House of Commons - Public Accounts

Select Committee on Public Accounts Thirteenth Report

2 The role of education in improving employability and its link with employment services

8. People increasingly need better skills and qualifications to compete in the labour market. Employers want skilled employees[8], and lack of basic skills, particularly literacy and numeracy, is a major barrier to obtaining work and to advancing at work[9]. To improve adult literacy and numeracy levels, the Department has used major advertising campaigns to promote basic skills training. Interim targets to improve the basic skills of adults and reduce the number of adults in the workforce without a full Level 2 qualification (equivalent to 5 GCSEs at A*-C grade) have been met. By the end of 2006, 1.76 million adults (target: 1.5 million) had improved their basic skills while 1.14 million more adults (target: 1 million) had achieved at least a Level 2 qualification. Many employers, however, are concerned about the number of people who leave school without basic skills.[10]

9. In its implementation plan for the Leitch review of skills, the Government has now set a more challenging set of targets to be achieved by 2020.[11] If the 2020 targets are reached, 95% of adults will have functional literacy and numeracy, up from 85% literacy and 79% numeracy in 2005 and more than 90% of adults will have gained at least a Level 2 qualification, up from 69% in 2005 (Figure 4).[12]

Figure 4: More challenging targets have been set for adult literacy, numeracy and Level 2 qualifications

Note: Entry Level 3 is the national school curriculum equivalent for attainment at 9 to 11 years of age, Level 1 is equivalent to a GCSE at grade D-G and a first full Level 2 is equivalent to 5 GCSEs at A*-C grade. Performance data for the functional literacy and numeracy will not be available until a survey is undertaken in 2008.

10. The Government is introducing Skills Accounts to give adult learners greater choice and control over learning. Learners will be able to purchase using public money relevant learning at an accredited, quality assured provider of their choice. The Accounts are being introduced on a rolling basis, starting with a pilot scheme involving 4,000 learners at a cost of £10 million. While the evaluation will not be completed until August 2009, the accounts will also build on the lessons learned from the Individual Learning Accounts programme, which closed in 2001 following evidence of abuse and revelations about the potential scope for fraudulent claims.[13] Unlike the previous scheme, the new accounts will only offer learning at providers that are quality assured by the Learning and Skills Council. Training providers will receive their payments as part of the mainstream Learning and Skills Council funding process, whereas Individual Learning Accounts relied on a private sector contractor to handle payments.[14]

11. Low-skilled workers are the least likely to be trained by their employers[15] perhaps because firms consider they will receive better return for their investment training those who already have some qualifications to reach a higher level. It is possible to access free basic skills training outside work, but research shows that for low-skilled adults, gaining vocational qualifications in the workplace brings the greatest improvement to earnings and productivity.[16] As a result, the Department for Innovation, Universities and Skills is prioritising expenditure on free basic skills and Level 2 training provision, so that some of the financial barriers that prevent employers from training low-skilled employees are removed.[17]

12. Around a third of British employers do not invest in training - a proportion similar to other OECD countries.[18] There are clear differences in expenditure on training between different sectors of the economy, and small and medium-sized enterprises are less likely to fund training. Some employers consider that they have to provide their employees with skills that should have acquired at school. Nevertheless, the Learning and Skills Council survey evidence indicates that employers are now spending more on training with expenditure increasing over the last two years from £33.3 billion to £38.6 billion. In the same period, the number of employers who say that they are training their staff has increased from 900,000 to 978,000.[19]

13. The main government initiatives to increase employer involvement in training low-qualified staff are the Skills Pledge and Train to Gain. The Skills Pledge aims to stimulate demand for training services by inviting employers to commit voluntarily to support their employees to obtain basic skills and to work toward relevant qualifications up to at least Level 2. By October 2007, over 400 private and public sector employers covering almost 2.5 million employees had made the pledge. Train to Gain aims to provide businesses with a simple-to-understand brokerage service, funding support for training (including free training for a first full Level 2 qualification or a Skills for Life literacy and numeracy qualification) and for small employers, wage compensation for time employees spend in training. The Department for Innovation, Universities and Skills plans to expand the Train to Gain programme with an increase in budget from £400 million this year to some £1 billion by 2010.[20]

