House of Commons - Re-skilling for recovery: After Leitch, implementing skills and training policies - Innovation, Universities, Science and Skills Committee

Re-skilling for recovery: After Leitch, implementing skills and training policies - Innovation, Universities, Science and Skills Committee Contents

2 The Leitch Agenda

Principles

18. The Leitch agenda, as set out in the original report and the Government response, has five principles which "underpin delivery of a raised ambition". These are:

shared responsibility: Employers, individuals and the Government must increase action and investment. Employers and individuals should contribute most where they derive the greatest private returns. Government investment must focus on market failures, ensuring a basic platform of skills for all, targeting help where it is needed most;

focus on economically valuable skills: Skill developments must provide real returns for individuals, employers and society. Wherever possible, skills should be portable to deliver mobility in the labour market for individuals and employers;

demand-led skills. The skills system must meet the needs of individuals and employers. Vocational skills must be demand-led rather than centrally planned;

adapt and respond. No one can accurately predict future demand for particular skill types. The framework must adapt and respond to future market needs; and

build on existing structures. Don't always chop and change. Instead, improve performance of current structures through simplification and rationalisation, stronger performance management and clearer remits. Continuity is important.[20]

SKILLS AND PROSPERITY

19. The Leitch Review states that "Skills were once a key lever for prosperity and fairness. Skills are now increasingly the key lever."[21] It also asserts:

The prize for achieving this ambition is great—a more prosperous and fairer society. The Review estimates a possible net benefit of at least £80 billion over 30 years. This would come from a boost in the productivity growth rate of up to 15% and an increase in the employment growth rate by around 10%. Social deprivation, poverty and inequality will diminish.[22]

20. In accepting his analysis and adopting most of the agenda for action which arises from the report, the Government appears to have accepted Lord Leitch's view, although it was slightly more circumspect in its evidence to our inquiry, stating that "developing skills is also one of the key ways of enabling people to find jobs and progress in work, and to creating a cohesive, engaged society"[23] and that "a more highly skilled workforce tends to be a more productive workforce"[24] (emphasis added on both occasions).

21. Two of our academic witnesses were much less convinced by the equation, pointing out that in Scotland higher level skills had not delivered increased productivity.[25] Interestingly, in answer to a parliamentary question earlier this session, the Exchequer Secretary to the Treasury asserted that "The independent Leitch Review of Skills found no evidence that skill gaps or shortages have held back economic growth".[26] This would be a surprising finding if the link between skills and prosperity was a straightforward one.

22. The UK Commission for Employment and Skills has expressed its intention "to tackle important questions, namely: why, when there has been significant progress on the UK skills front since the 1980s, has this not been matched by a comparable productivity miracle?"[27] and suggested that "The key to answering this lies in examining and understanding the complex interplay between the supply of and demand for skills and the interrelationships between economic development, employment and skills".[28]

23. It may well be the case that increased skills lead to an increase in national prosperity but there is a surprising lack of evidence to support the conclusion. There is clearly a need for more research to establish whether or not there is a causal relationship. This would help to justify the commitment of considerable public expenditure on training and skills development. Nevertheless, even without this evidence, we note that no voices have been raised to question the principle that it is right to aim towards a more highly skilled workforce, both in terms of individual benefit and for the wider good.

PARTNERSHIP

24. The Leitch Review advocated "a new partnership" between Government, employers and individuals in taking action on skills and training. It identified the following roles for each party:

Government: investing more, focusing on the least skilled. Ensuring that the education system delivers a highly-skilled flow into the workforce. Creating a framework to ensure employers and individuals drive the skills system so it delivers economically valuable skills. Being prepared to act on market failures, targeting help where it is needed most. Regulate if necessary and with care to reach the UK's skills ambitions.

Employers: to increase their investment in skills to raise productivity, wherever possible increasing investment in portable, accredited training. Ensuring that the skills system delivers economically valuable skills by effectively influencing the system. Pledging to support their low-skilled employees to reach at least a first, full Level 2. Introducing sectoral measures such as levies, where a majority of employers in the sector agree; and

Individuals: raising their aspirations and awareness. Demanding more of themselves and their employers. Investing more in their own skills development.[29]

25. This principle of partnership was reflected in Leitch's ideas on funding, where the Review recommended "a much clearer balance of responsibility, based on clear principles of Government funding to be targeted at market failure and responsibility shared according to economic benefit":

the Government should provide the bulk of funding for basic skills and the platform of skills for employability, with employers cooperating to ensure employees are able to achieve these skills;
for higher intermediate skills (Level 3) employers and individuals should make a much higher contribution, in the order of at least 50%; and
at Level 4 and above, individuals and employers should pay the bulk of the additional costs as they will benefit most.[30]

