.

Q430 Mr Marsden: Chairman, I would like to respond very briefly.

Mr Marston: I just wanted to pick up Mr Marsden's question is there a risk that this is simply a way of badging skills we already have. In the main we are pretty confident that is not what is happening, there is real skills development going on here and this is not just about badging the skills people already have, they are training and getting new skills. The evidence we have got for that comes from the surveys we have done of both learners and employers where, of the learners through Train to Gain, 81 per cent said, "The Train to Gain training has given me skills to do a better job in the future", 73 per cent said, "Train to Gain has given me skills to do my current job better", 43 per cent are getting better pay out of it, 30 per cent got promotion. If there is no skills gain going on, why would the recipients, the trainees, say, "I am getting new skills for this job, for a future job. My employer thinks it is worth paying me more. My employer is willing to promote me"? All of that is evidence that there is a genuine gain of skills that is making people more productive and able to do their jobs better. This is not just about badging skills they already have, it is giving them new skills and the data is showing that.

Chairman: It is important we put that on the record.

Q431 Ian Stewart: Firstly, your assertion that all politicians in the room have qualifications is not correct. However, I wholeheartedly agree with your statement that we should be promoting the opportunity for everyone. By the way, I also think that should apply to MPs, that we should have the opportunity to train and learn in this place and we do not currently have that. In relation to two of the key issues of the Government's strategy, employer-led and demand-led, we interviewed and questioned the CBI, British Chambers of Commerce and the Confederation of Small Businesses earlier this week and certainly my personal view is There is no uniform employer as is, their views about the Government strategy and what their requirements and demands are different from the different organisations representing different types of employer. I was left with concerns about whether the small business sector really wants qualifications at all and really wants training and qualifications that are transferable. My understanding from Monday's session was that at the smaller end of the scale particularly they just want the employee to be able to do the job that they want them to do at that point in time. First of all, can you define for me "demand-led"? Secondly, how do you balance the demands of individuals, employers and national policy? Should this vary between skills level or sectors?

Mr Lammy: My definition of "demand-led" is the Leitch definition. It is a definition that challenges suppliers to be more responsive to both individuals and employers. Inevitably, we are concentrating in this session at this time on employers and that is largely because of Train to Gain. In a couple of years we will be talking more about individuals because of the individual Skills Accounts that will be there for people and because of the adult careers service. Demand, in a sense, is coming from the people themselves, whether it is people within the workforce or people simply wanting to go into colleges, but moving colleges from where they are at. I come back to the point I made earlier, and it is to agree with you. 38 billion is being spent by business industry organisations on skills, but a third of UK business is spending nothing at all on skills. There is a tension in many, many businesses of self-interest, narrow interest, short-term interest, which can be about just the skills you need for their business. There are some other things I need to put on the table here. One is the simplification of the system in relation to our further qualification and curriculum reform moving to a more modular system, the QCF piloting, that gives that mobility and transparency we need in the system. Two is to emphasise the point that I made previously about qualifications. The first thing I did when I came into post was to increase the amount of money for leadership and management for particularly the owners of small businesses. I took the view that increasing that spend was important because if the owners themselves have gone on a course, and we are fairly flexible about what they think they need as a owner, there is quite a lot of flexibility about that, they get the bug, they realise what it did for them and take their employees with them. The evidence was coming through that that was the case. We increased that amount to get owners themselves on that journey.

Q432 Ian Stewart: I think we can all support the enthusiasm that you personally have and the aims of the Government in enthusing people to train and gain skills, but the commitment of employers is not unquestioned. Some academic researchers are actually questioning what is being presented as employer-led equalling employer commitment, both commitment to the strategy and financial commitment. There are questions about that. What evidence have you got that employers will play their part financially? Are the CBI, the British Chambers of Commerce and the Confederation of Small Businesses fully signed up to the Government's implementation of Leitch?

Mr Lammy: That is a fair question. Ian, one, I say it is a 2020 vision. Two, the spend that employers are putting into training is going upwards at the moment, it is going in the right direction. Three, we as a Government, you are right - let us get to the heart of the politics of this - in the absence of levies, because that is the politics of it, let us be clear about it, it is the elephant in the room that has not been put on the table yet, are putting drivers in the system to encourage those employers who have been more reluctant. That is what time to request training is about. In the same way that people have requested flexible working, it is putting the power in the hands of the individual to say to their employer, "I would like to do some training". We are doing that. We are giving people Individual Learning Accounts so they can see the quality of learning and have a portfolio of learning that is in their name. We are giving them an adult careers service so that in a market in which jobs may well come and go people can see and hear and get that information and guidance that has not been in the system. At the same time, we are working with our unions through Union Learn to be on the factory floor, to not have government ministers proselytising about learning, but to have your colleague nudging you saying, "I did it, you can do it". This is not some sort of top-down Train to Gain, this is lots of activity within that.

Q433 Ian Stewart: Let me just press you on that. We had Lord Leitch before us and I pressed him as to the role of trade unions, for example, and he was effusive, he said they play an absolutely key and fundamental role. Then I asked him why then was there little or no mention of trade union involvement and commitment within the Leitch Report itself. I pointed out to him that the TUC was mentioned on about the second to last page. David, how do you square your unprompted mention of trade unions and their involvement and where do education providers and trade unions fit into this triangle? It is now being articulated by you, but why is it not in the written material?

