SLIM Comment

THE LEITCH REVIEW and PRE-BUDGET REPORT

Prosperity for all in the global economy - world class skills

A Fuming DWP
An emasculated LSC
Blanche Dubois

… and Not the Manpower Services Commission

• 95% of adults to achieve basic literacy and numeracy by 2020
• Raising the number of adults with the equivalent of five good GCSEs to more than 90%
• Doubling the number of apprenticeships to 500,000: and,
• Adding 1.9 million people to those with the equivalent of three A levels.

Andy Dean

NB - Many thanks to the Guardian website, Times website, Niace and others (for bits and bobbins of what is used below).

The Contents

The report sets itself "against a background of economic strength and stability in the UK, with 14 years of unbroken growth and one of the highest employment rates in the developed world. The UK has significantly improved the skills base with rising school and college standards and strong growth in graduate numbers."

However, the report makes clear that in a rapidly changing global economy, with emerging economies such as India and China growing dramatically, the UK cannot afford to stand still. Despite having made good progress over the last decade, aspects of the UK's skills base remain weaker than those in other developed economies, for example:

• Out of 30 OECD countries, the UK lies 17th on low skills, 20th on intermediate skills and 11th on high skills;
• 5 million adults in the UK lack functional literacy;
• 17 million adults in the UK have difficulty with numbers; and
• More than one in six young people leave school unable to read, write or add up properly.

Low skills levels can hold back productivity and growth and, if not addressed, will result in increasing inequality and the marginalisation of some groups within the labour market. The report projects that, even if current targets are met, by 2020 the UK's skills base will be inferior to that of many other developed nations. A radical step-change is necessary.

The report recommends that the UK commits to a compelling new vision - to become a world leader in skills by 2020. This means increasing skills attainment at all levels by 2020 so that:

• 95% of working age adults have basic skills in both functional literacy and numeracy - rising from 85% and 79% respectively in 2005;
• More than 90% of adults are skilled to GCSE level or to vocational equivalents - rising from 69% in 2005;
• The number of Apprentices in the UK is boosted to 500,000 each year, with improved quantity, quality and esteem for intermediate skills; and
• More than 40% of adults are skilled to graduate level and above - up from 29% in 2005.

'Economically valuable skills' must be delivered through a demand-led approach, facilitated by a new culture of learning, and an appetite for improved skills amongst individuals and employers.

To attain these goals, the system must become more efficient, responding to market needs, and Government, employers and individuals must all engage and invest more in skills development. The report identifies necessary institutional reforms and simplifications including a scaling down of LSC roles as part of the shift to the demand side. The principles underpinning Leitch 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.

Lord Leitch recommends radical change across the whole skills spectrum by:
Increasing skill attainments at all levels;

• Routing public funding of vocational skills through Train to Gain and Learner Accounts;
• Strengthening the employer voice on skills through creation of a new Commission for Employment & Skills, increasing employer engagement and investment in skills, reforming Sector Skills Councils who will simplify and approve vocational training;
• Launching a new 'pledge' for employers to voluntarily train more employees at work. If insufficient progress has been made by 2010, introduce a statutory right for employees to access workplace training;
• Increasing employer investment in higher level qualifications, especially in Apprenticeships and in degree and postgraduate levels; significantly more training in the workplace;
• Raising people's aspirations and awareness of the value of skills, creating a new universal adult careers service to diagnose skill needs with a skills health check available for all;
• Government to introduce compulsory education or workplace training up to age 18 following introduction of new Diplomas and expanded Apprenticeship route; and
• Integrating the public employment & skills services to deliver sustainable employment, enabling more disadvantaged people to gain skills and find work, developing employer-led Employment and Skills Boards.

The new Commission for Employment and Skills does sound a little like the old Manpower Services Commission with the changes to LSC (who must feel more and more emasculated), DWP and JobCentre Plus, but would presumably be more demand-led, whilst the Employment and Skills Boards may hark back to some of the Training and Enterprise Council functions. We will see.

The report recognises that a shift towards Level 3 is needed:

“Our intermediate and technical skills lag countries such as Germany and France. We have neither the quality nor quantity of necessary vocational skills”

There is much here to that recognises the importance of work and skills to alleviating social exclusion.

“As a result of low skills, the UK risks increasing inequality, deprivation and child poverty, and risks a generation cut off permanently from labour market opportunity. The best form of welfare is to ensure that people can adapt to change. Skills were once a key lever for prosperity and fairness. Skills are now increasingly the key lever.”