26. It is hard to argue against the concept of shared responsibility between Government, employers and individuals as the major players in the delivery of increased skills. However, the duties that Leitch allocates to each partner and the funding obligations that accompany them are taxing and it is important to note that formal acceptance of this agreement has been made only by one of these players: the Government. The success of the Leitch agenda is therefore predicated upon a tripartite arrangement to which two parties have not committed themselves and indeed have no mechanism by which they can formally do so en bloc. On the matter of engagement with individuals, though, the fact that 7.6 million members of the workforce (26% of those in employment) are unionised must not be overlooked.[31] The Government has engaged with this group to an extent—and with notable success in its support of Union Learning Representatives—but this activity has sometimes been overlooked, which is regrettable. We analyse the important role of the unions in representing individuals' views in Section 6 of this Report.

27. As we will cover when discussing employer engagement and the role of the individual, there is room for doubt that employers and employees are ready to play the part that Leitch has sketched out for them and on which the Government's plans depend, especially where co-funding is concerned. Kevin Donovan, writing in the Association for Learning Technology newsletter, argued that Leitch will "disappear like so many of its predecessors", partly because "its faith in employers is misplaced and will result in a corruption of the role of educational institutions".[32] He cited research that shows that "although there are many companies for which skills enhancement forms part of business planning, there are others which base their plans on driving down labour costs and/or other elements of productivity". There is also a risk that the economic downturn is likely to have a significant negative impact in this area, as acknowledged in the open letter to employers by the Chairman of UKCES and others.

28. In addition we note that there are other parties which have a considerable involvement in the skills agenda which are omitted from Leitch's neat triangle of responsibilities. The role of training providers, whether FE or HE or the private sector, is not addressed directly, nor does Leitch address in detail the role of trades unions which are of increasing importance.[33] These institutional partners will need to play a full part in implementing the agenda and should be fully involved in the process.

DEMAND-LED

29. Closely linked to shared responsibility for skills delivery is another principle—that the system should be demand-led. This mantra runs throughout the review and led Lord Leitch to recommend several reforms, including that all adult vocational skills public funding, apart from community learning, be routed through 'Train to Gain',[34] where businesses have the choice of what training is provided, and 'Learner Accounts',[35] where choices are made by individuals, by 2010, a target date extended by the Government.[36] The Leitch Review also recommended that there should be a greater role for employers in shaping the skills framework through the new UK Commission for Employment and Skills and additional responsibilities for the Sector Skills Councils.[37]

30. Demand-led has come to define the whole skills agenda post-Leitch but its adoption as a principle by the Government and others raises several interesting issues, including whether a wholly demand-led system is practical or desirable, and, as Tom Bewick of Creative and Cultural Skills put it, "Whose demand are we talking about?"[38]

31. Professor Lorna Unwin, Institute of Education, University of London, giving evidence to the Education and Skills Committee in 2007, questioned whether employers are always capable of determining their own demands. She suggested that "a lot of employers themselves … need a great deal of help in terms of learning how to improve their businesses … Leitch tends to treat employers as if they are all leading members of big companies. Actually, on the ground, a lot of our employers themselves have low levels of education attainment."[39]

32. A related point was made by Professor Deian Hopkin, Vice-Chancellor, London South Bank University, representing Universities UK, who commented on the need for "employers to understand what their future training needs are going to be rather than simply reacting to what their present day needs are,"[40] and the role for universities to assist with this task. Other witnesses questioned whether "the pendulum has swung a little too far towards the employer-driven agenda because the employers do not always know what they want."[41]

33. The former Education and Skills Committee questioned whether the system could be described as 'demand-led'. It concluded:

The Government aspires to a 'demand-led' skills system. While mechanisms for making the system more employer-facing such as Train to Gain are welcome in principle, they cannot unconditionally be described as 'demand-led', given the strict constraints on what is currently fundable.[42]

34. Mick Fletcher, an education consultant, referred to the choices open to employers as "heavily constrained" by the need to "meet Treasury targets and as long as it allies with what a sector skills council has agreed, and as long as it fits in no doubt down-stream with some regionally based plan that comes from an RDA or a regional employment partnership."[43] Chris Humphries of UKCES suggested that a slightly different definition of demand-led might be more useful:

To me demand-led refers to the need to ensure our employment and skills system understands and is responsive to employment needs … It is about creating a system that is responsive on a number of dimensions. It can never be as simple as saying, 'Let us meet employer demand'. It has to bring together employer demand, local and regional priorities and individual capability and opportunity and create a system that is more responsive to all those priorities.[44]

