Memorandum submitted by Chartered Institute
of Personnel and Development (CIPD)
BACKGROUND
1. The CIPD's primary purpose is to improve
the standard of people management and development across the economy
and help our individual members do a better job for themselves
and their organisations. The Public Policy Team at the CIPD promotes
an agenda for productive workplaces to boost economic performance
and improve the quality of working life.
2. As Europe's leading professional body
for those involved in the management and development of people,
we are ideally placed to contribute to the development of public
policy across the spectrum of workplace and employment issues.
3. We are able to draw on the experience
and knowledge of our 135,000 members and our wide range of
research to provide a pragmatic stance on public policy that is
based on solid evidence and the real world.
4. Our membership base is wide, with 60%
of our members working in private sector services and manufacturing,
33% working in the public sector and 7% in the not-for-profit
sector. In addition, 76% of the FTSE 100 companies have CIPD
members at director level.
GENERAL COMMENTS
5. This consultation, while well intended,
is too late. The disruption that has been caused by the break-up
of the Learning and Skills Council (LSC) is a major setback for
employers in a skills system already plagued by confusion, bureaucracy
and duplication.
6. In 2008, the then Innovation, Universities,
Science and Skills (IUSS) Select Committee had witnesses stating
on the record that "there is a general view at the moment
that the new arrangements [for the LSC] are either a pig's ear
or a dog's breakfast"1 and, ironically, several witnesses
expressed their strong support for the LSC.2 The Committee themselves
explicitly said that "maintaining stability within the system
should now be the prime consideration",3 but it is clear
that stability is not top of the agenda as far as the Government
is concerned.
7. That is not to say that the LSC was functioning
flawlessly—far from it. Our spring 2007 Labour Market
Outlook survey4 found 33% of our members rated the LSC as
"good" versus 52% who rated it as "average"
and 15% who rated it as "bad", suggesting that the LSC
had considerable room for improvement in the eyes of employers
and HR professionals. Even so, with a relatively small percentage
of our members stating that the LSC was not fit for purpose, "reform"
was arguably a far more sensible option than "removal".
The transitional arrangements currently in place
between the LSC and the Skills Funding Agency
8. The cost of "reorganising"
the LSC into several new quangos was estimated to be £140 million
by April 2009,5 and one can reasonably assume that it has increased
significantly since then. Not only is this a considerable sum
of money in its own right, it begs the question of whether this
enormous reorganisation of the skills system represents value
for money in terms of what is spent versus what is gained in the
long run from a policy perspective.
9. The transition to the Skills Funding
Agency (SFA) was the perfect opportunity for new ideas, new approaches
and new people to be injected into the skills landscape. It is
therefore extremely disheartening that the post-LSC quangos will
contain many former LSC employees who have overseen such a poorly
performing skills system for so many years and bear at least some
of the responsibility for its failings. To enact the new post-LSC
quango arrangements, 1,000 staff will be sent from the LSC
to local authorities, 500 will be sent to the new Young People's
Learning Agency (YPLA) and the SFA will absorb another 1,800 workers6—giving
a total of 3,300 staff, an almost identical number to the
current LSC workforce. In addition, each of the new organisations
will have its own support staff, generating an unnecessary and
wasteful duplication of tasks and responsibilities. This degree
of duplication makes a review of the functions and necessity of
all skills quangos—as previously called for by the CIPD—even
more urgent.
How the SFA will oversee the FE budget through
its relationships with the UK Commission for Employment and Skills,
the National Employer Services and the National Apprenticeship
Service
The FE budget
10. In a recent employers' guide to the
upcoming changes, the Government declared that the SFA will be
more responsive, more cost-efficient, more co-ordinated and less
bureaucratic than the LSC7. One can only hope that by "responsiveness"
the Government is referring to responding to the demands of employers
and learners. However, the work of the SFA will involve no direct
input from either of these two groups8, despite their crucial
role in signalling skills demand and supply.
11. Performance management for FE colleges
will also be the responsibility of the SFA (via the YPLA), yet
the early signs are that this could be a very uncomfortable relationship.
The 2008 White Paper Raising Expectations: Enabling the
system to deliver beautifully illustrated this by opening
a sentence with the statement that "FE colleges are autonomous",
only to then immediately qualify this with the assertion that
colleges are "responsible for developing their own strategy
to respond to Government priorities and other demands".9
In other words, FE colleges are likely to be forced to dance to
the Government's tune irrespective of what employers and learners
ask for.