The preferred emphasis continues to be the demand side, such as Train to Gain:

“This ‘demand-led’ approach is a success. The Employer Training Pilots, on which the rollout of Train to Gain is based, proved effective at engaging employers and employees and are popular with business: 30,000 employers and 250,000 employees had participated by March 2006.”…

“The Review has concluded that this (SIC) sort of approach must be embedded across the system so that providers only receive funding as they attract customers, rather than receiving a block grant based upon supply-side estimates of expected demand. Building a demand-led system is the only way in which to increase employer and individual investment in skills and ensure that increased investment delivers economically valuable skills.”

And:

“Route all adult vocational skills public funding in England, apart from community learning, through Train to Gain and Learner Accounts by 2010.”

Additionally on the demand side, there is much on embedding a culture of learning, notably the Review recommends a new offer to adults to help increase a culture of learning across the country, ensuring everyone gets the help they need to get on in life:

• Raising aspiration and awareness. A new and sustained national campaign to raise career aspirations and awareness of the benefits from learning, backed by local outreach activity. Increasing the appetite and the opportunity to learn;
• Making informed choices. In England, a new universal adult careers service, learning from those elsewhere in the UK, providing a universal source of labour market focused, accessible careers advice for adults;
• Increasing choice. Giving individuals choice and control by entitling them to A Learner Account, learning from the schemes in Wales and Scotland, that they can use to pay towards the accredited learning of their choice; and
• Ensuring individuals can afford to learn. Financial support based on the principles of clarity and targeting to help those who need it most. In England, a new Skills Development Fund, subsuming the Learner Support Fund, will tackle the immediate barriers for those wanting to improve their basic and Level 2 skills.

There is plenty of good news for Sector Skills Councils, though a warning too:

“There are encouraging signs that the current system of SSCs is bedding down well, with some examples of excellence. However, overall performance is patchy due to conflicting objectives, the lack of a clear remit, deficiencies in performance management and ineffective leadership.”

Following international comparisons, in particular with Australia and the Netherlands, Sector Skills Councils will focus upon:

• Taking the lead role in developing occupational standards, approving vocational qualifications;
• Taking the lead role in collating and communicating sectoral labour market data;
• Raising employer engagement, demand and investment; and
• Considering collective employer action to address specific sector skills needs.

The Review is looking for a very dramatic cut in the number of qualifications.

The other key existing skills and employment structures will face some considerable, re-adjustments following criticism such as:

“The Review has found that the skills and employment systems, which should work in tandem to improve people’s job chances, are disjointed. Out of work support is not joined up with in work support. There are no effective links between someone moving into work from the New Deal and in work support such as Train to Gain that can help them stay in work and progress. Current skills and employment services have different aims, which means that delivery can be complex with an array of agencies trying to give help and advice to people. As a result, individuals do not receive the support they need and are unsure how and where to access it.”

With regard to the various organisational changes, the LSC will continue to manage Train to Gain, Learner Accounts, Apprenticeships, process funding and ensure effective provider competition. There are some programmes which cannot be made wholly demand-led such as those for adults with disabilities. However, as far as possible, funding should be routed through mechanisms which put effective purchasing power in the hands of customers.

A new organisation, the Commission for Employment and Skills will strengthen the employer voice, to deliver greater leadership and influence, within a national framework of individual rights and responsibilities. This will rationalise the existing system by merging and streamlining the Sector Skills Development Agency (SSDA) and the National Employment Panel (NEP), both operating across the UK, into a new organisation. In England, the Commission will also replace the Ministerially-led Skills Alliance and will ensure better integration of the current, disjointed Employment and Skills services. It will be responsible for:

• Reporting on progress towards the UK’s world class ambitions; scrutinizing system objectives and delivery; recommending policy and operational improvements and innovations; and
• SSCs and a network of Employment and Skills Boards.

The Commission will be chaired by an eminent business leader and comprise senior, high profile figures, including the Director General of the CBI and the General Secretary of the TUC. It will also include independent members, for example, relevant academics and representatives from the voluntary sector.