35. There is also a practical difficulty with determining the level of demand, even once the problems of encouraging demand and deciding whose demands are heard are resolved. The importance of good quality data on which to base planning decisions was also raised.[45] This affects the ability of the Government to measure achievement against targets and to make timely adjustments in the delivery of policy to enable the targets to be met. However, it is not clear who has ultimate responsibility for collecting data on skills needs and collating it in a useable form. The Chair of the Regional Skills Partnership Board in Yorkshire and the Humber told us:

what we are talking about here is a simple three-dimensional spreadsheet that says this is what by industry and by region we need for the various skills, and yet I have never seen that data. We have been trying within the Yorkshire context to get some aggregate data on that basis but it is as if each of the different agencies—the RDA, the LSC, the Sector Skills Councils and everybody else and his dog—has got their own data set. Why do we need that? Why can we not have one data set that gives us really useful information that we can then use to drive the system?[46]

The availability of good quality, reliable and up to date data is a basic requirement and the arrangements for its collection must be clear and effective. The latest update from DIUS, FE and Skills Systems Reforms: an update, places the responsibility on UKCES to "forecast skills and report on the state of the nation, with input from Sector Skills Councils (SSCs) … Regional Development Agencies (RDAs) and other key partners."[47] We recommend that UKCES review the collection of data on skills needs across sectors and regions and apportion responsibility for ensuring that it is collated and made available in a readily accessible format.

36. Shared responsibility and responsiveness to demand comprise a sound philosophy for the development of skills in the UK workforce. The difficulties arise in translating them into practical policies for implementation. To avoid "demand-led" and "partnership" becoming meaningless jargon, these difficulties have to be addressed.

Leitch targets

37. The Leitch Review recommended that "the UK commit to becoming a world leader in skills by 2020".[48] This required "doubling attainment at most levels", with the "stretching objectives for 2020" outlined in the introduction. As we noted, the Government response adopted these targets and added an additional target for 68% of the adult population to be qualified at level 3 by 2020. Interim targets have also been set for 2010-11 under the Public Service Agreement. These are that by 2010-11 79% of adults will be qualified to level 2, 56% to level 3 and 34% to level 4.[49]

38. There are several important points to note about these targets. First, the targets are tied to OECD league tables, rather than an analysis of the skills needs of the UK.[50] In theory, their achievement could leave the UK basking in glory at the OECD but no better off in terms of economic advancement or employment. Following on from this, they are blanket targets across all sectors, rather than homing in on particular sectors or types of skills. A representative from Yorkshire Forward told us:

there is a fundamental problem that whilst Leitch was very clear on the skills agenda …. what that does not feed though to is any targeting within the Leitch targets, so whilst innovation reports are saying how crucial these [STEM] skills are for the economy what then is delivered at an implementation of Leitch is a very blanket 'wherever the eligibility is for qualification that is what will be funded'.[51]

39. In the same vein, the targets do not encourage activity aimed at filling skills gaps either regionally or sectorally. The latest National Employers Skills Survey indicates that perceived skills shortages vary from region to region, with employers in the North East region most likely to be experiencing skills gaps (19%) followed by London (17%) and the South West (16%). All other regions had an incidence of around 14-15%.[52] Levels of shortages also vary between sectors, where Skillset (the Sector Skills Council (SSC) for Creative Media), ConstructionSkills, Semta (science, engineering and manufacturing technologies), Lantra (environmental and land-based) and e-Skills UK had the highest proportion of skill shortage vacancies as a percentage of total vacancies (41%, 40%, 31%, 29% and 28% respectively).[53] It is worth noting in connection with the previous discussion of the demand-led principle that the proportion of employers reporting skills gaps in England fell from 22% in 2003 to 15% in 2007, with a concomitant fall in the proportion of staff described as lacking in proficiency (11% to 6%).[54]

40. A further concern is that, except at the basic level of literacy and numeracy, the targets measure qualifications rather than skills. However, there are difficulties in using qualifications as a proxy for skills. Too great an emphasis on qualifications may skew policy away from skills which are needed now and for the future development of individuals, companies and the economy in favour of more easily measurable, but less relevant certificated courses. One witness suggested that "we have become extraordinarily hung up on qualifications", adding that "you cannot automatically assume that just because somebody has another qualification, they become more productive".[55] Another commented: "If we go back to much older work which was done by the National Institute for Economic and Social Research, by Sig Price and colleagues, they started off talking about the relationship between skills and productivity and trying to find ways of measuring it through their research. They came up with the best estimate of a 25 or 30% link between skills and productivity and education and productivity. There was this big gap ... relating to what actually goes on in the workplace."[56]

41. Soft or employability skills, such as communication or problem-solving, are rarely reflected in qualifications yet these skills are highly valued by employers. Leitch reported that employers in the National Employer Skills Survey 2005 felt that "soft skills were lacking", particularly team-working and customer-handling skills, but also other generic, soft skills such as oral communication, problem-solving and written communication,[57] and he recognised the problem that "qualifications only add economic value when they deliver skills that employers and individuals need".[58]