12. Indeed, the aforementioned White Paper
contained even more bad news for the FE sector with the additional
declarations that "the SFA will be responsible for intervening
where [college] performance does not meet the nationally agreed
minimum standards" and "the SFA will also identify issues
surrounding the viability of individual colleges" in tandem
with the YPLA10. In short, the SFA will maintain a cast-iron grip
on the flow of funding around the skills system.
UKCES
13. The letter sent to Sir Michael Rake
outlining the original remit of the UKCES stated that the UKCES
would "strengthen the employer voice, deliver greater leadership
and influence and to achieve the best from the employment and
skills systems" as well as "advise on how employment
and skills related services can best work together to deliver
an integrated service that meets the needs of employers and individuals".11
We are, however, becoming increasingly concerned that the UKCES
cannot set the agenda as much as it should because it is too easily
stifled by the influence of government.
14. According to BIS, the UKCES will merely
provide information about national skills needs and progress to
the SFA which—while suiting the SFA in terms of it maintaining
its control of the skills landscape—is a considerable barrier
to achieving a truly demand-led system because it gives the UKCES
no power whatsoever to address the very needs that they have identified.
This effectively guarantees that the FE budget will be diverted
from meeting the needs of learners and employers to some extent,
as it was under the LSC.
15. On the UKCES website, it states that
its remit includes the need to "monitor the contribution
and challenge the performance of each part of the UK employment
and skills systems in meeting the needs of employers and individuals".12
Even so, the CIPD notes that the UKCES has not passed judgement
on the existence and functions of the SFA itself, making the CIPD
concerned that the UKCES may therefore lack sufficient power and
political clout to bring about changes within the skills system.
National Employer Service (NES)
16. The NES tends to receive warmer reviews
from employers than other skills bodies but this is hardly surprising.
As the CIPD membership profile demonstrates, larger companies
often possess their own dedicated training, qualifications and
public affairs teams, meaning they are typically much better equipped
to navigate the skills system and access funding. Meanwhile, small
employers across the country often face an epic struggle whenever
they come into contact with government training initiatives. The
decision to create a tailored and accessible information service
for larger employers who in reality need the least help in navigating
the skills landscape is, at best, counter-intuitive.
National Apprenticeship Service (NAS)
17. The motives behind creating the NAS
were commendable, but a recent survey of our members suggested
that the benefits of such a service are not being felt. Our 2009
Skills Survey13 showed that 29% of employers have never
even heard of the NAS and 36% had heard of it but knew nothing
about it. To compound this, 35% had never heard of the "matching
service" that the NAS delivers while 34% had heard of the
matching service but knew nothing about it.
18. While one might expect this situation
to improve, there is good reason to think that the NAS was always
doomed to fail. Ideally, any national approach to increasing employer
demand for apprenticeships would be armed with a field force of
experienced professionals who could work with employers and local
schools. Unfortunately, the NAS will have just 200 individuals
to cover every single employer in England, which is ludicrously
insufficient for understanding and addressing the needs of employers.
The delivery role that is envisaged for local
authorities and the RDAs
RDAs
19. First and foremost, the manner in which
substantial new powers for RDAs and local authorities were announced
back in August warrants a mention. For the Government to spring
this enormous policy shift on employers and colleges just a matter
of months before other major changes, such as the break-up of
the LSC, are implemented was extremely frustrating for employers.
The absence of a meaningful consultation process for these changes
is also noteworthy.
20. The explanation of the new powers for
RDAs was that it would "make it easier to give businesses
the skills they need" and "reduce overall duplication
of functions between organisations".14 Furthermore, it was
declared that "employers have for a long time been critical
of the complexities of the skills system", which is true,
but to suggest that employers would choose RDAs as "the champion,
advocate and voice of skills for employers" is entirely disingenuous
and no evidence was provided to support this assertion. The additional
remark that "RDAs engage directly with employers" was
also a rather generous description of their approach, particularly
as employers are barely given any representation on the boards
of RDAs.
21. Not only are the above statements from
BIS misleading, they emphasise the contradictions that lay at
the heart of the RDAs well before they were given these new responsibilities.
RDAs were originally set up to "co-ordinate regional economic
development, help small business and encourage inward investment"15
but since then there has been a relentless "mission creep"
on the part of the RDAs to the point where the responsibilities
of other organisations have now been trampled all over.