14. The success of Train to Gain will be measured in part by the amount of additional training that it stimulates. Evaluation of Employer Training Pilots, a similar scheme trialled from 2002 by the then Department for Education and Skills, found that only 10 to 15% of the training undertake in the first year would not have happened without the programme. When promoting Train to Gain, the Learning and Skills Council has focused on engaging with 'hard to reach' employers who would not otherwise have invested in training. In its first year since it launched nationally in August 2006, Train to Gain has engaged with 52,730 employers, of whom 72% (target 51%) were classed as 'hard to reach'.[21]

15. There is a risk of the regulatory burden on employers reducing the time and resources they have to train staff at work. The Department for Innovation, Universities and Skills wants to reduce the administrative burdens on business by 25% by 2010. It wants to package the in-work training it offers into more coherent programmes that are easier for employers easier to navigate, shifting the whole system to a demand-led principle that is responsive to employers' priorities.[22]

16. The Learning and Skills Council has only engaged with a small proportion of employers and recognises that achieving learner targets (the number of people who have signed up for and completed training) will be challenging. The Council's top-level target is to train 807,000 employees by the academic year 2010-11.[23] In its first year it trained almost 250,000 employees which was well below the planned profile, partly because it experienced some difficulties in persuading employers to co-finance higher level qualifications.[24]

17. On 26 November 2007 the Secretary of State for Work and Pensions announced the introduction of systematic skills screening for new out-of-work benefits claimants and for claimants who reach six months on Jobseeker's Allowance. The Learning and Skills Council is developing 'Skills for Jobs', an umbrella term for their pre-employment training packages, and promoting the Train to Gain scheme. Along with Jobcentre Plus, the Learning and Skills Council is working to strengthen the links between pre-work and in-work training, for example Jobcentre Plus plans to introduce a marker on job vacancies that will allow jobseekers to see which jobs will also provide on the job training.

18. There is still a disconnect between targets for employment services and targets for skills services, even though the National Employment Panel recommended an alignment of objectives and performance indicators in 2004.[25] Employment targets measure the number of people helped into work, without sufficient consideration of whether people enter sustained employment. Skills targets have focused on qualifications achieved, without analysing whether qualifications have helped people gain employment or advance at work. As announced in the Government's July 2007 response to the Leitch review, the Department for Innovation, Universities and Skills and the Department for Work and Pensions are currently working to develop a shared objective of sustainable employment and progression. Data limitations prevent the Departments from tracking how people progress from qualifications through to employment, although they aspire to share data and so move towards more integrated targets in the longer term.

19. Currently benefit rules prevent Jobseeker's Allowance recipients from studying for more than 16 hours per week, for more than two weeks per year, which can prevent them from completing vocational training to increase their chances of gaining a job. To allow people to undertake full-time training linked to specific job opportunities, the Secretary of State for Work and Pensions announced on 26 November 2007 that the benefit rules will be relaxed. People who have been claiming Jobseeker's Allowance for six months or more will in future be able to undertake full-time training for up to eight weeks, provided that the training is focused on a return to work.[26]

8 National Employers Skill Survey, 2005, Learning and Skills Council, 2006 Back

9 DfES and DWP: A shared evidence base-the role of skills in the labour market, Department for Education and Skills the Department for Work and Pensions, 2007 Back

10 Q 65 Back

11 World Class Skills: Implementing the Leitch Review of Skills in England, July 2007 Back

12 Qq 1, 11-13, 36-39, 42-45, 57, 59, 63, 72, 75-76, 93, 108-110; C&AG's Report, para 4.15 Back

13 National Audit Office, Individual Learning Accounts, HC (2001-02) 1235 Back

14 Qq 94-107; C&AG's Report, paras 4.18-4.20 Back

15 The Labour market Impact of Adult Education and Training: A Cohort Analysis, Feinstein, Galindo-Rueda and Vignoles, 2004 Back

16 The returns to qualifications in England: updating the evidence base on Level 2 and Level 3 vocational qualifications, Jenkins, A., Greenwood, C. and Vignoles, A., London School of Economics, 2007 Back

17 Qq 10, 72, 67; C&AG's Report, paras 4.4, 4.9-4.10 Back

18 National Employer Skills Survey, Headline findings November 2007, Learning and Skills Council Back

19 Qq 9, 46-47, 64-66, 71, 85-87; C&AG's Report, para 4.4 Back