Financing of Further Professional Training:
The UK Approach
10 November 2006
Presented to CEI Human Resources Development
Forum
by David Greer
Welcome
Skills in England
12 million workers
have reading age of
children
Employers ignore
skills shortages
at their peril
Skills initiatives put
employers in control
MPs warn of harm
from low skills
Skills wanting
The big picture
• Skills shortages continue to have a negative impact on UK
productivity and competitiveness in the face of fast-growing
economies – China, India, Brazil.
• 16% of Employers in England claim to have staff with skills
deficiencies according to The UK National Employers Skills
Survey 2005.
• Over 5 million people of working age in the UK have no
qualification at all.
• Skills gaps cost employers £10 billion in lost revenue each
year.
How do we compare?
• The UK is the fifth largest economy in the world but its
prosperity has been constrained by its relatively low skills
base.
– Over one third of adults in the UK do not have basic schoolleaving qualification – double the proportion of Canada and
Germany (Leitch Interim Report 2005).
How do we compare?
• The UK is under increasing threat from international
competitors.
– The UK continues to have relatively poor productivity
performance. Output per hour worked is almost 30 per cent
higher in France and more than 10 per cent higher in Germany
and the US than it is the UK (Leitch Interim Report 2005).
• World class status is a challenging target.
– However, if we are to achieve our present ambitious targets we
will move up the league table.
How do we compare?
How do we compare?
How do we compare?
How do we compare?
UK Government
Response:
st
‘Skills for the 21 Century’
(2003)
st
21
‘Skills for the
Century’ (2003)
• ‘We believe it is right in principle that those who benefit
most financially should also contribute to the cost,
while protecting the interests of those who need most
help and cannot afford to pay.
• The Government should be clear about our priorities, so
that we can focus public funds where they will achieve most
benefit, particularly in raising national competitiveness and
creating sustainable employment.’
st
21
‘Skills for the
Century’ (2003)
• ‘We want to encourage the development of skills right
across the board. Supporting the development of higher
level skills and qualifications is every bit as important in a
knowledge economy as helping those with no or low skills.
Many of our skills deficits are at those higher levels.’
st
21
‘Skills for the
Century’ (2003)
• ‘So the strategy must provide a framework which
encourages such investment. But that is different from
deciding who pays for it. The state cannot pay for
everything. So in deciding the right focus for allocating
public funds, we must take account of where there are
market failures which block investment in skills, as distinct
from where the rates of return to individuals and their
employers make it fair to expect them to contribute to the
costs of their own learning.’
st
21
‘Skills for the
Century’ (2003)
• ‘On this basis, our priorities in using public funds are:
– The introduction of an entitlement to free learning for adults
without qualifications, to help them gain a full level 2 skills
foundation for employability. This extends the existing priority
of improving adults basic skills in literacy, language and
numeracy.
– Supporting those who are developing their qualifications to a
higher level in technician, advanced craft and associate
professional skills, particularly where those meet sectoral and
regional skills priorities.’
– Supporting those who are re-skilling for new careers, and those
preparing to return to the labour market, again particularly
where that meets sectoral and regional skills priorities.’
st
21
‘Skills for the
Century’ (2003)
• ‘On average, those with level 3 qualifications and above
have higher incomes and are more likely to receive training
at work for free. Moreover, adults in the UK contribute
relatively little to the costs of their own learning when
compared with other countries. In an OECD study, 19 per
cent of British individuals undertook education and training
that they had paid for, compared to 29 per cent in the US,
and 37 per cent across the 11 OECD countries in the study.’
What progress have we
made?
• 1 million more people with literacy and numeracy
qualifications
• Those economically active with no qualifications almost
halved
• Record number of apprentices - across more sectors
• Skills Academies – leadership and investment by major
companies
• Level 2 Entitlement introduced
What progress have we
made?
• New qualifications owned by business e.g. IT and ‘Lean
Manufacturing’
• Management and Leadership Programmes for 21,000 MDs
in SMEs
• Employer investment in training reaches £33 Billion per
annum
UK Government
Response:
‘Getting on in business,
getting on at work’ (2005)
‘Getting on in business,
getting on at work’ (2005)
‘The reforms in this White Paper, implemented as part of the
Skills Strategy, are designed to deliver for employers a
framework for skills and training with the following key
elements:
• A commitment to deliver publicly-funded skills training in a
way that is directly led by the needs of employers, as our
contribution to a national partnership which promotes
higher levels of investment and commitment in training
by employers.’
‘Getting on in business,
getting on at work’ (2005)
• ‘More people with the right skills and qualifications to be
effective and productive at work, through the reform of
education and training for both young people and adults.
That will cover skills at every level from functional literacy,
language and numeracy, to technician, advanced craft,
skilled trade and associate professional skills at Level 3,
Apprenticeships, and through to higher education.’
• ‘Training designed and delivered in a way that best meets
employers’ needs, through the implementation of the
National Employer Training Programme (Train to Gain)’
‘Getting on in business,
getting on at work’ (2005)
• ‘The Government is committed to using the funds and
powers at our disposal to ensure a much more demand-led
approach to training, driven directly by customer needs. To
that end, we will invest public funds, focused on the main
market failures at national, regional and sectoral levels. We
will set the strategic framework and will secure quality
assurance and necessary infrastructure. Above all we will
provide leadership for the alliance of partners that is needed
to change our national culture in valuing skills.’
