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

4 Employers: representation and engagement

132. As an equal partner in the Leitch triangle of responsibility, employers have a key role in ensuring that the agenda works. The 157 Group was right to observe that "Responding successfully to the Leitch targets ultimately lies in the hands of the employers not the providers. The Government needs the key employer organisations … to be central to the Skills Pledge campaign shouting the skills message from the rooftops and supporting their members' engagement."[239] This implies that a major task of Government is to persuade employers and their representatives of the importance and effectiveness of its policies in order to convince them to participate and to increase demand for training. Mechanisms for co-ordinating the views of employers and for encouraging engagement are therefore crucial to the fulfilment of the Government's plans.

Representative bodies

UKCES

133. The UK Commission for Employment and Skills (UKCES) is a new body, recommended by Leitch and enthusiastically adopted by Government, which sits at the heart of the implementation arrangements. It was established in April 2008 to strengthen the employer voice and provide greater employer influence over the employment and skills system. It describes itself as "a genuinely employer-led organisation, with Commissioners drawn from the highest levels of the private, public and voluntary sectors, supported by trade union leadership", aiming to "raise UK prosperity and opportunity by improving employment and skills".[240] The UKCES Chief Executive told us that "My remit as an employment and skills organisation is to focus on the extent to which the system meets the needs for economic competitiveness and increased employment."[241] The then Minister for Skills described the role of UKCES as "to keep us real to what we say we need to do in terms of Leitch".[242]

134. In July 2008 UKCES produced its first business plan and it is now consulting on its five year strategic plan. It is expected to produce annual updates assessing progress towards making the UK a world-class leader in skills and to undertake a major review in 2010,[243] although an important component of this—whether employers are doing enough or whether there should be a legal right to workplace training where the employee lacks at least a level 2 qualification—will been delayed until 2014, if the new right to request time to train goes ahead.[244]

135. UKCES was not widely raised in evidence to us, presumably because, as a new body, it had yet to make any kind of impression. There were some doubts about its chances of success. For example, the independent policy unit, Centre for Cities, welcomed the concept of the Commission and its regional boards but expressed concern that "it seems to be rather a toothless tiger".[245] The 157 Group also expressed concern that as an employer-led body, UKCES might find it difficult to deal with "sectors that are slow to train."[246] In addition, one of the academic experts who gave evidence to the Committee dismissed UKCES as "tinkering in the upstairs office" and an "irrelevant" change to the existing agencies as far as most employers were concerned.[247]

136. At this stage we do not share this scepticism about UKCES. The Commission has undertaken to "provide vigorous and independent challenge, advising the UK Government and Devolved Administrations at the highest levels on employment and skills strategy, targets and policies".[248] As we have seen, its position as a UK-wide organisation should mean that it is well-placed to bring in ideas from all parts of the nation and it has already begun important work on employability and simplification, and on SSC relicensing (see below). Naturally, it will take time for this work to have a real impact. We do, however, have concerns that UKCES may be under-resourced for the extensive programme ahead of it. It has a total organisational budget for 2008-09 of £14.3m, including programme funding.[249] There are also huge expectations being placed on it to address all skills problems through research and strategic advice and to exercise executive functions through its oversight of the SSCs. There may be potential for conflict in these two roles and in prioritising them. The immediate test for UKCES will be the re-licensing process where it is essential that UKCES establishes a reputation for swift effective action and an understanding of the political and sectoral realities. However, we are concerned that this should not distract UKCES from fulfilling its strategic role in high quality research and advice to Government on the realities of the market. Great things are expected of the creation of UKCES and we will keep a close eye on its development to assess whether it is delivering, including scrutinising its Five Year Strategic Plan, which will be issued before the end of 2008-09.

SECTOR SKILLS COUNCILS

137. The relicensing of the SSCs is probably UKCES's most high profile task in the immediate future, with the Government expecting all new licenses to be issued by the end of 2009. The SSCs are generally regarded as being of variable quality—Lord Leitch told us "I started off liking the concept of Sector Skills Councils but not so much the delivery. I saw one third doing well, one third badly and one third unproven, and I thought 'Goodness gracious'"[250]—but the Leitch agenda places new responsibilities on them, including for qualifications. They are also increasingly involved in establishing National Skills Academies.

