Memorandum submitted by the Local Government
Association
EXECUTIVE SUMMARY
1. The economy operates in functional economic
areas below the national level. In each area the demand for skills,
skill levels and supply of skills are different.
2. Despite changes to the institutional
framework of the skills system, it is still characterised by complexity
and too many public agencies, many of which are unaccountable
to local people. There remain significant unanswered questions
about how the Skills Funding Agency will operate below the national
level and how it will relate to the work of the Regional Development
Agencies.
3. Councils, acting together sub-regionally,
close to the economic reality and employer needs should make the
strategic decisions about skills. There has been progress towards
this in the forerunner city regions but we would like to see the
pace of devolution accelerated to a wider group of sub-regions.
LOCAL GOVERNMENT
ASSOCIATION
4. The Local Government Association (LGA)
is a voluntary lobbying organisation, acting as the voice of the
local government sector. We work with and on behalf of our membership
to deliver our shared vision of an independent and confident local
government sector, where local priorities drive public service
improvement in every city, town and village and every councillor
acts as a champion for their ward and for the people they represent.
5. The 423 authorities who make up
the LGA cover every part of England and Wales. Together they represent
over 50 million people and spend around £113 billion
a year on local services. They include county councils, metropolitan
district councils, English unitary authorities, London boroughs,
shire district councils and Welsh unitary authorities, along with
fire authorities, police authorities, national park authorities
and passenger transport authorities.
6. The LGA is pleased to submit a written
response to the Business, Innovation and Skills Select Committee's
inquiry into Further Education Funding and the Skills Funding
Agency.
EVIDENCE
7. The Committee has indicated that it will
be looking at the delivery role of local government and the Regional
Development Agencies. The Local Government Association will concentrate
its evidence on this issue.
Economic sub-regions
8. It is now widely accepted that the economy
operates in functional economic areas below the national level.
These areas are determined by patterns of travel to work, house
moves, retail shopping and industrial clustering.
9. Local authorities in these areas, more
commonly referred to as sub-regions, are increasingly coming together
in partnership. Some of the partnerships are longstanding, for
example in the case of the Greater Manchester authorities. Others
have coalesced around multi-area agreements and in two-tier areas
around local area agreements.
10. In each sub-region, the demand for skills,
skill levels and supply of skills will be different. There will
also be differences in significant knowledge assets present in
the sub-region, like universities and research, centres which
help power economic performance.
Skills drive economic performance
11. Skills are one of the principal drivers
through which economic performance, for both national and local
economies, can be raised. Recent research from the Work Foundation
has also shown that areas with higher skill levels have proven
to be more resilient in the recession.
12. There is however a widespread concern
about the UK's skills base: employers report skills gaps, especially
in science and engineering at technician level; in some areas
there is a mismatch between skills needs and the skills of local
people; and there are differences in skill levels between places,
with some neighbourhoods with particularly low skill levels.
13. Tackling these issues is at the heart
of how we solve regional disparities in economic performance.
Changes to Institutional Arrangements
14. The LGA has concerns about the skills
system. It is characterised by too many public bodies. Employers
find it confusing. The over-commitment by the Learning and Skills
Councils of capital funding which has stalled the building and
refurbishment of colleges, also led to loss of confidence in the
LSC.
15. Recent reforms will devolve the funding
for 16-19 learning, from April 2010, to groups of councils
working in partnership based on travel to learn patterns. But
there are different set of arrangements for adult skills. As the
Committee will be aware, the Skills Funding Agency—the new
body taking responsibility for adult skills from the Learning
and Skills Council—opens for business from April 2010.
16. We believe there are significant unanswered
questions about the accountability and role clarity of the future
training system for post-19, including a lack of clarity about:
— how the new Skills Funding Agency will
operate below the national level; and
— how the Skills Funding Agency will relate
to the role of Regional Development Agencies (RDAs).
We hope the Committee's inquiry will address
these issues.
Role of Councils
17. Councils, acting together sub-regionally,
should make the strategic decisions about skills that remain in
what is increasingly a demand-led system, where individual and
employer decisions determine the courses provided. They are better
placed to do so because they are closer to the economic reality
and employer needs.
18. There has been progress towards this
in the forerunner city regions but we would like to see the pace
of devolution accelerated to a wider group of sub-regions.
Skills for Growth White Paper
19. The government, in its' November White
Paper Skills for Growth, announced its intention to introduce
further reform on skills, including:
— a focus on high growth sectors, such
as the green and digital industries, advanced apprenticeships,
the vocational route into higher education, skills accounts and
some simplification of the skills agencies;
We are concerned that a focus on particular
sectors will be inappropriate for some sub-regions and distract
from the real skills needs of local economies;
— a lead role for the RDAs in identifying
the regional skills needs as part of the new integrated regional
strategies. The regional skills strategies, which will form a
new element alongside economic and spatial plans, will be jointly
decided by the RDAs and the regional boards of local government
leaders;
We welcome the involvement of the new leaders'
boards in setting these strategies. We have three principal concerns:
— that the skill needs of local and sub-regional
economies may get lost in the regional aggregation;
— that the regional skills strategies are
not binding on Skills Funding Agency investment plans; and
— local needs may be diluted by the national
priorities, inappropriate for some sub-regions, contained in advice
from the national bodies, such as the sector skills councils.
— the delegation of the strategic decision
making powers on adult skills in the forerunner City Regions,
Leeds and Manchester using Section 4 powers. This is a move
we strongly support. We would like government to formally invite
other sub-regions to develop skills plans that would provide the
direction for SFA funding decisions.
8 January 2009
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