42. UKCES is taking the lead on the employability agenda in its current review of practice in teaching employability skills. The purpose of the project, due to report by the end of 2008, is "to draw together such a consensus as there is on what is good practice in inculcating employability skills, and to form the basis for further work necessary (a) to develop teaching/training and assessment approaches where necessary and (b) to establish ways of motivating and equipping the employment and skills system to adopt these approaches".[59] We believe that capturing the acquisition of employability skills within Government targets and therefore attracting Government funding for such training should be examined by UKCES as part of its ongoing work on employability.

43. A second issue with using qualifications as targets is the danger that it can lead to a concentration within skills funding and provision on full qualifications because these count against the target. The former Education and Skills Committee argued that "The targeting of funding on particular kinds of full qualification-bearing courses makes it difficult for providers to offer the kinds of learning employers often say they want".[60] The Committee concluded that "a more flexible way of targeting funding is needed urgently, allowing the accumulation of 'bite-sized' learning which can be built up into a portfolio over time".[61] We have heard many similar comments during the inquiry which we examine in more detail later in the report, along with recent developments in government policy.[62]

44. Thirdly, an over-emphasis on measuring progress against the highest qualification held by an individual belies the dynamic nature of the acquisition of skills within the current job market—a key issue in the current economic climate. Individuals need to reskill in order to keep their qualifications relevant or to change careers. If the targets are too narrowly focussed on the number of people with a particular level of qualification, then it could be difficult to justify assisting people with training which will not take them up a level and which will therefore not count against the target. The controversial issue of the withdrawal of funding for equivalent or lower qualifications in higher education illustrates this point. Policymakers refer to this as "firstness", which the LSC defines as "the rate at which learners taking qualifications are taking one at a particular level for the first time." It notes "This is relevant, for example, with level 2 qualifications where the Public Service Agreement Target (PSA) target only counts those people who are over 19 who achieve a full level 2 qualification for the first time."[63]

45. There has recently been some relaxation of this principle for small businesses and in particular sectors, as set out in the recent update from DIUS:

To help ensure that the Train to Gain offer meets the needs of every sector, we have already agreed 10 'sector compacts' with employers in key sectors of our economy. Worth over £630 million over three years, these work in partnership with SSCs to tailor the Train to Gain offer to respond to the strategic challenges of each sector. They offer a range of benefits including:

tailored, sector-specific advice from skills brokers;
joint Sector Skills Council-LSC marketing about the specific skills offer to employers in specific sectors, with information about qualification routes to meet industry standards;
for businesses with more than 250 employees, a full subsidy is available echoing the offer to smaller, private sector businesses at Level 2 and 3 for people who are already skilled at that level for qualifications that SSCs say are the most important to the sector.
These three-way agreements between DIUS, the Learning and Skills Councils and SSCs/other sector bodies set out the specific offer to employers in the sector within Train to Gain. Sector compacts have so far been agreed with 10 SSCs and sector bodies and together these are worth some £630m over three years. We are negotiating further sector compacts and will be looking to ensure that each sector offer responds to the impact of the current economic downturn.[64]

As part of the wider Government action to help businesses weather the current economic conditions we are providing £350m and new flexibilities for small and medium sized businesses to help them train their staff. Training for SMEs in England is now a priority in Train to Gain and training at level 2 will be free for all SME employees regardless of whether they already have qualifications at that level. Free bite-size courses in business-critical areas, including business improvement techniques and customer service, will be available to SMEs to raise productivity. Management and leadership training has been opened up to the smallest employers and is now available to employers with 5 to 250 employees.[65]

46. Fourthly, qualifications are also essentially a status measure: they do not reflect whether the skill acquired is being used or is useful. The OECD has announced a new study (the OECD Programme for the International Assessment of Adult Competencies) which might address some of these difficulties by assessing the knowledge and skills of adults, including general levels of literacy and numeracy, and how well participants use ICT and key work skills in their job.[66] DIUS is participating in this project and we look forward to the results. It will be instructive to see whether the UK emerges better or worse-placed in OECD skills league tables as a result of a different basis of measurement.