138. The SSCs are clearly major partners in the process of delivering the Leitch agenda. The Chief Executive of one Council described them as providing a "reality check on whether or not the state's strategic aims and objectives are really in tune with both the short-and long-term economic needs of the country."[251] However, concerns about SSCs expressed in evidence range from their structural organisation through membership to funding and performance. For example, the ABPI saw the relicensing as an opportunity to make the system more coherent, commenting that:

The lack of clear differentiation of responsibility for scientific and technical subjects between the SSCs demonstrates the lack of a coherent framework. This has led to confusion amongst employers and education providers on the most appropriate SSC to engage with and has probably contributed to the slow pace of activity to meet our needs.[252]

Similarly, the Association of Accounting Technicians argued that:

there are considerable weaknesses in the design of the Sector Skills Network that compromises the ability of Sector Skills Councils to fully reflect the employer voice and thus negates their ability to be the sole arbiters of 'demand' for qualifications. Of particular concern to the AAT is the fact that because they are set up vertically, by industrial sector, they are not geared up to analyse and address skills like accountancy that are required across all sectors.[253]

Lee Hopley of the EEF suggested that generic issues, such as leadership and management, should come under the overview of the Commission, rather than individual SSCs.[254]

139. Several other witnesses also raised concerns over whether SSCs are truly representative. The Federation of Small Businesses pointed out that many SSCs lack small business representation.[255] This was backed up by Ufi which believed that "SSC membership is not always a true reflection of businesses in a region, eg not representative of sole traders/micro-businesses".[256] Professor Fuller went further: "What happens in our experience is that a few employers become involved and have a voice, but the vast majority are not engaged, probably do not know about them and the relevance to them and the ability to make a difference to them is not really apparent."[257] The TUC argued that there needed to be "a much more robust form of social partnership than simply obliging SSCs to have at least one union Board member."[258]

140. Under Leitch, the SSCs are being given extended powers to develop and accredit qualifications in their sectors. A general concern from evidence is that the SSCs might lack the capacity and funding to take on this role. For example, the Alliance of SSCs told us that "SSCs capacity is stretched in performing their current roles" and argued that "Many of the recently announced changes will require more from SSCs, and SSC funding needs to be reconsidered for the new context".[259] From the point of view of training providers, Million+ was concerned about the ability of SSCs to reduce complexity and deliver qualification reform, emphasising:

The transparency and credibility of any new SSC qualifications is not just a matter for the SSC and/or employers in the sector: all employers, students and universities would need to be convinced that an SSC qualification had transferability and currency in terms of wider employment and learner progression.[260]

141. Several witnesses suggested that the SSCs were "really under-resourced"[261] and that this was likely to get worse as the re-licensing process was designed to expect "more of sector skills councils but on, in effect, less money".[262] Lee Hopley of the EEF observed: "The need to raise revenue has been distracting for some of them and it has taken them away from their core focus which is engaging with employers, understanding how the sector they represent is evolving and what that means for changes in skill needs rather than the top level".[263] Skillset argued that they would shortly have to cut back investment in the regional/sectoral interface "unless we see some greater financial commitment through DIUS to our work … over and above what we currently have, which has not increased in line with the new role that Lord Leitch has identified for us".[264] In response, DIUS put forward the view that although the remit of the SSCs had been more tightly focussed, their role had not changed and that the SSCs were already receiving £48m a year to cover this core remit with additional funding provided through targeted programme funding for additional roles.[265] When the £14.9m in 2008-09 provided for work connected to qualifications and standards is included, the SSCs are to receive a total of £76.7m in 2008-09 in Grant-in Aid funding from UKCES.[266] This is of course divided in variable proportions between the 25 SSCs.

142. We raised with several witnesses the concept of establishing a small businesses SSC and have been persuaded by the argument from UKCES that this would go against the purpose and remit of SSCs which is "to bring together employers from strategically significant sectors of the economy based on coherent patterns of employment and skills".[267] We support instead the approach adopted by UKCES that in order "to achieve relicensed status they will need to demonstrate the confidence, support and influence of employers from each part of their sector, including smaller and larger organisations and from each part of the UK".[268] We also asked UKCES whether generic issues such as management skills should be addressed by itself, rather than each SSC. UKCES advocated a dual approach with itself taking "a lead strategic, advisory role on shaping skills policy on key generic skills such as management and leadership, where recent policy interventions have had limited sustained impact" and individual SSCs taking the lead where generic skills relate to occupational areas.[269] This seems reasonable, if lacking in detail. There is clearly work still be done in this area and we recommend that UKCES directly address in its annual report the structures through which key generic skills will be promoted.