Mr Lammy: As you know, I have tried to emphasise always the work of trade unions. Spend has gone up in relation to the money that we are giving to trade unions. Trade unions are critical to this discussion as far as I am concerned, absolutely critical, and will remain critical over the next 12 years it seems to me. I was in the Boots Distribution Centre in south-east London, which is a centre that is going to be closing down, and unions have played a critical role in giving those folk skills training that many of those people thought they would never be able to do. I have got to go back to Foster. Foster said in his report: "There are highly conflicting needs and interests in the sector between employers, learners and government, all and none of them are being met". He questioned the rationale of those courses without their apparent connection to employers. Now, go back to 2005 before we had Train to Gain. We are pushing providers to move in a particular direction and I do not want to see us go back to the picture that Foster painted. I say that Train to Gain is critical, Union Learn is critical, the individual learner and their empowerment, whether it is through time to request or the Skills Account, is critical.

Q434 Ian Stewart: Can I stop you there and pose the question again. At the outset I said that some researchers are questioning the commitment of employers within an employer-led system and employers' commitment financially as well. The concern they seem to have is that the employer commitment is not stabilised, is not growing, it may even go backwards and the Government may end up increasing its financial commitment to make sure all this works. How do you ensure that does not happen?

Mr Marston: I do not think the data bear that out. Every couple of years we do a national employers' skills survey and, as David mentioned, employers' own money investment is going up, it has gone up from about 33 billion to 38 billion now, and an increasing proportion of employers have training plans, an increasing proportion of employers have training budgets. There is a lot more to do. It is a big mountain we are trying to climb, but we are going in the right direction. We are confident that the more we can show to employers that we are serious about meeting their needs, we are not just foisting on them things that we think are good for them and they do not agree, we are trying to do things, training, skills, qualifications, that have real value and merit for them, and if they believe that then more and more of them will be willing to engage in that.

Q435 Mr Marsden: On that point, could I just say to Mr Marston that I think it would be extremely helpful if you could provide the Committee with factual detailed analysis of how those figures were obtained. I can only say, and I think I probably speak for other colleagues, there is a deep, deep scepticism out there among training providers, FE principals and many other people (a) that that has increased and (b), perhaps more importantly, that it will increase. Perhaps, David, that is where I come to you. You have rightly mentioned about the downturn situation and we are planning for the long-term, but there is a short-term, medium-term problem with employers, is there not, in that it is going to be very difficult to get them to put the sort of increased investment that you want to see, which we all want to see, in the next couple of years given the economic downturn. If that is the case, what flexibility, and this has been suggested to me by a number of people, has the Government got for doing some sort of deal with them where it says, "We'll do a bit of funding in the first year but you have really got to plough in in years two and three"?

Mr Lammy: There are two questions there. The first is when you mentioned providers, college principals, and there is deep scepticism, I have got to say I would be surprised if there was not some deep scepticism from providers and suppliers because we are forcing them to be more responsive to employers who were grumbling previously that they were not doing the courses that were necessary in the workplace. That is what politics is about, it is that people are going to be a little bit sceptical of the direction of travel because the pendulum in politics always wants to swing back to the status quo and the status quo was what Foster and Leitch were writing about.

Q436 Mr Marsden: Forgive me, David, I am not going to completely let you get away with that.

Mr Lammy: It is true though.

Q437 Mr Marsden: A lot of the college principals, and particularly the north-west we are talking about, are people who have engaged very strongly with employers in the past. They are not saying they are not engaging with them, they are merely saying they are sceptical either about their willingness or their ability, which is perhaps more important in the present circumstances, to put more money in.

Mr Lammy: Okay. On that second point, both to the point that Ian and yourself were making passionately, I am not sitting here saying all employers are playing ball, I am not sitting here saying all employers are investing in skills and training of their employees, I am not saying that. I am saying I am trying to better the system, we are putting in levers and those levers do stop short of levies for employers. We have been absolutely clear on that, but also said we will revisit that at the appropriate point.

Q438 Mr Boswell: That is the nuclear deterrent, is it?

Mr Lammy: No, because that brings with it other arguments about does that really work and you can then get into arguments about employers becoming complacent about skills because there is a pot of money over here. That is another future discussion that the Committee may want to explore. In the absence of that I am trying to indicate to you that we are applying pressure in lots of different places. In relation to what you are saying about this global downturn, of course it is right to say that there are some sectors that will be affected by this and certainly I have had representations from not all but parts of the construction sector. I have had representations from parts of the retail sector. There are other sectors - IT - where growth is expected to continue, for example, and there are strong parts of our manufacturing base because it is in the high skilled technology area where also growth is expected. Across 25 sectors of the economy you would not expect it to be uniform. Indeed, someone said to me the other day, "This must mean that apprenticeships are not going to arise". Do not forget, for example, with apprenticeships we are also saying that we as the Government and the public sector need to pull our weight, so we have got to see huge growth in public sector apprenticeships and I do not think the economic downturn should really be affecting that. Flexibility was behind your question and you are absolutely right, there has to be flexibility. We are moving in that direction with the compacts that we are signing with individual Sector Skills Councils where we are getting into the nitty-gritty of what is required in your particular sector that is relevant for your particular sector. There are some sectors where they want to place the emphasis, for example, on higher skills and we are responsive there with Level 3. There are some sectors where there is a quid pro quo on apprenticeships, and we are willing to do that. We must always keep in mind, of course, the taxpayers' priority in this discussion and, broadly speaking, as I say, they were underlining and support Leitch.

