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

1 Introduction

Skills in the UK

1. In December 2004 the Government commissioned Lord Leitch to identify the UK's "optimal skills mix in order to maximise economic growth, productivity and social justice".[1] His report, published two years later in December 2006, was a call to arms, recalling the UK's position in the 19^th Century, leading the world in the industrial revolution, and comparing this to the likely consequences if the UK did not take up the challenge to unlock the potential of the population: "Without increased skills, we would condemn ourselves to a lingering decline in competitiveness, diminishing economic growth and a bleaker future for all".[2] Leitch stated bluntly that the UK's skills "are not world-class" and concluded "despite substantial investment and reform plans already in place, by 2020, we will have managed only to 'run to stand still'", as competitor countries continue to improve their skills base.[3]

2. Lord Leitch's assessment was based upon depressing statistics revealing the level of skills among the UK working population. At the time of the report, over a third of adults lacked the equivalent of a basic school-leaving qualification, nearly half of all adults lacked numeracy skills and one in seven was not functionally literate.[4] Figures from 2006 placed the UK 17^th among the 30 OECD countries in terms of the proportion of 25-64 year olds with low qualifications.[5]

3. To remedy this situation and to achieve the ambition for the UK to become a world leader in skills, Lord Leitch recommended "radical change right across the skills spectrum".[6] He focussed on adult skills, in recognition that 70% of the 2020 workforce had already left school, and proposed a series of objectives for 2020:

95% of adults to achieve basic skills of functional literacy and numeracy (up from a 2005 base of 85% and 79% respectively)—also known as a Level 1 qualification;
over 90% to have basic school-leaving qualifications (69% in 2005)—also known as a Level 2 qualification, equivalent to 5 GCSE's at A*-C;[7] and
over 40% to be qualified to degree level or above (29% in 2005)—also known as a Level 4 qualification.[8]

4. Other key recommendations in the report included routing all public funding for adult vocational skills in England, apart from community learning, through Train to Gain and Learner Accounts by 2010, strengthening the employer voice through the creation of a new body, the UK Commission for Employment and Skills (UKCES), reforming Sector Skills Councils, a new 'Skills Pledge' for employers to commit voluntarily to train all eligible employees up to Level 2 in the workplace, extending Train to Gain to higher levels and creating a new integrated employment and skills service.[9]

5. There have been many reports on skills in the UK since the industrial revolution invoked by Lord Leitch. One commentator observed:

Once in every generation, at least, the government panics about a perceived skills shortage in the UK economy. It's a crisis. Everyone gets blamed. A report is commissioned. Reforms are proposed. A new quango is established. Deadlines are set. Not much seems to change. Then there is another panic … And so it is once more. [10]

6. But Lord Leitch spoke of the uniqueness of his review. Firstly, he noted "In the past there have been very many useful studies into skills, but there are certain features which did distinguish us. One was the width and the depth of the study; second was the duration of the study and, third, the emphasis on the study." He added:[11]

We spent a lot of time influencing and consulting; we had great input from a whole series of contributors, gaining agreement right across the United Kingdom. Gaining agreement was critically important, and we tried to make the study as apolitical as we possibly could. We raised and defined the agenda and then in the summer of 2007 that agenda and those recommendations became government policy, and that was the difference we made."

7. In its response to the Leitch Review in July 2007[12] the Government added one extra target (namely, 68% of the adult population to be qualified at level 3 by 2020)[13] alongside measures to implement the review programme. Most of the recommendations were accepted, although the Government took the view that routing all adult vocational skills funding in England through demand-led routes by 2010 would create "unacceptable risks" to colleges and training providers.[14] It also rejected the suggestion that UKCES should have a role in licensing Employer Skills Boards (ESBs) as it did not want to "prescribe one standard model".[15]

8. In order to finance these initiatives the Comprehensive Spending Review settlement for the Department for Innovation, Universities and Skills for the period 2008-09 to 2010-11 allocated funding of £5.3 billion a year by the end of the period "to increase adult skills and apprenticeships and make progress against the Leitch ambitions for world-class skills", with the aim of providing 3.7 million adult qualifications.[16]

Our inquiry

9. World Class Skills, the Government response to the Leitch review, describes itself as "the first significant document to be published by the new Department for Innovation, Universities and Skills".[17] The implementation of the Leitch agenda therefore offered itself as a priority for investigation by ourselves as the newly established select committee scrutinising the work of DIUS. Such an inquiry would also continue the work of one of our predecessors, the Education and Skills Committee, which was an indirect casualty of the machinery of government changes of June 2007. On 4 March 2008, therefore, we announced our inquiry, aiming to examine how responses to the agenda set out in the Leitch Report would affect the broader structures of further education (FE), higher education (HE) and lifelong learning. We specifically invited submissions on:

the responses of RDAs to Leitch and how coherent and structured these are;
what the existing regional structures of delivery are and what sub-regional strategies may be required;
the role of the Learning and Skills Council and Sector Skills Councils in this context;
the respective roles of the further education and higher education sectors in delivering a region-based agenda for Leitch and their coordination with one other; and
the impact on students of these initiatives, particularly in the context of policies for lifelong learning.