143. The relicensing process is currently underway (with the National Audit Office acting as independent third party assessor[270]) and UKCES is expected to make recommendations to Ministers between February and August 2009, depending on the SSC involved.[271] The process offers a welcome opportunity to assess why some SSCs are better than others, whether there are too many and whether they are representative, including how they include the voice of the learner in their work. The role of SSCs needs to be clear in order to justify the status they enjoy within the delivery structure for the Leitch agenda. In particular, they need to provide accurate sectoral information to help inform the direction of policy at all levels and they need to ensure that qualifications in their sector are transparent and credible.

144. We recognise that this work has to be properly financed and that the Government may need to provide significant core funding, not necessarily at same level for each sector, or the SSCs could suffer mission drift as they are forced to chase available funding. The Leitch review, and the Government's response, envisaged the possibility of expanding the ability of SSCs to raise levies from their sectors and UKCES is currently undertaking a major research project looking at collective measures, including levies, to stimulate greater employer investment in skills.[272] We recommend a review of SSC financing alongside the SSC relicensing process, although we stress that this should serve to speed up the process of relicensing and not to delay it.

145. We also note the comment from the City and Guilds Centre for Skills Development that "There is little available evidence as to the different regional capabilities of different SSCs; this is a subject that needs urgent evaluation".[273] In the light of the need to align sectoral demand with regional planning, we recommend that UKCES examine the regional capacities of individual SSCs as part of the re-licensing process.

146. We await the outcome of the UKCES relicensing of Sector Skills Councils with interest. In the interests of transparency we recommend that once the relicensing process is complete that all advice given by the National Audit Office in its role as independent third party assessor is made available to this Committee.

PRIVATE SECTOR ORGANISATIONS

147. Several witnesses raised with us the question of whether SSCs can be considered truly independent of Government. Mick Fletcher said of the SSCs that "It is difficult to see some of them as employer-led bodies. In a sense, a real employer-led body could not just be disbanded and reformed by Government at will, could it?"[274] The long list of such "real employer-led" bodies included the CBI and the EEF as well as a whole host of smaller organisations. David Cragg of the LSC told us:

If we are going to engage employers, we have, I think, very foolishly overlooked the legitimate representative bodies for employers. The best benefit and the best step forward I have seen in recent times is the level of engagement we have secured recently with chambers, the CBI and the Employers' Federation and even the Federation of Small Businesses because, if you can get a route to market and use the natural representative bodies which work with employers as opposed to, arguably, artificially created and created by the public sector, which, you might argue, sector skills councils have been, I think you will be in a better place.[275]

Not surprisingly, one such professional body, the Association of Accounting Technicians (AAT), also called for "greater recognition of the role that professional bodies can have", given their long experience in developing skills and raising standards. The AAT believed that "mechanisms should be put in place to actively engage professional bodies in the planning and development of provision".[276] We agree with these views. In addition to the SSCs, the Government and UKCES need to work with not just the major organisations such as the EEF and the CBI, but also with less formal clusters and consortia such as Electronics Yorkshire and smaller sector bodies.

Employer engagement and participation

148. Employer spending on skills is reported to be around £38 billion a year.[277] This underlines the importance of employers as decision-makers in training and the fact that Government has a significant role in influencing this spending as well as its role as a direct provider of cash or training. The scale of the challenge in persuading employers of the need to invest in training their staff can be seen in surveys of current trends and attitudes. For example, the Survey of Regional Economic Trends In Yorkshire and the Humber (May 2007) showed that funding on staff training had fallen since 2005 with only 53% of businesses providing staff training in the last 12 months.[278] In another region, the East Midlands, the Centre for Enterprise found that 59% of businesses who did not invest in higher level skills (61% of the sample) were "unlikely" or "definitely not" inclined to do so in the next 12 months.[279] The national picture shows that in 2007 33% of businesses spent nothing at all on training, 52% lacked a training plan and 65% had no separate budget for training, leaving 37% of employees receiving no training at all.[280] Anecdotal evidence and common sense suggest that these trends will only worsen in an economic downturn. The recent UKCES 'open letter', imploring employers to continue with training, underlines this concern.