Q439 Chairman: Can I just ask you one thing, David. We have spent nearly an hour on these first three questions and we have a lot to go through, so if we can all speed up. That is not a criticism because we are enjoying very much the discussion with you. My concern about this whole agenda, and Des, Tim, Gordon and Ian have raised it, is in terms of the Leitch agenda he was looking ahead to 2020 and the sorts of skill levels that we will need in order to be able to compete in an economy in 2020 and we do not know it will look like. We have really got to up the skill level. He also made the point that 70 per cent of the 2020 workforce has already left school and is actually in the workplace or in some employment. Whilst the whole business of Skills for Life is making sure people with no qualifications get those, nobody around this table would disagree with you, the real challenge is what do we do for those people who are in work who want and need the skills of tomorrow but the employer does not see those as relevant to his business? How do we incentivise those? How do we get the people with Level 3 skills to actually re-skill in areas where the Government says, "Our policy says first we will fund Level 3, but we will not fund anything else"? How do you ensure these 20,000 degrees that are going to be co-funded by employers? Where is that coming from? As a Committee we cannot see where the commitment is from people to invest (a) in individuals where there is no real benefit to their business or (b) why they would invest in higher education because there is no evidence to say that would happen. Where is your evidence that this is all going to happen? Do you appreciate the point I am making?

Mr Lammy: I do appreciate the point you are making. I suppose I am prompting you to look further because I am saying that clearly you have to look at the Skills Accounts that we are piloting and you will want to take an interest in that.

Q440 Chairman: I accept that.

Mr Lammy: Clearly you will want to have a look at the careers and advancement service that is critical to people's empowerment to take up skills and drive the system and drive demand. Clearly you will want to ensure what we are doing in joining up Jobcentre Plus and the Next Steps service is removing the incentives, if you like, that have existed in Jobcentre Plus to get someone into a job. We have all seen someone who has a job for two or three months and they come back to us, they have lost the job because they have not got the skills progression. Clearly the integration of employment and skills is critical, goes to the heart of what you are saying, and we will want to ensure that over the next few years we really see that join-up and people really experience that join-up on the ground. I think the second part of your question comes back to the point that I made previously, and that is where should Government best spend its money. We have taken the view that we are happy to subsidise young adults up to the age of 25 at Level 3, but at Level 3 and beyond we think the balance has got to be a partnership between us and business, that it should not be Government subsidising in entirety Level 3, Level 4 skills, it has got to be a partnership between us and industry, therefore we have got the foundation tier that is hugely important for people progressing. Absolutely we want to see co-funding. I am really excited about my new job because I think one of the central issues in my job with higher education is that conversation between universities and employers and making sure there is a strong cadre of courses and partnerships for adults.

Q441 Chairman: Nobody would disagree with your aspirations, David, but where is the evidence that anybody is going to do it? Which other country in the world has employers investing in undergraduate qualifications for the sake of undergraduate qualifications? I do not see it. Stephen, you have the evidence, do you?

Mr Marston: Can I offer some pointers at least because you are absolutely right, this is hugely ambitious. Millions of people need to be motivated to get qualifications they do not currently have, and are we going to get there is absolutely the right question. But we can take some comfort from what has been achieved so far. One of the hardest things to motivate people to do is if you cannot read and you cannot write and you cannot add up, what is going to cause you to want to enrol on a programme to do that, and yet two and a quarter million people have been motivated to do that at level 2; 1.8 million people who did not have a level 2 qualification have come forward since 2001 and they have said, "Yes, that is for me, I want to do it." Apprenticeships, which cover level 2 and level 3, we have doubled the number of people starting apprenticeships over the last ten years. At higher education, despite all of the changes to the student support system, enrolment remains very buoyant. If you look at what happened over the past few years we are, bit by bit, encouraging more people to get more qualifications. Can we not take some confidence from that, therefore, that we do know something about how to enthuse, how to motivate, how to encourage people? We have to make it clear to them that it is worth investing their time, their money their effort, but in increasing numbers they are seeing that case and they are coming forward and they are enrolling.

Q442 Chairman: You cannot point to a single country where employers are investing significantly in undergraduate qualifications upon which you are modelling your aspirations for the first 20,000 co-funded higher education degrees. Can you or can you not, Stephen?

Mr Lammy: I was in one last week.

Q443 Chairman: Which one?

Mr Lammy: Germany is investing a lot of money and employers are right at the heart of that system.

Q444 Chairman: In undergraduate qualifications - level 4 qualifications?

Mr Lammy: With the greatest of respect, Phil, I would not use the badge "undergraduate" qualifications.

Q445 Chairman: Level 4 then.

Mr Lammy: Level 4, yes, in the sense that - let us be clear on this - you can do an apprenticeship that moves, and we not just talking about level 2 apprenticeships here - level 3 and beyond and Foundation Learning Tier is all about that investment.

Chairman: David, could I just say that it would be useful if we could have a brief note to say where in fact you have your evidence from that this will work in the UK. That would be useful to put in the report.

Q446 Dr Iddon: Good morning, David. I have loads of quotes here taken from different witnesses who indicate the high complexity of the present system of delivering skills and training and these same witnesses are not convinced that the new system will be any less complicated or more responsive and flexible to the needs of both employees and employers. I think you have a huge hurdle to overcome to convince these people, professionals in the field, that what you are trying to deliver achieves that. Even one witness, who sat where you are sat now, a few months ago held up a paper where on the train he tried to write down all the organisations responsible for delivering skills and training and even he, a professional in the field, had packed up. How can you convince the people in this policy area that the figures are going to get better?

