National Audit Office Value for Money Report
Skills are essential to a successful and sustainable
economy and society
- A strong skills base, though not sufficient on its own, is an
important element in a productive and sustainable economy (
Figure 1 below ). And skills for public sector
employees are essential to providing better public services. In the
2003 Skills Strategy [Footnote 1] ,
the government set out its commitment to improving skills for
employment as one of the building blocks towards enhancing the UKs
success as an economically competitive nation. Skills make an
important contribution to increasing social inclusion, because
better skilled people are generally more able to fulfil their
potential, earn more and use their skills for the benefit of their
families and communities. [Footnote
2]
Figure 1 ("Strong skills are essential to a successful and
sustainable economy and society, and benefit individuals") is
not available in this version of the executive
summary.
- The Department for Education and Skills (the Department) spends
around 6.7 billion, through the Learning and Skills Council, on
employment-related education and skills training in England (
Figure 2 overleaf ). In addition, 1.9 million
employers in the public and private sector spend an estimated 23.7
billion on education and training, including around 10.3 billion on
trainee labour costs and about 10.8 billion on training provided
within the organisation. [Footnote 3]
The total also includes an estimated 2.6 billion spent on external
training, either in Englands 397 colleges of further education or
with providers from the private, community or voluntary sectors.
Despite this expenditure, six per cent of employers have skill
shortage vacancies and 20 per cent have skills gaps, costing in
total some 10 billion a year in lost revenue, equivalent to 165,000
a year in a typical business with 50 employees.[Footnote
4]
Figure 2 ("Expenditure on Learning skills in England") is
not available in this version of the executive summary.
The delivery chain for providing education
and training for employment is complex
- A wide range of government and private sector organisations in
addition to the Department for Education and Skills are involved in
the planning and delivery of education and training for employees
(Figure 3below). Appendix 1 provides more detail
on key policies, initiatives and organisations.
Figure 3 ("Delivery chain for education and training for
employment") is not available in this version of the executive
summary.
Tackling the skills challenge
- Improving skills for employment and ensuring employers get what
they want requires employers co-operation and involvement.
Employers are a very diverse group, covering a very wide range of
industries, voluntary groups and charities, and public sector
organisations ranging from the very small to the huge sectors like
the National Health Service. Some employers are multinationals with
hundreds or thousands of employees and supported by human resources
and training departments, but the vast majority of companies are
small, many with only a few employees or acting as sole traders (
Figure 4 ). While smaller businesses are less likely to train than
larger businesses [Footnote 5], training also varies
widely by sector. [Footnote 6]
Figure 4 ("Who people work for") is not available in this
version of the executive summary.
- The UK has historically had low productivity relative to its
main international competitors.[Footnote
7]Work done by HM Treasury and the Department of Trade and
Industry has also shown that there are significant and sustained
differences in economic performance between and within the UKs
regions. [Footnote 8] Variations in skills
composition is the major factor in explaining those differences
[Footnote 9], but investment in skills
training is also important among other key drivers including
innovation, enterprise and competition.
- Figure 5 illustrates regional data in England
on productivity, skills gaps, training days, and Learning and
Skills Council expenditure per head of the working population. The
data is presented for illustrative purposes only, because possible
connections between the four sets of data, and the reasons for
similarities and differences between regions, are likely to be
complex. The fact of such complex interrelationships reinforces the
need for relevant public sector organisations to engage effectively
with employers to define requirements for improving skills for
employment, and to help secure provision that meets the identified
needs.
Figure 5 ("Regional data on productivity, skill gaps,
training days and expenditure per head of working population") is
not available in this version of the executive summary.
Why and how we did this study
- Two of our recent reports prompted this study:
- i n Skills for Life: Improving adult literacy and
numeracy [Footnote 10] we highlighted barriers
to employers investing in training for employees with low literacy
and numeracy, and the importance of structures and funding that
support the flexible provision that encourages adults to take up
learning; and
- in Securing strategic leadership in the learning and skills
sector in England [Footnote
11] we explored the tension between some of the Learning and
Skills Councils national targets and regional priorities for skills
development.
- Much is known about the extent, causes and implications of
skills gaps [Footnote 12], and we found a wealth
of data collected through intermediaries such as local Learning and
Skills Councils, Business Link organisations, Sector Skills
Councils, colleges and training providers. But there was relatively
limited up-to-date information based on direct research with
employers on how they want publicly funded training to be improved
and whether it represents value for money from their perspective.