22. In their 2008 report on skills,
the IUSS Select Committee found that RDAs and the LSC were often
pulling in different directions while the working relationship
between SSCs and RDAs was similarly tense, given that RDAs "prioritise"
certain sectors in each region. It has now reached the point where
SSCs (and by extension the voices of employers) are shut out of
the final decisions made by various quangos within the skills
agenda. Given the SSCs' expertise and aptitude in canvassing employer
needs, the lack of a clear rationale behind the decision to hand
these responsibilities to RDAs instead assumes even greater significance.
23. We are also concerned that the UKCES
failed to scrutinise this absence of a solid evidence base or
explanation to justify the new RDA responsibilities in their Towards
Ambition 2020: Skills, jobs, growth publication in October
2009, save for a single sentence at the back of this document
which recommended that the Government should "review"
and "clarify" the roles of RDAs at some point in future.16
24. Moreover, the fact that Regional Skills
Partnerships, which were intended to align the funding from the
LSC and RDAs towards agreed priorities, were scrapped in the recent
Skills Strategy published by BIS17 emphasises the problems
that employers face. Despite calls for RDAs and SSCs to work in
partnership under the new arrangements, the tension between the
regional approach of the RDAs and sectoral approach from the SSCs—the
latter being far better aligned with employers—is only going
to get worse if more powers are handed to RDAs.
25. The need for skills quangos at a regional
level has never been properly justified to employers, and until
this situation changes there is little reason to be optimistic
about the potential of RDAs to add any value to the skills system—especially
when other, more suitable bodies are already capable of delivering
the RDAs' skills responsibilities. Our spring 2007 Labour Market
Outlook survey18 found that just 24% of employers rated the
RDAs as "good" within the context of skills—which
was lowest rating of all the different bodies, including FE colleges,
private training providers, Business Link, the LSC and SSCs. Given
this finding, the decision to hand more powers to RDAs does not
bode well for our members.
Local authorities
26. Beneath the regional skills fiasco lie
even more obstacles at a local level. The break-up of the LSC
will pass huge amounts of funding and responsibility back to local
authorities, which is an extraordinary decision given that the
LSC was created back in 2001 partly because the Government
felt that there was too much local variation in FE provision and
a lack of co-ordination between local areas. Since local authorities
lost control of 16-19 and adult skills funding over a decade
ago, their capacity to deliver these services is now likely to
be inadequate (albeit through no fault of their own).
27. The seemingly endless waves of local
skills initiatives are already causing confusion for employers
before the LSC is officially dismantled. For example, "Local
Area Agreements" are arranged between central government,
local authorities, Local Strategic Partnerships (small-scale versions
of the Regional Strategic Partnerships that were recently scrapped
due to their ineffectiveness) and other public sector bodies in
an effort to "join up" public services effectively.19
It is with some regret that the CIPD notes the absence of genuine
employer involvement in such initiatives.
28. What's more, "Multi-Area Agreements"
are now supposed to bring together public and private sector partners
to co-ordinate action on employment and housing across local authority
boundaries,20 while "Employment and Skills Boards" represent
yet another strand of skills policy that is intended to operate
at a sub-regional level.
29. Unfortunately, the cracks are already
appearing in sub-regional skills policy. The former Department
for Innovation, Universities and Skills told the IUSS Select Committee
in 2008 that Multi-Area Agreements "are emerging as
the key tier with regard to skills [as] they cover geographical
areas which make real sense in terms of skills"—which,
just like RDAs, contradicts the sectoral employer-led approach
to skills from the SSCs. More duplication was also in evidence,
as Employment and Skills Boards are expected to "articulate
the needs of local employers" and "monitor the labour
market",21 which is surely the role of SSCs.
30. Any discussion of the new role for local
authorities must also include a mention of the YPLA. We fear that,
given the considerable powers of this new quango, the voices of
employers and learners are destined to be sidelined to an even
greater extent. The creation of the YPLA within the SFA also contrasts
sharply with the Government's commitment to reducing the number
of skills quangos22—a reduction that the CIPD believes should
happen sooner rather than later.
31. Through its responsibility for securing
funding for local authorities to carry out their new 16-19 duties,
the YPLA will be entirely subject to the whim of the Secretary
of State when allocating funding.23 Moreover, as mentioned earlier,
the YPLA will be allowed to develop its own means of assessing
the "performance" of training providers such as FE colleges
and can use this information when making funding decisions.24
Although the concept of performance management for colleges might
seem sensible, it is clearly at odds with recent moves towards
a "traffic light" information model for training providers,
as discussed in the Skills Strategy White Paper in November
2009,25 which allows learners to judge the quality of provision
themselves—thus removing the need for the YPLA and freeing
up additional resources.