10. These terms of reference centred on regional responses, which we remain convinced are central to the successful delivery of skills policies, but the central role of Government emerged strongly from the evidence and we have reflected that development in this Report.

11. We are grateful to all those who gave written and oral evidence (which was taken by a dedicated Sub-Committee) during this inquiry. We were particularly pleased to launch the inquiry with an evidence session in Leeds which enabled us to focus on the range of players involved in the skills agenda in a single region, and we thank those who arranged and participated in that highly informative and useful visit. Transcripts of the oral evidence sessions are published alongside this Report, together with written evidence submitted to the inquiry. We also benefited from the minutes of a meeting convened by one of our members, Gordon Marsden MP, at Warrington Business School on 3 October. This gave us an additional regional perspective and a summary of the meeting is published in Volume 2 of this Report.

12. As a prelude to our inquiry we took evidence on 28 April 2008 from Lord Leitch. This session was the last in a series of familiarisation sessions with key figures within our areas of responsibility which we organised in our first few weeks of existence as a new Committee. We are grateful to Lord Leitch for his evidence and we have drawn on his comments and observations throughout our inquiry and this Report.

13. Our special advisers for this inquiry were Chris Hughes CBE, formerly Chief Executive of the Learning and Skills Development Agency and Professor Ewart Keep, Deputy Director, ESRC Centre on Skills Knowledge and Organisational Performance, University of Cardiff. We are very grateful for their assistance.

Our Report

14. This Report does not attempt a detailed analysis of all the programmes, reforms and structures involved in the implementation of skills policy in recent years. Instead, it takes a critical overview of the impact of the Leitch agenda and assesses how the UK, and more specifically England, can move towards achieving the ambitious targets within a tight timescale. This has to be put in context of the current economic climate which is very different from that in which Lord Leitch conducted the review, and should place skills development right at the top of the political and employment agenda. In a recent open letter to UK employers Sir Michael Rake, Chairman of UKCES, Mervyn Davies CBE, Chairman of Standard Chartered plc, Brendan Barber, General Secretary of the TUC, Richard Lambert, Director General of the CBI and Sir Stuart Rose, Chairman of Marks and Spencer plc, warned that although:[18]

In an economic downturn, there is always a temptation for businesses—large and small—to cut spending on staff training … Investing now in building new skills will put us in the strongest position as the economy recovers. Skills to support the development of new products and services will shape whether we are ready to gain competitive advantage when growth resumes. From our experience in previous downturns, it was the businesses that did invest in their staff which saw the most dynamic recovery.

15. There is a general agreement that skills levels need to rise but questions remain about whether the Leitch agenda is realistic, whether the current direction of implementation is right and what action the Government should take now to improve the skills position in the UK in difficult times. It is these issues which we set out to address.

STRUCTURE OF REPORT

16. We first examine the principles and targets introduced by the Leitch agenda and the Government's plans for implementation. The rest of the Report examines progress towards the realisation of the vision set out in the Leitch review in terms of delivery structures and programmes (chapter 3), employers (chapter 4), training providers such as FE colleges and universities (chapter 5) and individuals, including the role of trade unions—a key but often unacknowledged partner in skills delivery (chapter 6). We present our overall conclusions in chapter 7.

17. As we explain later in this Report, one of the major issues is the complexity of the skills landscape. There are many organisations, acronyms and relationships to understand. To aid the reader, at the back of this volume of the Report we have included lists of the different organisations involved in skills and charts showing how they relate to each other. The charts in particular speak for themselves showing how complicated the system has become. We are very grateful to the National Audit Office for supplying us with this information.[19]

1 HM Treasury, Prosperity for all in the global economy-world class skills, Final Report, December 2006 (referred to in this report as the 'Leitch Review of Skills'), Executive Summary, p 6, para 1 Back

2 Leitch Review of Skills, foreword Back

3 As above Back

4 As above Back

5 Skills: statistics and recent developments, House of Commons Library Standard Note SN/EP/4504, October 2008 Back

6 Leitch Review of Skills, foreword Back

7 With a "commitment to go further and achieve 95% as soon as possible" (Leitch Review of Skills, p 3) Back

8 Leitch Review of Skills, p 3 Back

9 Leitch Review of Skills, p 4-5 Back