Though we drew on a range of sources, we focused our research on
direct views from private and public sector employers and employers
organisations in England. We have also taken account of a recent
major review [Footnote 13]on the key challenges and
opportunities facing further education colleges which recommends
that colleges should sharpen their focus and direct their major
efforts towards improving employability and supplying economically
valuable skills.
- Our report distils our findings into the following four themes
that emerged from our research:
- employers want a simple way of getting advice on the
best skills training for their staff;
- employers want training that meets their business
needs;
- employers want incentives to train their staff more;
and
- employers want to influence skills training without
getting weighed down by bureaucracy.
- The report is divided into these four sections with key
findings in a single box at the beginning of each section. We have
then highlighted some of the most important findings and
illustrated them with case studies of actual practices we
found.
- Our methodology (Appendix 2) included a representative
telephone survey of 508 private sector employers in England,
discussions with relevant people and organisations, visits to seven
further education colleges and twenty-five private and public
sector employers, and a literature review. A panel of people with
experience in skills development advised on our methodology,
commented on our emerging findings and provided advice on our draft
report.
Conclusions
- Up-to-date skills are essential if employers in England are to
maximise their productivity. Figure 6 sets out the
rationale for the government's strategy for improving skills.
Recent research has estimated that on average an eight per cent
increase in the proportion of trained workers can lead to a 0.6 per
cent increase in UK productivity, as measured by the value added
per hour worked. [Footnote 14] But training is
expensive, and employers will only invest if they perceive there to
be economic benefits and the training meets their needs. The needs
of the economy and of different industries and business sectors do
not always coincide with the interests of individual employers. For
example, individual employers may not see benefit to their
businesses from basic skills or a first full level 2 qualification
(equivalent to 5 GCSEs grades A*-C), and some are therefore
sceptical about the value for money of this expenditure from their
business perspective. Nonetheless, many will wish to recruit new
employees with such skills or qualifications, as a basic
requirement of employability.
- The government’s role is to balance these needs, having regard
to the wider and longer term interests of employers and the economy
and the promotion of a flexible labour market, and to design
appropriate policies. The Skills Strategy is designed to fill the
gaps left by market failures in education and training which, if
left unfilled, would lead to a sub-optimal supply of skills and
qualifications. The Skills Strategy aims to address market
failures, including those relating to:
- some employers concerns that once trained and qualified
(particularly in general employability skills that are useful to
many organisations) an employee will leave before the employer has
gained the benefit of its investment in training; and
- lack of information about, and understanding of the potential
benefits from opportunities available to enable adults and their
employers to gain higher skills and qualifications.
- Many employers and other stakeholders recognise the social
benefits of much of the education and training for employment that
receives priority funding from government. They also appreciate
that the skill levels that receive priority form the basis for
employees to progress to level 3 learning and above, where economic
benefits are known to occur. Further research commissioned by the
Department is expected to provide a stronger business case to
employers of the benefits of training. A strong synergy between
government and business priorities, effort and investment is worth
striving for. Our detailed conclusions are set out below. In our
recommendations, we set out a way forward that we would expect,
from our research, most employers will support.
Employers want a simple way of getting advice on the best
skills training for their staff
- Generally, employers place more reliance on experience and the
word-of-mouth recommendations of other employers in deciding which
training to invest in, and who can best provide it. Any system for
providing advice to employers on training, training providers and
the quality of provision therefore needs to facilitate employers
talking to each other about their experiences.
- Organisations involved in funding, planning and providing
skills development public and private have been working towards a
no wrong door approach enabling employers to get advice, or to help
influence provision, whichever public organisation they approach.
Employers, particularly smaller ones, who want a quick and obvious
route to obtain good advice and clear jargon‑-free information,
require clear signposting because they can be deterred by having
many options.
- The challenge is to ensure that all employers, particularly
small ones, have confidence to access the information and advice
they need. No wrong door was developed on the basis that different
employers may wish to take a variety of routes in different
circumstances; for example, some are very clear about their needs
and would prefer to contact a training provider directly, whereas
others may need support, for example from Business Link, to help
assess their requirements. Skills brokers working in the Employer
Training Pilot areas (Appendix 1) and in other contexts are
demonstrating the value of a wide brokerage role that integrates
business and skills brokerage. These brokers can add value and
reduce costs by bringing together different small employers seeking
the same or similar skills development, and different colleges and
providers who can, together, provide the best training solution for
an employer or group of employers.
- Business advisors and skills brokers generally recommend that
employers develop a training plan, however brief, linked to their
business goals. Investors in People provides a systematic means for
employers to assess training needs. Where companies have Union
Learning Representatives, these staff can also support employers
and employees in identifying and developing fit for purpose
training.