47. There is a case made by the Government to balance these arguments, which is that qualifications have a particular value for the types of individuals whom the Government is trying hardest to encourage. The then Minister for Skills told us "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 ... 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".[67]

48. Stephen Marston, Director General for Further Education and Skills at DIUS, added:

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% of them said it was about gaining a qualification. From the learner's point of view the qualification is immensely important and … is most important for the people who have no qualifications yet ... 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.[68]

49. A recent CBI survey of more than 600 employers backed up this point to a degree: when asked the question "why offer training leading to qualifications?" 372 employers (62.4%) offered "employees value qualifications" as one of their responses. However, the complexity of the issue is demonstrated by the fact that when asked to list the barriers to providing training leading to qualifications 187 (34.9%) of the same pool of employers offered the response "available qualifications lack relevance to my firm."[69] Furthermore, when employers were asked what their employees valued most, only 84 (14.1%) responded "training that leads to vocational/professional qualifications", compared with the 361 (60.5%) who said "job-related training to help them to carry out their current role."[70]

50. We have already commented on the need for more research to demonstrate the link between skills and productivity. The same arguments apply to the relationship between skills and qualifications. We are concerned that the conflation of skills and qualifications in the targets may lead Government to assume that a qualifications strategy is an adequate substitute or proxy for an overall skills strategy. This may drive up levels of attainment, improve the UK's position in international league tables and contribute towards improved economic performance but a real skills and training strategy would focus more on skills utilisation by companies to achieve high performance working practices and so raise productivity.

ARE THE TARGETS ACHIEVABLE?

51. It is perhaps too early to be measuring against the 2020 targets but DIUS gave us a progress report against the interim targets for 2011:

Level 1 literacy (2011 indicator) is 597,000 achievers. Although actual performance will not be measured until 2008-09, current performance is on track to achieve the 2011 indicator.[71]
Level 1 numeracy (2011 indicator) is 390,000 achievers. Again, performance will not be measured until 2008-09 academic year, but latest data from 06-07 also indicates that we are on track, albeit with a steep trajectory to 2011.[72]
Level 2 (2011 indicator) was to have 79% of working age adults qualified to at least Level 2. We are only at the beginning of the measurement period and the proportion of adults qualified to Level 2 or higher now stands at 70.6%. The target is very stretching and we are continuing to expand Train to Gain through recently announced Sector Compacts in key industrial sectors, including manufacturing, construction and processing. [73]
Level 3 (2011 indicator) was to have 56% of working age adults qualified to at least Level 3. The actual level now stands at 50.3%. As happened with Level 2 there has been a slow initial take up of Train to Gain. We expect to see an upturn, following the introduction of the free entitlement for learners aged 19-25 and the roll-out of Sector Compacts.[74]

This indicates difficulties at everything above the basic skills level, and we note that the steepest climbs up to the 2020 targets are yet to come. To fill in the gaps: according to the latest available data from the UK Labour Force Survey, 12% of the UK working age population have no qualifications at all, whilst 29% have a higher education qualification. It is also worth noting that 14% of those aged 16-24 are not in education, employment or training (NEET).[75] Statistics from elsewhere also suggest a mountain to climb. Chris Humphries of UKCES told us that "The latest evidence from the OECD is that both in terms of the proportion of our adult population that have got secondary education and in terms of the proportion that have got tertiary education we are going backwards compared to our major competitors in the OECD, not forwards and I think there is a real need for a sense of urgency around this".[76]

52. The Leitch targets require 5.7 million new adult attainments at Level 2, 4 million adult Level 3 attainments and 5.5 million attainments at level 4,[77] a challenging commitment, especially given the fact that reskilling at the same level of qualification may not count towards the targets.

53. It is instructive to examine how the targets translate at a regional level. In Yorkshire and the Humber, for example, Yorkshire Forward and the Learning and Skills Council calculate that:

To achieve Leitch will require an additional 986,000 individuals qualified to Level 2 or higher, of which there will be an additional 583,000 qualified to Level 4;
The estimated Level 3 contribution required by the region is likely to be an additional 190,000;
The region will also need to find at least another 50,000 apprenticeships;
To achieve the literacy and numeracy targets the region will need to achieve qualifications for around 750,000 additional people.[78]

54. These are very large numbers and we asked witnesses whether the targets were achievable. Only the Minister was confident that they were.[79] Other witnesses agreed that they were "very, very stretching"[80] or, in referring to the regional targets, "beyond aspirational".[81] North West witnesses at the Warrington satellite meeting concurred, indicating that though the targets were "achievable" at level 2, they were "very challenging" at level 4.[82] An FE College Principal complained to us that "some of these targets actually do not motivate employers or the colleges up and down the country, which are one of the engine rooms for the delivery of skills more than qualifications. We want challenges but we want challenges that we can actually achieve."[83] This view that the targets were too high to be relevant and may even be counterproductive was also voiced by others, including the witness from Yorkshire Forward RDA who told us "Our concern is as the Leitch ambitions translate into measurable targets and qualifications as to whether within the economy of Yorkshire and the Humber, within the labour market, we will have sufficient demand for those qualifications", even if they were met.[84]