The Review further proposes a new integrated employment and skills service, drawing together existing services such as Jobcentre Plus and the new adult careers service. It will offer universal access to work-focused careers advice, basic skills screening, job placement and links to in-work training. Common objectives and aligned incentives will drive delivery which will be monitored by the Commission and Employment and Skills Boards. This will ensure individuals receive effective support to get into work, stay in employment and progress. Delivering this will require:

· A new single objective of sustainable employment and progression opportunities. Meeting this aim will require all involved in such services, from DfES and DWP, the LSC and Jobcentre Plus, to front line staff and colleges, to change their work practices;

· A new universal adult careers service, providing labour market focused careers advice for all adults. The new careers service will deliver advice in a range of locations, including co-location with Jobcentre Plus, creating a national network of one-stop shops for careers and employment advice;

· A network of employer-led Employment and Skills Boards, reporting to the Commission. Their role will be to engage local employers, articulate local labour market needs, scrutinise local services and recommend improvements in integrating labour market and training support. Engaging local employers will improve the matching of work-ready applicants to sustainable jobs, including the disadvantaged. This network will rationalise and build on successful city, employer coalition and regional models; and

· A much greater role for basic skills training in the benefit system. Including a new programme to screen all those returning to benefits within one year, and better incentivising benefit claimants to improve their basic skills.

The balance of responsibility will change as the situation and skills levels of the individuals change. There is a key recommendation that:

• 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 per cent; and
• At Level 4 and above, individuals and employers should pay the bulk of the additional costs as they will benefit most.

There is detail here to regarding the 14-19 age-group and, in particular, reference to remaining in education until 18:

“Once the Government is on track to successfully deliver Diplomas, with rising participation at age 17 and significant improvement in the OECD rankings, it should implement a change in the law, so that all young people must remain in full or part-time education or workplace training up to the age of 18.”

It was noticeable that this did not make much of an impact upon the Pre-Budget Report, however.

The Pre-Budget Report

In his Pre-Budget Report today, Gordon Brown supported key elements of the Leitch Review, notably:

• By 2020, 90% of adults should achieve five GCSEs or equivalent, he added.
• Former CBI director general Sir Digby Jones will take up a new role in boosting skills as the Government’s ‘Skills Envoy’
• The Government will consult on £2,000 bursaries to encourage young people in care to go to university.
• New "summer universities", along with work experience and coaching, would be established to encourage people to stay on in education after 16.
• Universities will receive £60m for applied research to help Britain "transform knowledge into successful products and new jobs".

The key section on ‘Meeting the Productivity Target’ includes:

Investing in a new ambition for world-class skills, increasing adult skills across all levels and strengthening employer voice in their provision – by taking forward the recommendations of the Leitch Review;

With the Chancellor taking the opportunity to establish some of the battleground areas for the next election, there wasn’t as much on the Review as their might otherwise have been, but it was clear (and has been throughout) that the Chancellor supports the Leitch assessment and will move fairly quickly to start implementing changes.

In detail the Pre-Budget Report states:

• The Government welcomes the Leitch report and its analysis of the growing importance of skills in a modern economy... The long-term challenge for the UK is to increase its prosperity through higher productivity and employment at a time when the global economy is changing rapidly. These global changes are increasing the number of high skilled jobs and increasing skills demands within most existing jobs.

• The Government accepts the higher skills ambitions for 2020 set out in the Leitch Review… The Government will consider how best to achieve the Leitch ambitions and implement its recommendations, alongside the level of resources it will allocate to them, as part of the 2007 CSR process.

• The Government accepts the principles the Leitch Review recommends to underpin the delivery of the world-class skills ambition. There must be a shared responsibility for delivering the ambition. Employers, individuals and the Government must all improve their efforts and investment. The Government is committed to investing where there are market failures, with employers and individuals making a larger contribution where they gain the greatest private returns. The focus must be on economically valuable skills that deliver returns for employers and individuals. The skills system must be fully demand-led and focused on the needs of employers and individuals. Reforms should also build on existing structures through simplification, rationalisation and better performance management.

• Employers have an important role to play in securing world-class skills in the UK, raising their investment in skills at all levels and using skills effectively. The Government welcomes the investment in training that employers have made, and their involvement in existing skills initiatives. The Leitch Review sets out recommendations for shared action from the Government and employers – a ‘something for something’ approach – that ties greater rights to increased responsibility. This approach recommends that employers take more responsibility to offer time off, in return for more influence over the type of training available, and that the Government takes more responsibility to reform and invest in training provision. At the heart of this deal is the Government’s commitment, through Train to Gain, to ensure all workers have a basic platform of skills.

• Since April 2006, the Government has been rolling out a new national service for employers – Train to Gain. This provides firms with free, flexibly delivered training in the workplace for their low-skilled employees. In return, firms give their employees time off to undertake and complete training. This innovative approach is based on the lessons learned from Employer Training Pilots, which were launched in September 2002 and completed recently. Evaluations of the Employer Training Pilots have shown the positive impact of the pilots on both employers and learners in terms of satisfaction and workplace performance improvements. Over 90 per cent of employers were satisfied with the pilots overall. The Leitch Review makes a number of recommendations for integrating skills and employment services, with Train to Gain playing an important role in helping to increase sustainable employment and progression. The Train to Gain model has clearly been a successfully piloted and provides a solid foundation from which the Government can start work towards the Leitch ambitions.