Employers want training that meets their business
needs
- Many employers feel a duty to their employees in a number of
respects, including enabling them to grow and develop as
individuals. But for all employers, whether operating in the
private, voluntary or public sector, the needs of the business have
to be the focus of employee training and skill development if the
company or organisation is to survive and develop. Most employers
provide a considerable amount of training in-house. This may be
informal on-the-job training, which can be appropriate and cost
effective, particularly in smaller organisations where it may be
difficult to provide a temporary replacement for a key member of
staff. Often employers use private sector consultants and experts
to help them. Business and organisational needs inevitably and
appropriately drive every employers decisions about how much time,
money and effort to put into training.
- Private training companies specialisation in particular areas,
together with ability to sell the business benefits of their
products, makes them a natural choice for many employers. Further
education colleges have to steer a more complex course. They are
expected to support achievement of the governments wider objectives
of creating a strong economy and promoting social inclusion, as
well as to respond to employers needs. The strategies they are
required to develop to help, for example, vulnerable learners, are
very different from those they need to convince employers about
what the college can offer their business. Even so, many colleges
are steering their course very effectively and are providing
training and skill development that employers want at the time and
place they want it. More could and should do the same, and the
sector as a whole needs to take account of the recommendations of
the recently published review of the future role of further
education colleges (Appendix 3) [Footnote
15].
- Through its Agenda for Change [Footnote
16], the Learning and Skills Council is seeking to enhance the
reputation of colleges so that they are more often the partners of
choice for employers looking to develop their workforce. A number
of factors can, however, undermine the effectiveness of training in
tackling skills shortages: for example, qualifications available
may not necessarily directly meet employers needs; in a particular
geographic area there may be shortages of skilled trainers; and
there may be a need to use expensive capital equipment for training
which is not available. Colleges and other providers that reach and
stay at the leading edge will be those working most closely with
employers to address these barriers, and those finding innovative
solutions which meet employers needs. Examples include sharing of
skilled staff and up front investment, and working with groups of
employers within an industry and/or supply chain.
- At present there is limited joint working between colleges and
private sector training organisations. By joint working we mean
partnerships, where the private sector trainer is more than just a
contractor to the college; for example, college and private sector
staff may collaborate to deliver training at an employers
workplace. We consider that such joint working could potentially
provide a rich stream of future skills development, drawing on the
strengths of both types of organisation, to develop training that
could be especially attractive to employers.
Employers want incentives to train their staff
more
- Employers want employees to be literate and numerate; but
employers may be reluctant to fund or release employees for
training in literacy, numeracy or for a level 2 qualification,
especially when most people might be expected to gain such skills
before they leave school. The primary focus for public funding is
therefore to encourage adults to achieve the minimum level, with
the expectation that employers and individuals should accept the
major responsibility for funding education and training in higher
level skills, which bring more substantial financial rewards in
terms of increased productivity and profitability for employers and
increased wages for individuals.
- The Department considers good literacy and numeracy skills and
a full level 2 qualification to be the minimum employability skills
needed for productive, sustainable employment in a high-value,
advanced economy. People with such skills are more likely to be in
employment and receive further training, but England has large
numbers of adults without these minimum skills. If this skills gap
is not filled, it will continue to limit both the pool of potential
employees for future jobs as the economy develops, and the capacity
of the labour market and the economy to raise productivity and
increase the rate of innovation. Existing evidence shows that
employees without the basic level of skills are much less likely to
be offered training by their employer.
- Government cannot realistically fund all training for
employment, and employers have to bear much of the cost, including
fees for external providers as well as internal training costs and
trainee wages ( Figure 2 ). The Department meets
some costs, in particular for areas of learning that are government
priorities. For example, the Learning and Skills Councils funding
priorities include 16-19 year olds, people with low levels of
literacy and numeracy, and adults lacking a full level 2
qualification (equivalent to five GCSE grades A*-C). The Skills for
Life programme is designed to help the very large numbers of adults
in the working population an estimated 26 million in 2003 who do
not meet one or both of the standards for literacy or numeracy that
the Department considers necessary for school leavers in todays
economy. The Department is seeking improvements in the literacy and
numeracy of 2.25 million adults by 2010, with a milestone of 1.5
million adults by 2007. The Department also has a separate target
to reduce by 40 per cent by 2010 the number of adults who do
not have the wider skills for employability represented by a full
level 2 qualification. Figure 7 explains
entitlement to tuition at level 2.