Mr Lammy: By telling them that government is not taking this on in the sense that government has asked the UK Commission, which is driven by employers themselves, to help us further simplify the system. It does not get more convincing than that, really. We recognise that the system needs further simplification. Then you get to the second question: what do you get rid of? Do you get rid of some of the Sector Skills Councils, who in a sense can complicate the system depending on the sector that they are in? Do you get rid of the mechanism by which to get money to colleges and employers, which is where the Learning and Skills Council has been and where the new body will sit? Do you say, "We do not want a Careers and Advancement Service"? Do you say, "We do not want an apprenticeship service"? Once you get to "we need to simplify the system" you then get to the hard issues, which is what do you want to get rid of, and people start to go quite mute on that. So we have asked the UK Commission for Employment and Skills to look at this, and broadly speaking what they are saying is, "Look, this is about hiding the wiring; and this is about as making it as simple as you can for your average small business in the middle of England to understand how they can access skills training and equality. And there we are currently doing things like the Train to Gain brokerage and the joining up with Business Link to ensure that there is a one-stop shop really for that advice for the local employer, and that is a huge and important move in the right direction. But broadly speaking we will take up advice and challenge from the UK Commission to move forward in a way that is responsive to business. I accept that the system needs further simplification. The question is how we do it and we have asked business and industry to lead on that for us.

Q447 Dr Iddon: Let us look at the Learning and Skills Council. You must be aware that there is quite a resistance actually to breaking up the Learning and Skills Council, which has taken a long time to settle down and it has changed its modus operandi, but at least it is beginning to perform now obviously to employers and employees' satisfaction. Yet the Association of University Colleges, for example, are critical that by 2010 what the Learning and Skills Council is doing now will be done by four more separate units by the end of that decade. Why are you so keen to press ahead with disbanding the Learning and Skills Council?

Mr Lammy: It is not actually four more, it is two more. The Learning and Skills Council has been successful in meeting the targets that the government has set it but the landscape has changed, it has moved on. There are new and urgent priorities in relation to young people. We want to bear down much further on the issue of NEETs and raising the leaving age to 18 is critical in that. We believe and are committed to a rebalancing of work-based qualification and learning, also practical learning as well as the academic. That leads us then to apprenticeships alongside the new diplomas. That does require change in the system. Then we have this other change that we have obviously spent an hour on this morning, which are the demand-led changes in the system. So it has been clear to us that we do need a locally responsive system, hence the changes up to 19, that really in a sense builds on the progress of the Learning and Skills Council but accepts that that local ownership of issues like NEETs, that local relationship with diplomas, that local relationship with employers and apprenticeships is necessarily going forward. Then on our side if you like, the DIUS side of the fence, a streamlined system that gets the money out to employers and has the national apprenticeship service and the new advancement service - and I think that is how you get to four but actually they sit under the new single funding agency. I do not know if you want to come in on that, Stephen.

Mr Marston: That is right. In one real sense what is driving this is a commitment to simplification because at present for 16 to 19 year olds there is a fragmented set of responsibilities where local authorities do some bits, the LSC does some bits. One of the major drivers to the changes we have is to simplify by putting the local authority in the lead in making sure that all of the services and all of the programmes for young people are strategically led by the local authority for that area. That inevitably has knock-on consequences for the LSC and it does mean that we are going to need to make a split at age 19, but we should have a clearer, simpler, more coherent approach that brings together all the services that young people need up to the age of 19. Post-19, then, we will focus on delivering for employers through the Skills Funding Agency - and it is just one agency that will do all of our post-19 skills training work.

Q448 Dr Iddon: It is a Skills Funding Agency.

Mr Marston: Correct.

Q449 Dr Iddon: But will that agency also be involved in developing future strategy, or is it just going to be a funding agency?

Mr Marston: It is going to be primarily a funding agency but of course to decide what you want to fund you have to have some sense of priorities, objectives and purpose. One role of the UK Commission for Employment and Skills is to be saying on behalf of employers on the demand side, "What are the future skills that we need that will take us towards that competitive skills base that Sandy Leitch sets out?" That, if you like, sets out the demand need and then the Skills Funding Agency will be responsible for picking that up and funding colleges and training providers to meet those needs.

Q450 Dr Iddon: I want to look next at the levels of planning for delivery of the new services. Obviously the Regional Development Agencies play an important part in this agenda and so do the Sector Skills Training Councils, which are probably more responsive to the local level of delivery. Is there some tension there, do you think, between what the Regional Development Agencies do and what the Sector Skills Agencies do?

Mr Marston: There can be but we recognised some years ago that we need to have a way of bringing together a regionally-based assessment of skills needs with a sector-based assessment of skills needs and the way we do that is through Regional Skills Partnerships, which bring together the Sector Skills Councils, the RDA, the Learning and Skills Council and Jobcentre Plus, so that they are combining the assessment of the region and the assessment of the sector needs. That then gives the LSC the basis for deciding what to commission from colleges and providers in that region.

Q451 Dr Iddon: There is a plethora, is there not, of some regional, very local planning bodies? It is so complicated and such a - I think one of our witnesses described it as a bit of a "pig's ear", of a mess. How are you going to simplify all that?

Mr Lammy: Let me just do this from a constituency point of view. Is it a good thing for me as the MP for Tottenham, for the London Borough of Haringey, to be preoccupied with skills, thinking about the strategy it needs on the ground for young, inner-city kids in my constituency to get the skills and for their parents, many of whom in this context speak English as a second language and have some real challenges? Of course it is. Is it important for the Mayor and the London Development Agency to get employers around the table, local authorities around the table, the LSC around the table to have this as one of the central priorities for London? It was under the last Mayor and it looks like it might be under this new Mayor - thank God for that. Is it then really important for me in London that the public sector steps up to the plate to offer apprenticeships? Of course it is because it is unacceptable that there are around about 200 apprenticeships in the London Borough of Haringey available for the young people of my constituency. So you get back to this thing: what bits should we stop? This is all about success; this is all about the success of people understanding how important skills and training is, and we have to be absolutely robust about that. That is what is happening at local level across the country. So of course there is a tension there between local and regional sometimes and certainly sector-led pushes, but it is all necessary to get us to the right place.