• The Government also accepts the need for a strong, coherent employer voice at the heart of the skills system, delivered through the new Commission for Employment and Skills, recommended by the Leitch Review. In advance of the creation of the Commission, Sir Digby Jones has agreed to take on the role of the Government’s Skills Envoy, working with all employers to help build a national consensus about the need to work together to improve the UK’s skills.

• The Government has introduced a number of measures to encourage all young people to take part in some form of education or training up to the age of 19. Despite progress in recent years, the UK ranks among the lowest performing OECD countries in terms of post-16 participation.

• Since April 2006 the Government has been piloting new Learning Agreements. These are aimed at 16 and 17 year olds who are in work but not receiving accredited training, to ensure they undertake appropriate learning. The Government will now consider extending these pilots, to enable a greater number of people to benefit.

• Building on the existing statutory right to paid time off to train or study for this group, the pilot is testing the effectiveness of formal learning agreements, financial incentives and wage compensation for young people and their employers when engaging in training.

SLIM Comments

“In the modern labour market, people will need to update their skills more often as they change jobs, adapt to new technology and working lives lengthen. They need integrated, work-focused advice on how to do this.”

We’ll leave the last words to Lord Sandy:

" In the 19th Century, the UK had the natural resources, the labour force and the inspiration to lead the world into the Industrial Revolution. Today, we are witnessing a different type of revolution. For developed countries that cannot compete on natural resources and low labour costs, success demands a more service-led economy and high value-added industry.

" In the 21st Century, our natural resource is our people - and their potential is both untapped and vast. Skills are the key to unlocking that potential. The prize for our country will be enormous - higher productivity, the creation of wealth and social justice.

"Without increased skills, we would condemn ourselves to a lingering decline in competitiveness, diminishing economic growth and a bleaker future for all. The case for action is compelling and urgent. Becoming a world leader on skills will enable the UK to compete with the best in the world. I am optimistic."

More thoughts and reaction:

The Times’ Reports

http://www.timesonline.co.uk/article/0,,2-2489055,00.html

The Guardian’s take

politics.guardian.co.uk/homeaffairs/story/0,,1965039,00.html

TUC Reaction

"The TUC welcomes the Leitch Review of Skills as an ambitious and coherent strategy to revolutionise workplace learning and eradicate low skills by 2020. This means that the clock is ticking for the one in three employers who fail to train. Those employers are now on notice to clean up their act by 2010, or the new individual right to workplace training will be implemented.”
http://www.tuc.org.uk/learning/tuc-12749-f0.cfm

CBI comment

"Nobody could deny that we have to raise our game on skills if the UK is to seize the opportunities that globalisation brings and mitigate its downsides, at a time when jobs for the unskilled are becoming more scarce." "Currently, too many employers remain confused and bewildered by the skills infrastructure. There is a clear need to ensure a better match between publicly-funded courses and the training and development that employers and employees are looking for. Companies will wholeheartedly endorse Lord Leitch’s central tenet that the skills needs of employers - and their employees - should be put at the heart of the UK's adult training system. Leitch is right to advocate that training should be demand-led, and that public funds should only go to those vocational courses accredited by employer-led Sector Skills Councils.”

NIACE

“The ball is now firmly in the employers’ court. If the government accepts Lord Leitch’s recommendations, there can be no excuses if they fail to deliver. NIACE is ready to help them rise to the challenge. There is much to welcome in the report and we are pleased that the Leitch review has endorsed so much of the analysis we and others have offered. The recommendation that government consider a statutory entitlement to workplace learning in 2010 if progress is slow means that employers will be compelled to take training seriously.“

“We also welcome the recommendation that government move away from higher education policies limited to those aged under 30. However our main concern will be to ensure these reforms benefit those adults who need the confidence to take up opportunities as well as those currently outside the labour market. One area of disappointment is that the review does not highlight sufficiently the challenges of a changing demographic profile. Older people’s engagement in the labour market, migration and the different profiles of sectors of the economy and parts of the UK are issues that government cannot afford to leave to employers.”
http://www.niace.org.uk/news/current.htm#Leitch

The Review can be read/downloaded here:

www.hm-treasury.gov.uk/independent_reviews/leitch_review/review_leitch_index.cfm

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