- The National Employer Training Programme (Appendix 1) will seek
to achieve growth in training by encouraging take up of the level 2
entitlement among employees, and by stimulating employers to
contribute to training employees who already hold a full level 2
qualification. Employers generally acknowledge the economic
benefits from training and skills development at level 3 and above,
and expect to bear at least a proportion of the costs (alongside
substantial public funding allocated through the Learning and
Skills Council to subsidise a wide range of training at level 3).
In contrast, only a minority of employers are prepared to engage in
training low-skilled employees to a first level 2 qualification.
However, there is still a risk that subsidies intended to encourage
first level 2 training may be used by that minority of employers
who would have provided such training anyway. An evaluation of the
Employer Training Pilots is seeking to estimate the extent of this
effect, and the Department intends to minimise the effect in the
design and roll out of the National Employer Training Programme by
seeking to target hard to reach employers and employees.
- In developing a demand-led National Employer Training
Programme, the Learning and Skills Councils aim through brokers is
to assist employers to improve productivity by helping them to
identify training opportunities that meet their needs
cost-effectively and with minimum disruption to their businesses.
Success depends on brokers:
- being responsive to the needs of employers who are seeking
training opportunities;
- being able to communicate to employers the benefits of skills
development; and
- creating and offering packages of training with an appropriate
balance of costs shared between public funding and the employer,
and that are attractive in terms of business benefits, especially
for those hard to reach employers who have traditionally not
provided much training for their employees.
Employers want to influence skills training without getting
weighed down by bureaucracy
- We found that many employers and their employees want to
influence skills training. The biggest barrier is time most
employers need to keep tight control on time spent out of the
workplace that does not directly contribute to their business.
Relatively rare but effective influencing occurs
employer-to-employer across supply chains. But with 1.9 million
employers in England, it is not easy for any but the largest
companies to get their voice heard to influence skills training.
Getting genuine input from employers without involving them in
bureaucracy is a difficult challenge, but it has to be met if
greater employer engagement is to become a reality.
- We found low awareness, especially among small employers, of
the types of bodies intended to give employers a voice. The 25
Sector Skills Councils (Appendix 4) are employer-led organisations
representing business, industrial and other sectors and ensure that
training supply meets their needs. They are working with all sizes
of employers in their sectors to identify skills needs, gaps and
overlaps, and devise how best to tackle them.
- Some Sector Skills Councils are well established, with secure
funding sources and high levels of employer commitment. Others have
been established only recently. Expectations of Sector Skills
Councils are high. For example, Sector Skills Councils are required
to develop Sector Skills Agreements (paragraph 4.7) across England,
Scotland, Wales and Northern Ireland. Other responsibilities
include working with partners to develop apprenticeships and
qualifications reforms. Employers, through their Sector Skills
Councils, are also invited to consider developing National Skills
Academies that will focus on developing employer‑-led, national
centres of excellence sector by sector. As awareness of the Sector
Skills Councils increases, there is a growing risk that they will
become overstretched, unwieldy or both. And if this happens they
risk losing the buy in of the employers they exist to help. The
Department is aware of this risk and is working with the Sector
Skills Development Agency to determine priorities, and to build
capacity and capability, particularly in the newly established
Sector Skills Councils.
- The Sector Skills Agreements should provide information for
Sector Skills Councils work to help build the Framework for
Achievement in England, led by the Qualifications and Curriculum
Authority in partnership with the Learning and Skills Council and
the Sector Skills Development Agency. The proposed Framework is a
major reform of the current qualifications structure to provide
more obvious pathways of progression to employment and/or further
learning, and will incorporate a new system of credits that
recognise achievement, with levels assigned to them. The Sector
Skills Councils are developing Sector Qualifications Strategies in
the UK, which will identify the appropriate mix of qualifications
and training provision for each sector and are intended to
rationalise the existing number of recognised qualifications. These
Strategies will have to achieve a balance between ensuring that all
vocational qualifications are flexible enough to meet the needs of
employers and learners, while ensuring the consistency and validity
required across the country to support a flexible and dynamic
labour market. The programme of work is ambitious; preparing the
Strategies involves substantial consultation with employers on
proposals to incorporate the best of in-house provision as well as
externally provided training.
RECOMMENDATIONS
- Our recommendations are based around the four themes that
emerged from our research: simple ways of getting advice and
information; training that meets employers business needs;
incentives for training; and ways of employers influencing without
getting weighed down by bureaucracy.