55. Not all our witnesses argued against the targets. Lee Hopley of the EEF told us that "The targets are good in the sense that they are the direction of travel that we need to be going in in order to remain competitive."[85] Indeed, some pressed for additional ones, although these were notably more precise ones. The Equality and Human Rights Commission, for example, called for the Leitch targets to be adapted to include "some indicators below the target which was about disaggregating them down for different groups"[86] and for "progression targets".[87] NIACE suggested that there was also a need for participation targets to accompany the current achievement targets.[88] This would fit well with the worklessness agenda in encouraging focus on increasing the skills of disadvantaged groups. However, DIUS declared itself to be "not convinced that it would be useful at this point to introduce additional targets to focus on different groups", believing that such targets would be hard to define and ineffective and that they would impose new burdens on the FE sector.[89]

Conclusion

56. It is hard to avoid the pessimistic conclusion that the targets may be unrealistic and unachievable, in part because they do not take account of differences in skills needs in regions across the country. If this analysis is right it has unwelcome implications for the UK. In relation to 2020, we note that Lord Leitch set out in his report his analysis of the consequence of failing to meet the challenge in full when he foresaw the UK falling further and further behind its competitors. More immediately, there is the danger that skills policy might be distorted in order to meet the targets at the expense of programmes and delivery mechanisms that reflect what employers and individuals really need. As one witness said, "down the line [targets] tend to be abused. There are people who believe their jobs depend on them hitting the target, even if it means missing the point".[90] The focus of the targets on gaining qualifications could lead to a near total concentration on the delivery of formal qualifications to people in work, rather than addressing NEETs or others who are less easy to pull up the qualifications ladder. The drive to meet the targets could also result in a pressure to increase the numbers with qualifications by re-badging those who already have skills instead of adding value through training. The deadweight costs of this would be considerable.

57. While we applaud the direction of travel and believe that it is right for the UK to be ambitious in its plans to raise the skills levels of its workforce, we are concerned that these targets as they stand risk alienating and disheartening those involved in delivering skills—training providers, planners and employers alike—by seeming too out of touch with reality. As the Chief Executive of Skillsfast told us, "I think the whole issue of targets, targets, targets and qualifications, qualifications, qualifications, which seem to be part of the implementation plan of Leitch, will disaffect employers".[91] Yet the targets matter because they guide policy, leading to our concern that the Government's adherence to these targets, both at the PSA level and for 2020, may lead to the temptation to be too mechanistic in pursuit of PSA commitments and make short-term policy shifts as the deadlines get closer—which might distort the market and not improve skills. There is also room for scepticism that there will be demand for all the qualifications produced through the Leitch agenda. Nevertheless, we recognise that it would be very difficult for the Government to abandon the targets or to scale them back without a negative impact on the perception of its commitment to the skills agenda which it rightly would wish to avoid, especially in the current economic climate.

58. The Equality and Human Rights Commission suggested that "consideration should be given to extending the entitlement to support lifelong learning and re-training in skills that have currency in the labour market for people to support effective re-entry and progression into sustainable work".[92] This should be tied into work already underway to integrate employment and skills provision, as recently announced by the Government: "On 15 October we announced a £100m package over the next 3 years building on IES trials to support newly redundant workers facing the greatest barriers, eg, older workers and the low skilled. The extra funding will be available for people who are currently facing redundancy and those looking for work to help them retrain and develop their skills so that they can quickly move back into sustainable employment, either in their existing sector or a brand new one."[93]

59. An important step which could be taken would be to broaden the Leitch targets to include re-skilling. The current focus both within the targets and in entitlements on funding for a first level 2 qualification means that those who need to update skills, either because they have been out of the labour market for some time or because their job no longer exists, may not be supported. This situation is set to become even more pressing as the recession bites and redundancies force people to seek to move to other sectors in which their current qualifications are irrelevant. The Government has made some progress with its Sector Compacts and assistance to SMEs, but these initiatives need to be assessed and potentially broadened.

60. We recommend that the Government examine and develop ways to include the absolute number of qualifications gained rather than "firstness" alone in the skills targets, to reflect the importance of re-skilling. We also recommend that the Government should set out broad milestones indicating its aspirations for progress towards the 2020 targets in the light of the current economic situation.

