Labour Party Conference

Manchester, 26-30 September 2010

City & Guilds/TUC fringe event – Who are skills for: can we meet the fairness test in an age of austerity?

David Coats (Chair): Opened the round table discussion with about 50 participants. He outlined the challenge of continuing to develop the skills that business, industry, commerce and, in particular, the voluntary sector need during a time of deepening economic uncertainty. This fringe meeting would hear from speakers with policy, employer, trade union and awarding body perspectives and would have the opportunity to widen the debate according to the expertise and interest of those present.

Key questions:

• How should a commitment to fairness and social equity inform decisions about the provision of adult skills and training, particularly when it comes to prioritising resources given the focus on budget reductions? How could it be demonstrated that policy choices had been designed to credibly meet this ‘fairness test’?
  
  
• Does an employer focussed strategy for skills mean trading off issues of individual aspirations for skills development, including future career advancement beyond the demands of the current role (and potentially the current employer)?
  
  
• How do advocates of the importance of skills for future growth need to rethink public advocacy and arguments, so that they resonate better with public audiences than they did before the 2010 general election? Are there tensions between a commitment to a high skills future and the economically liberal scepticism towards government intervention: which informs the coalition’s political economy and how might that be reflected in the future skills policy debate?

Rt. Hon Pat McFadden MP (Shadow Secretary of State for Business, Innovation and Skills): Talked openly and candidly about the historic issues in his own constituency. For many years no secondary school achieved the national average, yet there was no public outrage and as the labour market moved the aspirations of education didn’t match it. This, in his opinion, is ‘a terrible thing’.

We need to move on from the numbers game on apprenticeships and focussed on how we develop the skills that the economy need, yet there is always a lag between demand and supply. This is not a direct criticism of FE or HE, more a reflection that often industry cannot plan for the skills that it needs (green skills being an example) and consequently training programmes are out of sync with need.

In HE it has been possible to steer providers towards science, technology, engineering and mathematics through the funding mechanism, yet still employers say that there is not enough young people and adults skilled in the areas they need. How did this inflation in hard skills come about?

In terms of fairness and equity, much depends on the diversity of local (city and town) economies. In single industry cities a sudden surge or dip in supply or demand can have a dramatic impact on the skills economy. Where diverse industries exist there are ‘more bets on the table’ and employers and FE/HE are able to work together to provide the infrastructure.

Alessandra Buonfino (Head of Government Affairs, Tesco): Tesco is a big employer, but often it is not appreciated how far this extends through the supply chain, construction, etc. In terms of direct employees there is a clear gap in educational attainment – most often in the area of basic or soft skills. Not just with respect to numeracy and literacy, but also the confidence to relate to others.

Tesco seeks to offer its employees the ability to choose what they want to learn and to aspire to something else. It is for this reason that it has great employee retention and a high percentage of senior leaders and managers who started off in relatively low skill positions. 

Andrew Sich (Head of Policy and Corporate Affairs, City and Guilds): Fairness can only be about the empowerment of individuals and this means proper advice and guidance delivered by professionals. We are asking young people to make key career choices at an early age and for adults to make life-changing decisions as a consequence of deficit reduction policies – this needs a single, all-age career service.

We need individual learning accounts of some form, despite the failings of the previous attempts there needs to be a mechanism that encourages people to learn for the sake of their own futures. Employers have to accept that co-funding is essential. There is great inequity between FE and HE, no more so than in the financial support available to those who want to improve their skills. In HE there is a preferential rate through student loans whilst in FE the only real option is a career development loan at commercial interest rates (point from floor – often theses are inflated).

Frances O’Grady (deputy General Secretary, TUC): We must not set aside a decade of progress, with significant advances in the Skills for Life programme, higher education aspirations and the resurgence of apprenticeships. Most employers think young people are work ready and a recent survey suggested that there is an 85% satisfaction rate with those leaving HE being well prepared for work. The great inequality, however, is with those with low skills and on low incomes. These people are much less likely to get skills development through work and cannot afford to look to improve themselves.

Points from the floor:

Do we need to revisit the ‘hardy perennial’ of industry levies, such as those that have existed in the construction industry?