Mr Marston: If I may just come in briefly because there are two things we are trying to do. Firstly, it is to engage all of those people who want to be engaged in being able to say, "What skills do you need?" So, as David says, at regional level, sector skills level, multi-area agreement level, local level, all of that is good - we want people to engage in identifying their own skills needs. That is very different from providing a simple, clear, easy to use service with a small business or the individual learner, and Train to Gain is absolutely trying to do that. It is hiding the wiring, it is making sure that any business can go into a single service, single brand working nationally and say, "These are my needs, please help me meet them." If we can make the service simple then actually it does not matter that we have lots and lots of organisations helping us to identify their skills needs. But getting service simple is what we are really focusing on with the Commission.

Chairman: Can I ask my colleagues to be as brief as you can now, please, because I am very conscious that we only have 35 minutes left.

Q452 Mr Boswell: If we can come back to the institutions and come to a different tack, mainly about UKCES and the SSCs themselves. Very simply, Minister, we are wrestling with deadweight and value added in these concepts. What is going to come out of the creation of UKCES that was not available previously?

Mr Lammy: On the simplification issue that has just been raised I think we did need UKCES to help us with that leadership in those areas. I think it was right that there was an independent voice that challenged government in this area, and of course we get that independence from UKCES. I emphasise that UKCES is not just employers, there is also trade union representation on the board as well, as well as small business and larger organisations like Charlie Mayfield from John Lewis, for example. So there is an important voice there in the system that has not existed before to do the pieces of work that make this system stronger; to balance the hard political things that exist there - regional and sectoral; further simplification; strategy and delivery. That, I think, is what UKCES can do.

Q453 Mr Boswell: That is helpful. Can we then apply this to the discussion of the current issue about the re-licensing of Sector Skills Councils? You indicated earlier that some are better than others - or some are more advanced than others, perhaps it is fair to say. What is the re-licensing process meant to achieve? Will it lead, for example, to some rationalisation? And how are you going to engage employers collectively in that process of determining the best course forward?

Mr Lammy: I do not think it is for me to engage employers in that process; I think this is a process that has been led by the UKCES in its relationship with Sector Skills Councils themselves. They have asked the National Audit Office - which I think is very rigorous - to do the assessment; and we publish the criteria against which Sector Skills Councils will be judged. I think it is fair to say that there has been progress over the five years. We have to accept that different sectors start in different places. I do not want to prejudge the outcome of that process. I want to emphasise not just the re-licensing but the re-focusing so that there is a very clear mission for Sector Skills Councils in what they are trying to do, remembering that we are giving them more power in a sense; we are giving them more power over qualifications and the qualifications that they think their sectors require. We are giving them more leverage over their employers. So it is against that backdrop that the process is taking place.

Q454 Mr Boswell: How representative are they at the minute, in your judgment; and is there any correlation between the level of their being representative and their relative success; or is that something you are going to defer for UKCES on which to advise you?

Mr Lammy: Frankly, that could be the subject of a whole inquiry to talk about the different sectors and where they are at because there are regional variations, there are big historic variations; there is rapid progress in some over a short period of time; there are communication issues across different sectors. So that is just too complex an issue for me to answer in a short sound bite.

Mr Marston: But in every case the re-licensing criteria will look at how well does this Sector Skills Council work with its employers; what is the level of satisfaction and engagement of the employers in its sector, and that will form a critical part of the assessment of re-licensing.

Q455 Mr Boswell: That is very helpful. But we all know and acknowledge that there are complex structural issues, some of which the Minister has referred to. There are also questions we have had in evidence here and indeed in other inquiries about the number of SSCs that may be stakeholders in a particular issue, for example nuclear engineering. Will the UKCES study and the re-licensing criteria cater for these issues like, for example, should we have an SSC for small businesses; should we deal with professional issues like accountancy across SSC rather than by silo; and would there be some things that UKCES or somebody else - yet another body - should take in-house on behalf of the whole interest?

Mr Lammy: Absolutely and I have spoken to Chris Humphries about some of these cross-cutting issues; I have spoken to him about leadership and management, about small business issues, and about some of the other trade bodies that exist outside of Sector Skills Councils and they are absolutely something that we have asked them to determine in this process.

Q456 Mr Boswell: Can I just ask quickly on qualifications, are they going to be up to the job of doing this, or that will be part of the re-licensing criteria? And I suppose I ought to declare an interest as a Fellow of City and Guilds. Is this at least possible to consider if they are going to draw up the spec for awards, qualifications, that they might subcontract this or outsource this to awarding bodies?

Mr Lammy: They have to be in partnership with awarding bodies to get this right. But what you want them to do is to be in determination about what qualifications are necessary in their sector. There is a lot of duplication in some sectors - unnecessary qualifications that really do need to be streamlined. There is a really important conversation that employers must have amongst themselves about what is necessary; but they have to be in partnership with awarding bodies on that - that is the way we are framing it - and I think that Sector Skills Councils are in a good position to move forward on that basis.

Q457 Mr Boswell: Final question: communications and representations. What is going to be the most effective medium for this to work? There was some suggestion in the past that there were bodies, a big representative organisation like the CBI, who could make representations, but in a sense UKCES has come on to take on that role. How is it going to play in terms of getting your ear, Minister, or your successor, in terms of major employer interest? How best are they channelled and represented to you?

Mr Lammy: Major employer interest is represented on the board of the UKCES.

Q458 Mr Boswell: Small business?