Government implementation

61. The Government accepted the Leitch prescription with only minor amendments, such as pushing back the date by which all funding for skills should be through demand-led mechanisms[94] and rejecting the recommendation that Employment and Skills Boards should be licensed.[95] However, the Leitch review was not a blueprint and there has been much work since on the detail of how the reforms are to be implemented.[96] One skills provider in Leeds told us that FE was suffering from "initiative overload".[97] At the same time, several witnesses, including EEF and SEMTA, expressed frustration from the point of view of employers at the slow rate of progress in delivering change on the ground.[98]

62. We note that two of the Leitch principles for delivery of the skills agenda which are less discussed than partnership or demand-led provision, are that implementation should firstly, be adaptable and responsive and, secondly, build on existing structures. The change in the economic climate will provide an early test of the adaptability of the Government's programme, but we are concerned that so far the Government's response has betrayed a propensity to redefine the machinery, rather than address more intractable problems such as building a culture in which training is the norm. DIUS has gone beyond Leitch in announcing the abolition of the Learning and Skills Council and in introducing draft legislation on apprenticeships. The creation of DIUS itself and the split between the schools and post-19 education and skills functions of the former Department for Education and Skills is another case in point.

63. Tom Bewick of Creative and Cultural Skills commented "I think we have a national obsession in this country with structural reform … and responding inside the policy framework for a new organisation or a new structure … It is not the institutions that need to change, it is the behaviour, it is the attitudes and it is the outcomes that need to change as a result of shifts in technology, shifts in employment and other changes in society."[99]

64. Turning to the rate of progress, we were told by the Government in spring 2008 that "DIUS and its partners have already made significant progress towards the world class skills ambition that Lord Leitch recommended", citing many examples of increases in skills.[100] However, a few months later, the UKCES Chief Executive was adamant that "I am certainly not satisfied with the rate of progress at the moment".[101] His view is significant because UKCES has been charged with the "Publication of 'a state of the nation' report assessing progress towards making the UK a world leader in employment and skills by 2020, and monitoring progress against international competitors in the context of the aims and priorities of the four nations".[102] The first annual report is due to be published by 31 March 2009.[103] It will be a test of both UKCES and the Government how robust UKCES is able to be in expressing its findings but on current form, we do not expect the UK to receive a glowing report. It may well be that the headline changes are merely a necessary precursor to addressing the other side of the skills equation. However, there is only a short time to go before the PSA target date of 2010, and only twelve years before the 2020 Leitch deadline, and a lot remains to be done.

EVALUATION

65. The Government's evidence to us measures its progress and the effectiveness of its implementation of the Leitch agenda in terms of the numbers achieving qualifications or on courses and in terms of satisfaction surveys concerning programmes such as Train to Gain. Both methods of evaluation have their difficulties. On Skills for Life, for example, in April 2008 the Government told us that "Since 2001, 1.76 million learners have achieved their first Skills for Life qualifications, with the Government meeting its target of 1.5m achievements by 2007 ahead of schedule".[104] This is undoubtedly impressive but in a recent report on this programme the NAO found that "the true impact of the Skills for Life programme on the nation's skills base is not known".[105] The NAO recommended that the Department undertake a follow-up to the 2003 Skills for Life survey "as soon as is practically possible" and "use the results of the survey to improve planning for Skills for Life provision which is hindered by the lack of evidence on current Skills for Life needs of the population".[106] The DIUS Director-General for Further Education and Skills told the Public Accounts Committee in June 2008 that "ministers in my department are considering now when and what sort of survey we should undertake".[107] The main factor under consideration was whether to conduct an international or national survey.[108] Given the importance of this area of policy to the economy, it is important that the substantial sums of money spent on skills programmes demonstrably add value, not just deadweight cost. We await the Public Accounts Committee report on Skills for Life with interest and support the need for research into the effectiveness of DIUS programmes to improve skills levels.

66. The use of surveys for the evaluation of Train to Gain is also problematic. There is a marked discrepancy between the levels of satisfaction expressed about Train to Gain in the surveys cited by the Government to justify the expenditure on this programme and the evidence to the Committee of considerable employer dissatisfaction. We believe that while surveys of individuals and employers who have taken part in Train to Gain are useful, a clearer and more accurate view of the value of the programme also requires the deployment of case studies of organisations and cohort studies of workers that can trace the longer-term impact of the programme on employers' attitudes towards, and investment in, training and the subsequent learning and employment patterns of those individuals who have benefited from Train to Gain. Control groups of similar firms and workers who have not received support from Train to Gain would be valuable in helping to access issues of deadweight and the real impact of the programme on earnings and promotion. Similar research on other programmes, such as the skills account pilots, is also needed.

67. In view of the large amount of money spent on skills by the Government and the importance of the programme, it is essential that there is a proper evaluation of the outcomes of all aspects of Train to Gain. We recommend that the Government report to us on an annual basis on the use of resources within the skills agenda and on the evaluation of their effectiveness, potentially involving the National Audit Office.