The threat to adult learning is great and this cannot be reconciled to what we know about the demographic trends: year on year reduction in the number of younger people; year on year increase in the number of adults needing to retrain; working through and beyond the current retirement age. At a time when we clearly need to be investing in the skills needs of adults we are facing the greatest threat to provision.

Reinforcing the point on student support, how can it be fair that an individual can choose to study in HE and pay back the investment over time at favourable rates and yet the hard skills the economy needs now are not afforded the same support?

National policy steers information, advice and guidance yet it is the needs of local industry that drives employment. If we move towards better IAG it needs to include better local intelligence so that the needs of both employers and individuals can be considered.

At present the state pays the majority of the cost of training. An individual can choose to study for a particular vocation regardless of the needs of the economy and colleges are free to recruit to courses that may have little local prospect of employment.

LSN/Pearson fringe event - Who should pay for skills?

John Stone (CEO, LSN) opened the event and set the context that this was the second in a series of three fringe meetings across the Liberal Democrat, Labour and Conservative party conferences. The debate in Liverpool the previous week had been lively and he expected the same again. That said, Ed Miliband was due to make his first speech as Labour Party leader towards the end of the fringe, so expect a mad rush for the best seats.

A thought for the event: UK businesses invest approximately £38bn in training and development (CIPD figures) but still cite a big gap between the skills needed and those present in the workforce. Where is the disconnection between skills demand and supply? (theme emerging here with the City and Guilds/TUC skills fringe).

Labour MP Fiona McTaggart highlighted that funding for skills should be devolved to a local level so that businesses, learning providers and students can work together to ensure that the skills developed in communities meet the need of local markets. Her own constituency of Slough had suffered over time due to a lack of appropriate skills, but that partnerships between local businesses, colleges and other learning providers would enable future provision to be tailored to the needs of the local economy. Fiona believes that the skills gap in Slough is now narrowing faster than in any other part of the country.

The fact that skills and qualifications lag behind the market should be a serious concern for government. Economic recovery is not simply about deficit reduction, growth must be a factor and how can the economy grow if there is a mismatch between skills and the needs of business and industry. Small and medium sized employers present a particular challenge in this regard. Very often small employers struggle to fund training such as apprenticeships and don’t take on apprentices unless there is a family connection and this will vary significantly from area to area.

Where we go next with funding skills needs to address the tension between national priorities and t he reality of local economies. This can only be achieved through devolved funding mechanisms and true local partnerships between industry, learning providers, future students and the state.

Ken Livingstone, the recently selected Labour candidate for the Mayor of London, illustrated the unique nature of London as an economic unit compared to the rest of the country. He argued that the job market in London was unlike any other in the country and here is the best example that a national funding mechanism could not deliver the skills solutions needed for economic prosperity.

To reinforce the point, Ken reflected on his experience as Mayor of London at the time of the introduction of the Learning and Skills Council (now superseded by the SFA and YPLA). At the time he argued that there needed to be an absolute relationship between local skills planning and the economy and that this could only be achieved if the Learning and Skills Council was within the authority of the Mayor of London.

Ken also made the point that then and now in London there is a presumption that schools prepare young people for higher education, not further education – with further education seen as the safety net for those not prepared for university. He believes that business and industry needs to take a greater role in the upper school curriculum and that this cannot be achieved through centralisation.

Adrian Bailey, chair of the Business, Innovation and Skills select committee observed that a balance was needed between state and employer funding. Adrian also argued that learner perceptions of vocational qualifications need to be improved by communicating their value. This was supported by Chris Banks, former chair of the Learning and Skills Council (LSC) and chair of the Independent Review of Fees and Co-funding in Further Education, who said that businesses were contributing too little to the funding of skills and that the current system is too complex. Chris said that his review will be making the case for co-investment and that state funding should only be used where business and individuals were making a matched contribution.

An audience vote saw that over 90 per cent of the fringe audience thought employers could do more in training their workforce but that a majority thought that this would be difficult to do. Stronger local and regional networks and local enterprise partnerships were seen by the audience as the best way to support employers. Shane Chowen (NUS) made the point that the current student support arrangements, where HE students get loans at preferential rates and FE students could only look to career development loans at (at best) commercial rates, will make it difficult for individual current and future students to consider financing their own skills development.