Mr Lammy: Small business is represented on the board of UKCES. The interests of Scotland, Northern Ireland and Wales are represented on the UKCES, as is the voluntary sector represented on the board of UKCES. We have put a lot of effort into getting everyone around the table and that is why we think the organisation has the clout to challenge us where necessary but also to help us move forward.

Mr Marston: The Commission also includes the Director General of the CBI and the TUC; so we have a very representative group of all the major partners.

Q459 Mr Marsden: I would like to move on to the area of higher and further education and the way in which they collaborate with each other, and also the way in which that is going to affect employers' engagement. David, I think it is particularly appropriate, in view of your new responsibilities, for me to ask you this question to start off with: how do you think the structures of FE and HE are going to have to change over the next few years if they are going to adequately address the Leitch agenda?

Mr Lammy: I think the direction of travel that we set out in our Higher Skills Strategy is sympathetic to greater partnerships with Sector Skills Councils and universities. Obviously we will want to do further work on pathways to higher education across the sweep - within apprenticeships, certainly. In coming back from Germany last week that is something is at the forefront of my mind. I think it is important to put on record that there are lots of good things that are happening in higher education institutions and the relationships and partnerships they have with industry. All of the work that has gone on around technology, much of the innovation that we are seeing in manufacturing, a lot of this is sitting in universities. We were with one of the retailers - I forget which one it is, so I had not better not mention it - one of the big supermarket chains that is doing a lot of work with Manchester University ---

Q460 Mr Marsden: I think you will find it is Tesco.

Mr Lammy: ... on climate change. So these relationships are there, and one of the jobs that I have to do is to really articulate that to the country. The Foundation Learning Tier is really important. Your question suggests is there more work to do - yes, there is.

Q461 Mr Marsden: That is interesting and I would agree with you with what needs to be going on. "Patchy" is perhaps the wrong word, but it is differential country-wide and that relates to how regionally organised particular HE university groups are. In the northwest, for example, I think it is particularly good. Perhaps a more penetrating point though is where HEFCE sits in all of this because HEFCE obviously has a critical role in terms of encouraging the troops, engaging and taking those things on board, yet HEFCE have funding streams but have no regional structure themselves and this is something that has been remarked on to me and I think to other members of the Committee from time to time. Is that a problem; that actually we have an organisation like HEFCE which really has to run very fast to cope with this new regional skills agenda?

Mr Lammy: I think two days into the job I will have to park that question.

Mr Marston: HEFCE does have regional consultants; there is a team for each region.

Q462 Mr Marsden: But they do not have a regional structure.

Mr Marston: Correct, they do not have a distributed regional structure but there is a higher education regional association in every case and the regional consultant works with that regional association of HE; so I think we can say that HE is well linked into regional discussion about skills and training with the RDA and the other regional players.

Q463 Mr Marsden: David, I accept that you want to park any comments on HEFCE.

Mr Lammy: Start reforming HEFCE!

Q464 Mr Marsden: That is a subject for another inquiry, but I will come on to something for which you certainly have responsibility at the moment and indeed we have had conversations about it in the past, and that is the extent to which the structures in HE and FE - and I am talking about core structures now - are suitable and constant with what you want to do in terms of the skills agenda. I say that again because the feedback we get - certainly the feedback I got in the northwest last week - is that there continues to be frustration among employers and among learners that a lot of the courses in HE and FE are not bite-size and are not portable enough and are not compatible enough. Do you think that we are making sufficient progress in that area for those sorts of courses to meet the needs of learners and also to meet the skills agenda?

Mr Lammy: I think you have to unpack that. The first thing to say is that it is very easy, is it not, to talk about HE and not bring out the vast range that exists within higher education in this country; the huge differences between institutions; the different mission of institutions, the fact that our higher education institutions are independent and all have different missions and play different roles. Some put in a tremendous effort into research and development; others tremendous efforts into teaching, all with critical relationships that they have to have with the outside world because they are preparing in the end our population to go into the outside world. So there is a range issue there. It is right to say, of course, that there are big structural differences between further education and higher education; that is true. I am very much looking forward to taking my knowledge of the skills context into this new job in discussion with universities about what they are doing - and I think they are doing a tremendous amount - and about what more we can do.

Mr Marston: About FE and HE it is just worth saying that in FE the qualifications and credit framework will from 2010 unitise all the above vocation qualifications, so unit-based qualifications will then be universal.

Mr Marsden: That is absolutely true but with Bologna and various other initiatives, my view is - and the Minister may share it but may not wish to comment at this stage - that they have a hell of a long way to go in that respect in HE.

Chairman: We have quite a long way to go as well.

Q465 Mr Marsden: One final point, if I may? The big issue, if we are going to get people to step up to the plate on the vocational route at level 3, is whether those qualifications are actually going to be accepted by a broad range of HE providers at level 4. HEFCE has just produced a pamphlet which suggests that that again has some way to go. What thoughts do you have in that area as to how we can stimulate a greater acceptance in the HE area of vocational qualifications?

Mr Lammy: I read the pamphlet and Phil and I were with them earlier on this week. Again, I am sorry to say this, but I wanted to emphasise partnership and cooperation in my first contribution. These are issues that I want to explore further over the coming weeks and months and I am reluctant to get into them in the first few days of the job.

Q466 Dr Gibson: With Train to Gain you are always going to get customer satisfaction and dissatisfaction and my attitude to that, I guess, is just get on with it and shut up really. But does Train to Gain need any adaptations, from your experience so far?