‘Getting on in business,
getting on at work’ (2005)
• ‘Employers will have new powers to shape the design,
content and delivery of training to meet their needs. In
return, we look to employers to invest more in training,
where there is a clear return to the employer and the
learner.
• We look to them to engage more actively in developing and
deploying skills to meet business priorities, and to articulate
their needs in a way that schools, colleges, universities and
training providers can understand and act on.’
‘Getting on in business,
getting on at work’ (2005)
• ‘We recognise that many employers already invest heavily
in skills – a total of £33 billion per annum including wage
costs – and are committed to investing in their people. But
many firms do not express a need for skills because they
pay low wages to low-skilled staff to produce low-value
goods and services. Our national objectives cannot be met
unless more organisations set higher value business
strategies, and invest in skills to support those strategies.’
Key developments
• A new National Employer Training Programme (Train to
Gain) will give employers real choice over the training they
offer their employees.
• A new partnership with employers to support training at
Level 3 and 4 in technician, advanced craft, and associate
professional skills.
• Clear guidelines on priorities and levels of public
expenditure balanced by expectations of increased
business and individual contributions to the costs of training
Key developments
• Individuals will be helped to gain new skills and higher
qualifications. Whether it be moving from welfare to work,
sustaining employment, or moving out of the low-skill, lowpay trap, the system will be geared to the needs and
aspirations of the individual. Information and guidance will
be strengthened, qualifications reformed, and the new Level
2 entitlement introduced nationwide with the full cost of
tuition met by the Government.
Key developments
• Reforming training supply is an essential part of creating a
new, responsive system. We have many high performing
colleges, universities and other training providers who work
well with business and provide education and training which
support individuals’ employability and career progression.
However, the standards of the best must be extended to all.
Key developments
• Create new National Skills Academies at the apex of the
skills system. Skills Academies will be employer-led and
form a strong network in each sector linking Centres of
Vocational Excellence with universities, training providers
and specialist schools. They will raise standards across the
system by fostering innovation, spreading best practice,
shaping the curriculum, and improving the professional
development of teachers, lecturers and trainers. Skills
Academies underline our determination to transform the
quality and status of vocational education and training.
TRAIN TO GAIN
The National Employer Training Programme
TRAIN TO GAIN – the National Employer Training
Programme
DEFINITION
• Train to Gain is a new service to help businesses get the training
they need to succeed.
• Train to Gain offers a new way of working with employers that
uses an independent and impartial brokerage service to diagnose
business and training needs, sourcing training and wider business
development activities, as appropriate
TRAIN TO GAIN WILL…
• Be a service to employers
• Be Demand led
• Provide employers with a broker working to national standards
and linked to a reformed business support service
• Offer access to LSC core programmes: Skills for Life, NVQ level 2
and 3 qualifications, and Apprenticeships
• Promote jointly funded investment in higher level skills,
leadership and management support and Investors in
People
• Provide Information and advice to employees
NEW TRAINING PROVIDER STANDARD FOR
EMPLOYER RESPONSIVENESS AND VOCATIONAL
EXCELLANCE
PROVIDERS WILL…
• Have a high proportion of staff with recent experience of the
industry they support
• Be flexible in delivering training at a time, place and pace that
suits employers and their staff
• Build strong links with skills brokers, business advisers and other
business organisations, to deliver an appropriate mix of training
and business solutions
• Build on links with schools, Higher Education, other providers, and
become central to supporting local economic development
WHAT SUCCESS LOOKS LIKE
FOR EMPLOYERS
• Employers will rate the skills brokerage service highly in helping
them overcome critical skills needs.
– Level 2 and Skills for Life but also Apprenticeships, higher level
skills and Management and leadership training.
• Training providers will deliver in ways which directly benefit the
business without disrupting operations.
• Employers will be able to clearly identify the business
benefits and progressively increase their own investment
in training.
• Employers will be helped by Skills Brokers to access wider
business advice from business brokers, and recruitment support
from JobCentre plus.
WHAT SUCCESS LOOKS LIKE
FOR EMPLOYEES
• At least 190,000 adults will start a first full Level 2 qualification in
2006/7 and greater numbers in 2007/8.
• Many of these will also improve their Basic Skills in the process.
• Many more employees will undertake other forms of
training funded by their employer ranging from short
courses to higher education.
• The personal benefits gained will encourage more
employees to invest in their own training and
development.
WHAT SUCCESS LOOKS LIKE
FOR TRAINING PROVIDERS
• Excellent provision accelerated and demonstrates responsiveness
to employer and learner needs through FE White Paper reforms.
• New economic mission for Further Education delivers productive
and rewarding employment opportunities to young people and
adults.
• Specialist providers supply world class services with world class
facilities.
• New high quality providers enter the system bringing innovation
and driving up quality through increased contestability.
• New providers and existing good providers openly compete for
new and existing learning programmes.