32. This apparent confusion is further exemplified
by the YPLA being given the power to force any local authority
to provide whatever training it deems necessary should the local
authority fail or be "likely to fail" to secure enough
training provision.26 Needless to say, if funding truly followed
the learner under a "traffic light" information model,
this function would become obsolete. In addition, the YPLA has
the power to issue guidance to local authorities on any matters
related to training provision, which local authorities have no
choice but to follow.27
33. The full extent of the powers given
to the Secretary of State is astounding: they will set the objectives
for the YPLA, set time limits in which these objectives must be
achieved and dictate how the organisation should be managed. They
can even give the YPLA additional orders if they are personally
"satisfied" that the YPLA is not performing its functions
properly.28 Despite all this control being put at the Secretary
of State's fingertips, there will be no statutory duty on them
to listen to employers about how effectively the YPLA is performing
or whether it is meeting employer's needs in any local area.
CONCLUSION
34. The CIPD has significant concerns about
the current direction of travel on skills policy. While many of
the Government's intentions, such as simplifying the system and
making it more "demand-led", are undoubtedly correct,
the implementation of these plans strongly suggests that employers
and learners are likely to remain at the periphery of the skills
landscape for many years to come. Until this situation changes,
the inefficient use of precious resources is set to continue.
It is employers and learners, not quangos and government departments,
who know what skills and qualifications this country needs. Until
the funding and control of the skills system reflects this simple
truth, the UK will struggle to meet the considerable economic
challenges that lie ahead.
7 January 2010
REFERENCES
1 Innovation, Universities, Science and Skills
Select Committee. (2008) Re-skilling for recovery: after Leitch,
implementing skills and training policies. London: The Stationery
Office, p.30.
2 Ibid, p.29.
3 Ibid, p.30.
4 CIPD. (2007) Labour market outlook. Spring.
Quarterly survey report. London: CIPD, p.20.
5 Hansard, 30 April 2009, Column 1015.
6 Hansard, 12 January 2009, Written answer
from Sion Simon MP.
7 Skills Funding Agency: Questions and Answers
for Employers, DIUS website, May 2009, see www.dius.gov.uk/~/media/publications/S/sfa_qa_for_employers,
pp.3-4.
8 DCSF/DIUS. The new pre and post 19 landscape
(Powerpoint presentation).
9 DCSF/DIUS. (2008) Raising expectations:
enabling the system to deliver. Norwich: The Stationery Office,
p.71.
10 Ibid.
11 UKCES Remit letter (2007), from John Denham
and James Purnell to Sir Michael Rake.
12 Our Remit, UKCES website, see http://www.ukces.org.uk/about-ukces/about-the-uk-commission/our-remit/
13 CIPD. (2009) Skills survey. London:
CIPD.
14 BIS. The transfer of the strategic skills
function to Regional Development Agencies (RDAs) — Question
and Answer document, p.1.
15 1997 election manifesto for the Labour
Party, see www.labour-party.org.uk/manifestos/1997/1997-labour-manifesto.shtml
16 UKCES. (2009) Towards ambition 2020: skills,
jobs, growth. Wath-Upon-Dearne: UKCES, p.34.
17 BIS. (2009) Skills for growth: the national
skills strategy. Norwich: The Stationery Office, p.18.
18 CIPD. (2007) Labour market outlook. Spring.
Quarterly survey report. London: CIPD, p.20.
19 Local Area Agreements, Department for
Communities and Local Government website, see www.communities.gov.uk/localgovernment/performanceframeworkpartnerships/localareaagreements/
20 Multi Area Agreements, Department for
Communities and Local Government website, see www.communities.gov.uk/localgovernment/performanceframeworkpartnerships/multiareaagreements/
21 HM Treasury. (2006) Leitch review of skills:
prosperity for all in the global economy — world class skills
(final report). London: The Stationery Office, p.134.
22 BIS. (2009) Skills for growth: the national
skills strategy. Norwich: The Stationery Office, p.17.
23 Apprenticeships, Skills, Children and Learning
Bill, House of Commons website, see www.publications.parliament.uk/pa/ld200809/ldbills/042/2009042.pdf,
p.43.
24 Ibid, p.45.
25 BIS. (2009) Skills for growth: the national
skills strategy. Norwich: The Stationery Office, p.61.
26 Apprenticeships, Skills, Children and Learning
Bill, House of Commons website, see www.publications.parliament.uk/pa/ld200809/ldbills/042/2009042.pdf,
p.46.
27 Ibid, p.48.
28 Ibid, p.49.
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