149. The Government's major initiative to encourage employer engagement and participation is the Skills Pledge which was launched in June 2007 as a vehicle for employers to make a public commitment to investing in the skills of their employees. The Government describes it as "not a product or service—it's a philosophy which signals an employers' understanding of the value of skills to their business and to their employees".[281] By the end of March 2008, 2,585 employers, representing over 3.7 million employees, had signed.[282] The top three performing sectors were construction, care and development and lifelong learning.[283] DIUS announced on 24 November 2008 that a parcel courier, James Ford, had become the five millionth employee to gain from the Pledge after his employer, DHL Express, signed up. Over 7,500 organisations have now committed to the Pledge.[284]

150. The Government's survey of the impact of the Pledge on 800 of the first 1,300 employers showed that around 60% were offering employees wider or more abundant training opportunities.[285] This appears to be a significant step forward but it is not clear where these new employers have come from. Research from the Chartered Institute of Personnel and Development suggested that only 13% of private sector employers in their annual survey of 700 organisations had signed the Skills Pledge.^.[286] The reasons cited for this were: increased costs (46%), perceived lack of organisational benefits (34%) and lack of time (30%). The CIPD describe these reasons as "endemic of the wider scepticism with the [Leitch] Review".[287]

151. Various explanations were given to us for the low level of employer engagement with the skills agenda. Ufi, for example, lay part of the blame at the feet of the SSCs: "SSCs have not successfully addressed the employer engagement agenda partially due to weak strategies for partnership working, particularly with brokers and Chambers of Commerce".[288] A more general view is the complexity of the training infrastructure and a confusion over what is on offer and by whom. Steven Broomhead, representing the RDAs, told us that:

I very much regret that employers never really seem to get involved in the detail of the planning arrangements. I have seen lots of them turn up over my career, bright-eyed and bushy-tailed, at planning meetings at a local level, regional level and sometimes even at a national level, only to find that the wiring, the bureaucracy and the dead hand of even the conversations around policy planning frighten them away rather quickly, so I think we have got to think about, and perhaps we do it through the national commission, perhaps they think we do it through the new sector skills councils, how we can effectively get the voice of employers to be engaged in those policy debates. What is the voice of the employer? Is it the sector skills councils, is it bodies like the British Chambers of Commerce or the CBI? I think there needs to be some fundamental discussion about that because currently there is rather a confused picture about how employers do get involved and how they see their involvement making a difference.[289]

152. SEMTA argued further that the Leitch agenda appeared, falsely, detached from the concerns of many employers:

We believe that the majority of employers, especially those who are not engaged with their SSC, are not particularly connected with the Leitch agenda. Even for those who do a lot of work in skills and training, the impression they have is that the activity currently coming from Leitch is primarily concerned with lower level skills. The launch of the Skills Pledge in England, with its headline commitment to addressing basic and Level 2 skills has reinforced that view.[290]

Directly on the Pledge itself, Frank Lord of the Alliance Employment and Skills Board suggested that there was a lack of clarity about the purpose of the Pledge and its relationship to other programmes: "it is confusing at the moment for employers with Skills Pledge, with Investors in People and Train to Gain; they all seem to merge together".[291]

153. Another potential difficulty was identified in research by Professor Unwin, conducted with Professor Fuller and Professor Felstead of Cardiff University. This suggested that there was a "disconnect" between the Leitch agenda concentration on the supply side and "any analysis in terms of what is happening in real workplaces and whether employers will make use of qualifications and the connection between what is in the qualifications and the skills needed in the workplace".[292] She suggested that "what employers across the public and private sector need is serious support with how to design workforce development", which was "missing from Leitch".[293] Lee Hopley of the EEF added: "I do not think it is that small businesses or any other businesses are not prepared to pay for training. Sometimes the problem is that they are not very good at articulating what they need and that is why Sector Skills Councils have got to get better at what they do".[294]

154. The Leitch review recommended that UKCES undertake a review in 2010 to determine whether sufficient progress had been made by employers in training their staff.[295] The Government now proposes instead to introduce legislation to give employees the right to request time off for training, and this is expected to appear in the 'Children, Skills and Learning' Bill to be considered during the 2008-09 session. If this legislation is passed, UKCES will be asked to delay until 2014-15 the aspect of its 2010 review relating to consideration of whether employees should have a legal right to workplace training where they lack at least a level 2 qualification.[296] This change in policy suggests that either the Government believes that employer engagement is rising or it has backed away from confronting employers with an unpopular compulsory measure. DIUS imply that it is the former. The Director General for Further Education and Skills told us that employer engagement was "a big mountain we are trying to climb, but we are going in the right direction".[297] He went on: "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."[298]