Mr Lammy: Yes, it did. I published Plan for Growth now last November, which was a few months after I had been in the job, to indicate flexibilities. It is only two years' old and those sorts of big spend schemes have to be flexible and have to move to meet needs as demand changes. The compacts that we are striking with Sector Skills Councils is a further innovation in the system, so absolutely it has to be a responsive system not a big bureaucratic state-down one and I am open in that. Indeed, I want to indicate, without tying the hands of my successor, that again we want to make sure that what we set up is absolutely as responsive as it can be in the context of a global economic downturn.

Q467 Dr Gibson: What do you say in terms of flexibility to the fact that many young people now move jobs, as you will know yourself - you have moved jobs; that it is not one job for life any more, as it was in my day - but not now. Can we keep up with that? How do we handle that situation when new skills are necessary for the new jobs?

Mr Lammy: I think the key component of that is the Adult Advancement and Careers Service; it is quality information advice and guidance. It is the further steps that we are taking and have to take in that direction, to equip people with the information, the knowledge and the support that they may not have had in the past to make those decisions. But I think you are absolutely right.

Mr Marston: I think there is another component of that which is integral to the qualification reform, that we are putting a lot of emphasis on generic transferable skills, so we are not just offering qualifications and training programmes that are about today's job. Woven into each of these new qualifications are generic and transferable skills that are portable in a number of different jobs throughout your career.

Q468 Dr Gibson: One thing I am surprised about is that the small businesses do not seem to be happy about apprenticeships. Do we just say, "Get on with it" or do they have a point? SME companies, for example, do not seem to be as enthusiastic as I think they ought to be.

Mr Marston: I think they have got a point in the sense that if you are an SME providing the full band with training programme for an apprenticeship it is quite a demanding thing to do. We did set up an apprenticeships review and we thought there was an important role for group training associations in the way in which we can help SMEs come together so that they do not have to take on the full responsibility for the whole apprenticeship programme, but none the less they can be closely involved in providing components of training in partnership with other SMEs in the area.

Q469 Dr Gibson: Are there different brokerships for Train to Gain and apprenticeships and would it not be better to have one group that handles both?

Mr Marston: It is a single set of brokers for Train to Gain. We have said that within the National Apprenticeship Service we want a field force that can back up and reinforce the frontline brokerage system so that where an employer says, "Yes, within my overall training programme I want to offer some more apprenticeship places" there are experts whose specialism is getting apprenticeships set up. What we do not want is competing and conflicting brokerage systems running around knocking on doors without communicating with each other.

Q470 Dr Gibson: Where do you get these people from? How do you recruit them? Do you put an advert in the daily press, or what? How do you find these trainers, these stimulators, these navigators - whatever you want to call them - on which the whole thing depends, really?

Mr Marston: It does. The way we have done it so far is by letting contracts; in other words, we have gone out with an advertisement saying that we want this service of brokerage; that the contract has been won by different people in different places. For example, in the northwest the RDA-managed Business Link won the contract also to be the skills broker, which was a good way of getting tight integration between skills brokerage and the RDA.

Q471 Dr Gibson: And the contract is for how long?

Mr Marston: I think they were initially left for two or three years.

Dr Gibson: And now they are reviewing it and up again for grabs. Thank you.

Q472 Ian Stewart: How can demand for training from employees be increased? And how easy is it for individuals to understand the type of training that is available?

Mr Lammy: I think I probably touched on demand before in relation to the learning account, particularly the Advancement Service and time to request. Those are the key things that I put on the table to try and help with that.

Q473 Ian Stewart: What is your view, David, with regard to the TUC suggestion that there could be collective learning accounts - the sum is more than the individual?

Mr Lammy: I think I would be open to a further discussion with the TUC on that, certainly.

Q474 Ian Stewart: Has there been any assessment of whether there are sufficient suitable courses available in all regions to ensure that the skills accounts can work effectively?

Mr Lammy: That is why we are piloting at the moment and it is too early to say how that pans out, to make sure that we have the right system.

Mr Marston: It is an important role, I think, of the Adult Advancement and Careers Service that that will be our national service that tells people what is available in every area and how you access it. It is meant to be a simple one-stop shop for all the information you need to know what is available to you, how you get it and what forms of support are there. Whether the right qualifications and programmes will be there is partly what we are asking Sector Skills Councils and the Commission to do, so that we are constantly reviewing are there gaps in this market, are there new training programmes that need to be developed, new qualifications that need to be developed, picking up on what employers are saying about the skills gaps they are experiencing and developing new programmes to meet those.

Q475 Ian Stewart: What do you say to those that say that the proposed right to time off to train is a significant step backwards from previous threats to employers of a legal right to workplace training?

Mr Lammy: Let us see how it works. I think it is a step forward to empower people to have a conversation that they may not have felt otherwise they could do about training; to put that on the table, to require employers to think about it seriously. That is definite progress and actually it has been welcomed because it is progress and we were in a lot of discussion, particularly with the TUC, when we came up with time to request. We have said that we will look down the line at the legal requirement and that is a whole other set of issues and I respect those issues on both sides.

Q476 Chairman: Can I just ask one question about the skills accounts? If I currently have a level 3 qualification do I have an automatic access to a skills account, which would allow me then, for instance, to do a foundation degree?

Mr Marston: The skills account does not guarantee you any given level of funding; the account itself is just a way of bringing together ---

Q477 Chairman: What I am really asking is does everybody get a skills account?

Mr Marston: Everybody gets a skills account in the sense that they have an individual learner number, an account that records their own history and entitlements that they have, but what you are entitled to in terms of further public subsidy will vary depending on your previous qualifications and what you now want to do. You ask about a foundation degree; you would still have to meet the entry requirements for a foundation degree ---

Q478 Chairman: I would have if I got to level 3, would I not?