Government vision

68. We asked the Government for its vision in relation to the skills agenda. It told us that it was "for a prosperous and fair Britain in which the talent of every individual is used to build a skilled, resilient and innovative workforce that rivals the best in the world".[109] This answers what the Government wants to achieve through implementation of Leitch agenda, albeit in somewhat vague and aspirational language, but it does not address the question of what the landscape of delivery structures will look like in the future. This is not an academic question. As DIUS has recognised, one of the major risks to its business is "Failure to persuade employers and/or learners that it is worth investing more of their time, money and energy in education, training and skills on the scale needed to meet the Government's objectives".[110] A second is "Sector instability and reform overload in further education—that the key delivery partners become distracted from delivering 'business as usual' due to uncertainty over the future organisational shape of the sector, or as a result of the sheer scale of change".[111] If the Government is to persuade employers and individuals, as well as other key players, to enter into a sustained partnership on skills, then Ministers must do better than this.

69. We note also that two of the department's strategic objectives (DSOs) relate to the skills agenda:

2. Improve the skills of the population throughout their working lives to create a workforce capable of sustaining economic competitiveness, and enable individuals to thrive in the knowledge economy.

3. Build social and community cohesion through improved social justice, civic participation and economic opportunity by raising aspirations and broadening participation, progression and achievement in learning and skills.[112]

70. It seems to us that the implementation of the Leitch agenda thus far has been governed by the first of these DSOs more than the latter. We have particular comments to make about lifelong learning later in this Report, for example.[113] While we recognise and welcome the Government's moves towards the integration of employment and skills services, we believe that this process needs to be far closer to the heart of the implementation of Leitch. An LSC witness argued strongly that "One of the things we definitely do need is mechanisms for pre-apprenticeship for people who are not in work which give them stepping stones to prepare them properly for work, and that needs to be part of a broader and much more integrated approach. It is the forgotten bit of Leitch, frankly, and we need to be doing far more on integrating employment and skills interventions.".[114] Similarly, Dr Collins from the Association of Colleges believed that in calling for more flexibility for FE, "We are not forgetting that skills are very important to the economy and upskilling the nation, but they are also important to social cohesion and mobility and equality of opportunities, and some of those elements have been a little bit lost in the discussion about skills and moving the employer needs forward".[115]

71. There is an urgent need for clarity of vision from the Government as to how the future skills landscape will look, rather than just buzzwords and warm principles. DIUS has made a start in its recent publication FE and Skills Reforms: an update but there is more to be done. We recommend that the Government set out a clear picture of how the landscape of delivery structures will look once all its reforms are complete, from the point of view of planners, providers, employers and individuals in order that all involved are aware of the organisational end-point of the journey. The vision we call for should articulate how it is intended to meet both of the relevant departmental strategic objectives in the 2020 skills delivery arena.

THE SECRETARY OF STATE'S SPEECH TO THE CBI, OCTOBER 2008

72. Since our evidence-taking concluded the Secretary of State for Innovation, Universities and Skills, the Rt Hon John Denham MP, has outlined his strategic vision for how the skills system needs to develop and his concern that "individual employer demand may not be sufficient to create a critical mass of the requisite skills and as such Government needs to do more to influence demand not only through policy and regulation but through procurement and purchasing".[116] In his speech of 24 October 2008 to the CBI, he also identified the "key factors driving our skills system which are not yet properly addressed in our skills policies", including "whether we understand properly what drives employer spending on skills and whether our current framework will maximise it".[117]

73. This speech represents quite a dramatic change in stance from DIUS and we were pleased to see that in it the Secretary of State acknowledged many of the concerns reflected in the evidence we received, particularly that policy needs to be geared towards supporting "important and strategic sectors of the economy", rather than merely achieving "the requisite number of successful learners".[118] Taken together with the changes to relax rules regarding funding of training by SMEs, the Secretary of State's speech to the CBI in October 2008 indicates a welcome change in emphasis and a recognition of the realities of the UK's skills problems. We hope that it will lead to a greater willingness to work with employers, particularly UKCES, and those who represent the concerns of individuals to adapt Government implementation of the Leitch agenda to observe the spirit of increasing skills, rather than the letter of the prescription. We welcome this contribution to the evolving post-Leitch agenda.

20 Leitch Review of Skills, p 3 Back

21 As above Back

22 Leitch Review of Skills, p 4 Back

23 Ev 99, para 1.5 Back

24 Ev 99, para 1.4 Back

25 Q 70 [Professor Alison Fuller] and Q 101 [Professor Alison Wolf]. See also Ev 337 [Kevin O'Leary] Back

26 HC Deb, 24 January 2008, col 2130W Back

27 Ev 298 Back

28 As above Back

29 Leitch Review of Skills, p 17, para 49 Back

30 Leitch Review of Skills, p 15, para 40 Back

31 Certification Office Annual Report, 2007-08. Please note that the proportion is based on all in employment data from the Labour Force Survey. Back