155. The commitment of employers is vital to raising skills levels, especially given the high proportion of the 2020 workforce already in employment. These employees need support for training in the form of time off, information about courses and a positive attitude on the part of their employers. They also require increasingly high levels of financial support once they move beyond the basic skills levels. It is clear to us that current strategies to raise employer engagement are insufficient. What is needed is a cultural change to make it the norm that employers view training as something they do as a matter of course. We note that there may be a particular problem with basic skills. We were told continually throughout the inquiry that "the issues for employers are around the basic skills of numeracy and literacy that they wish their employees to have."[299] Yet equally employers expect this to have been provided by the education system, rather than something they should address themselves; the Leitch Review referred to them feeling "let down by poor levels of basic literacy and numeracy resulting from a failing school system."[300] The Government, acting through the LSC, the SSCs and others, must also show that staff training at all levels is relevant and useful to them. In the current economic climate, more than ever, employers must be persuaded that training is essential to the survival of their company. On the part of the Government, this includes the fundamentals of ensuring that the right training is available and is readily accessible within an easily comprehensible system but it also includes better communication of what is on offer and why it is in the interests of employers themselves to avail themselves of the opportunities.

156. There is also a burden of responsibility on employers. We note that the Government has backed away from compulsory training for the time being but this may be the last chance for the voluntary approach. Given that the performance of different sectors may itself be highly variable, rather than kick compulsory training into the long grass the Government should look at other ways to encourage employer participation, such as considering companies' training policies and practices during procurement processes. In sectors where significant progress has not been made by 2014, compulsion must be seriously considered.

Small businesses

157. Small businesses are faced with particular problems, both in enabling training and in making their voices heard in the determination of employer demand. Yet they represent a major part of the UK economy: over 99% of UK businesses are SMEs, and they employ nearly 60% of private sector workers.[301] SMEs and micro businesses have different needs from larger companies within the same sector: for example, the FSB argues that "Small businesses require bite-sized courses, located in (or close to) the workplace, to avoid losing a significant proportion of their workforce when only one member of staff is being trained."[302] They may find it harder to take on apprenticeships, which could close a significant avenue of Government funding to them.[303] One FE principal also told us that;

My college works with 1,600 employers, from SMEs to large employers such as Corus and we have got to de-grey the initiatives with our employers to get them on board with what it means to get upskilled, what it will mean to the local economy, what it will mean to the region, indeed what it will mean to their business. You can get the message across to the bigger employers reasonably successfully but getting that message across to the small-and medium-sized enterprise is more difficult.[304]

158. These examples illustrate the kind of issues which have to be considered when adapting skills policies to SMEs. Yet strategies for encouraging SME engagement are very thin. Two recent initiatives have begun to address this. First the Government has announced a package of measures to assist SMEs in the current economic downturn, including refocusing £350m of Train to Gain funds on the sector. As part of this, the package also included relaxing restrictions so that:

For the first time, training at level 2 will be free for all SME employees regardless of whether they already have qualifications at that level, and there will be free bite-size courses in business-critical areas, including business improvement techniques and customer service, to raise productivity. Management and leadership training will also be opened up to the smallest employers so that it is now available to employers with five to 250 employees.[305]

Secondly, UKCES has proposed the establishment of employee development centres within a business park to be used as a shared base for learning and development programmes offered to all tenant firms.[306] Such centres were strongly supported in evidence to us by the Chairman of an Employment and Skills Board who described such centres within clusters of small enterprises as "a very good vehicle to engage adult learning which would then be demand-led because they would take that back into the learning place to encourage their employers."[307] We welcome these initiatives but we consider that there is a need to address skills policy and SMEs more broadly. We welcome the Government's decision to refocus Train to Gain on SMEs and relax restrictions on its use. This is an important first step in developing skills engagement with this sector. The development of employee development centres within clusters of small enterprises also has potential and should be evaluated at an early stage to inform decisions on whether it should be rolled out more widely. These initiatives also need to be incorporated into a comprehensive strategy for adapting skills policies to SMEs, led by UKCES and DIUS.

239 Ev 132, para 1 Back

240 Ev 297 Back

241 Q 172 Back

242 Q 411 Back

243 Ev 308, paras 31-34 Back

244 Department for Innovation, Universities and skills, Time to Train: Consulting on a new right to request time to train for employees in England, p 6 Back

245 Leitch Review of Skills: initial reactions, Patricia Seex, 6 December 2006, available at www.centreforcities.org.uk Back

246 Ev 132, para 2 Back

247 Qq 103, 105 [Professor Unwin] Back

248 Ev 298 Back

249 UKCES Business plan 2008-09, p 19 Back

250 Oral evidence taken before the Committee on 28 April 2008, HC (2007-08) 471-I, Q 51 Back