Mr Marston: You probably would have but of course foundation degrees are offered by universities in the main and they remain entitled to set their own entry requirements.

Q479 Mr Boswell: So it is not a funding guarantee as such? It is a statement of where you are and then something may be derived from that, but it is not a guarantee.

Mr Marston: But there will be guarantees of entitlement for some groups. For example, if you do not have a level 2 and you want to get a level 2 you will be guaranteed free training to get your level 2 and that will go into your account.

Q480 Chairman: Stephen, it will be really useful to have a note on what is involved with those because I think we are a little confused about what the entitlement actually entitles you to.

Mr Marston: Yes.

Q481 Mr Marsden: David, through the course of this inquiry - and, as you are aware, this is the final oral evidence session - we have had concerns expressed from a number of witnesses, not critical, I would say on the whole, on the overall direction of travel of the government skills agenda - that certain groups at the moment may not be getting a fair crack of the whip. It has been quite a broad range. The Association of Accounting Technicians, for example, was concerned that the emphasis on level 2 meant that mature people in their fifties who needed retraining would not necessarily have that access. More broadly, Age Concern have said - and I quote - " The government is currently promoting training which is not always appropriate for many adults over 50, for whom achieving a full level 2 qualification is not the best or most cost-effective way of improving employability." I want to be very clear on that - we are not getting into the broad debate about informal learning, I am talking about very specifically - are we doing enough under the skills agenda at the moment to address the needs of employability of people in that forties and increasingly over fifties' market?

Mr Lammy: We have not perhaps talked this morning in great detail about the work that goes on jointly between us and our colleagues in the Department for Work and Pensions and the integrating with employment and skills agenda. There we are funding employability; we have local employment partnerships that absolutely go up to people beyond their fifties - because in the end the whole point of them are for gathering up people who have been very far in the labour market previously, who were working with very large companies, organisations, some of our large retailers - to get people into the job market. The work we are doing on the next step ---

Q482 Mr Marsden: I am sorry to interrupt you. Just on that issue that you have been describing, are DIUS the lead ministry or DWP?

Mr Lammy: Clearly because in the end the cohort of people that we are really worried about are those in receipt of benefit DWP is in the lead with us. I met with Stephen Timms monthly. We were together, I think it was three weeks ago, in Birmingham looking at this whole issue and how what we are doing together is working on the ground. So there is a whole agenda there where that is important. We have a balance; there is a balance between where we should deploy taxpayers' money, as I said previously, so we do not renege from lower skills and level 2, because I do think it is right to say that the business industry should be investing in skills at the higher level. We have also been clear in some of the compacts we have struck with particular sectors that we have been responsive and flexible to some of the issues that come up within particular sectors.

Q483 Mr Marsden: But given the demographic changes of which we are all aware, it is true, is it not, that we are not going to meet some of Leitch's targets unless we manage to bring back into retraining not just the sort of people you have been talking about but a large number of people with disabilities and also of course people who have been out of the labour market for other reasons for significant periods of time. What do you still need to do to finesse the approach for them?

Mr Lammy: I was accused previously of publishing too much, but of course we published two pieces of work on the integration of employment and skills where we talked about the 16-hour rule, where we talked about lone parents; where we talked about the work that we had to do with those with disabilities; and the reforms that we have to make in the system to make it more responsive to their needs. This work is now being piloted with roll-outs across the country and different Jobcentre Plus areas linking Jobcentre Plus and the Learning and Skills Council having to work more closely than they have ever worked before. And I expect that there will have to be further work over the months and years ahead.

Q484 Mr Marsden: A final question, if I may - and again this is based on concerns that the witnesses have brought to us - does it worry you that there was no specific quality benchmark in the Leitch Report? That is a specific issue that the Equalities and Human Rights Commission raised with us when they came to give their evidence. If you are not concerned about the fact that there was no formal acknowledgement of the need for an equalities agenda as part of Leitch, what do we need to do informally to address those issues more concretely?

Mr Lammy: I absolutely believe that equality issues lie at the heart of many of these issues.

Q485 Mr Marsden: Does it worry you that Leitch did not deal with it?

Mr Lammy: Leitch was set a particular job in relation to productivity and the relationship of skills within that, and I think he did a good report on the back of that. You then have policy that comes as a consequence of that. We have a single equality scheme in the Department that was published very recently. The LSC is absolutely engaged on those agendas. Much of the DWP's work is with a cohort of people who have been subject to discrimination or challenge as a result of disability, ethnicity or gender. So of course that is critical in this discussion and in terms of tangibly what do we then do we said, for example, at the apprenticeship review that we wanted critical mass pilots, that we wanted mentors. We piloted work with women on gender issues in relation to some of those issues even previous to that, so I am very sympathetic and open to what you are saying. The proof then is in the pudding and the policies that come behind that.

Q486 Mr Marsden: For your information the National Skills Forum - and I think you may be aware of this - are currently doing a big inquiry on the whole issue of women and skills.

Mr Lammy: I welcome that.

Mr Marston: We did publish the Equalities Impact Assessment with our own response to Leitch, so we have gone through all the recommendations in Leitch.

Q487 Chairman: On that note could I thank you very much indeed, Stephen Marston and Mr David Lamming. We have asked for a number of pieces of information and we would like to write to you on one or two other elements. Could I ask you finally, Minister, who in fact is going to take over the skills brief in DIUS?

Mr Lammy: Lord Young will be taking over the skills brief.

Chairman: We have a formal announcement; thank you very much indeed. We wish you well; thank you very much indeed for your cooperation this morning. And thank you very much indeed, Stephen.