- The Learning and Skills Council, in collaboration with
other organisations, should coordinate coherent information and
advice for employers on improving skills. The large number
of organisations, bodies, and information sources on skills
development is confusing for many employers, who can find it
difficult to decide which is the right route for them. There are
opportunities for the Learning and Skills Council to coordinate
public sector efforts to increase awareness among employers of how
and where to get advice, and take advice from employers on how to
develop information sources they will want to use. This might
involve, for example, streamlining of communications with employers
on improving skills through:
- as part of the National Employer Training Programme, continuing
to develop brokers capacity to build relationships with employers
and provide impartial advice on the most cost-effective training
and skill development to meet business needs, so that they become a
preferred route for many employers seeking information;
- the UK Register of Learning Providers, which is to be developed
as a single database to link together existing data sources on all
providers in the UK, and make the information publicly available;
and
- the Employers Guide to Training Providers (the Employers Guide)
by which employers and brokers can access complete information on
available training. In order to be valued and used by employers and
brokers, the Employers Guide, and as far as possible any linked
databases, should be developed to include a facility to allow
employers to obtain feedback from other employers who have used the
training.
This recommendation should result in overall savings because public
sector organisations should become less likely to duplicate each
others work, and should make fewer but more effective approaches to
employers on improving skills. Making the Employers Guide more
employer friendly may slightly increase costs, but by facilitating
employers access to other employers experiences of training
provision, there should be higher usage and user satisfaction with
the type of information being made available.
The Learning and Skills Council could evaluate the
implementation of this recommendation by:
- monitoring usage of the Employers Guide;
- seeking views on user satisfaction, for example by using a
method successfully operating on the learndirect website; and
- periodically seeking views, for example from Sector Skills
Councils and organisations such as the Confederation of British
Industry, on whether the changes are having the desired
impact.
- Brokers and training providers should focus on
innovative and affordable training that employers need, and on
providing the training at a time and place that is convenient to
employers and employees.
Skills training must meet business needs, or else
employers are unlikely to be interested. Meeting business needs
includes making sure that costs in terms of employee time spent
training including time spent travelling to and from training are
minimised. There is limited value in brokers just matching required
employer skills to available courses, which many employers could do
equally well themselves with the right information. The real value
of brokerage is in working with employers and training providers to
secure cost-effective skills training, especially for those
employers who are not currently providing much training. For
example, a broker can identify where two employers needing the same
skill might agree to share training costs; where a provider could
deliver training on an employers premises, with mutual benefits in
saving employee time and less expense for the provider on premises
and equipment; and where larger employers may have facilities that
can be offered to neighbouring employers and/or employers in their
supply chain. Brokers can also increase choice by making employers
more aware of how they can use learndirect to provide accessible
training to their employees [Footnote
17] and by working with colleges and private providers to
encourage them to pool their skills and strengths to devise
training that will demonstrably benefit employers. This
recommendation should be cost neutral, since it should be taken up
in developing brokerage, as planned, under the National Employer
Training Programme. Individual initiatives by training providers to
make training more responsive to business needs will have to be
cost‑-effective if employers who will pay directly for at least
some of the training and will be required to release staff for
training are to take the opportunities up. The Learning and Skills
Council could evaluate the implementation of this recommendation
by:
- monitoring the outcomes of work by brokers; and
- (as for recommendation 1) periodically seeking views on whether
the changes are having the desired impact, for example from Sector
Skills Councils and organisations such as the Confederation of
British Industry.
RECOMMENDATIONS continued
- In addition to reflecting national priorities, funding
should be tailored to encourage more training to meet skills
shortages and regional priorities. First full level 2
training (equivalent to 5 GCSE grades A*-C) receives relatively
high public funding precisely because many employers would not
consider it in their interest to pay for training at this skill
level, which is aimed primarily at improving general employability
(i.e. providing the generic skills required for successful and
productive employment) and at increasing social inclusion (
Figure 6 ). Some employers are prepared to pay for
more specific skills training at level 3 (equivalent to A-level)
and above, and there is evidence that training at these higher
levels brings more benefits to employers as well as employees. The
Department recognises the benefits of level 3 training, and the
Learning and Skills Council allocates funds to subsidise the cost
of some level 3 training for adults. More investment is needed in
training at all levels, but because the returns are greater at
level 3 and above, the government considers there should be a
stronger expectation that adults and their employers should
contribute more to the cost. For some employers to be persuaded to
engage more in employee training and release staff for training,
including publicly funded training at level 2, they need more
financial incentives and/or clear demonstrable benefits, such as
evidence that training will help fill local skills gaps.
The Department is undertaking research to provide a stronger
business case of the benefits of training to employers. When
completed, the Learning and Skills Council should disseminate the
research results to inform employers, and especially to explain the
advantages to those who have not historically provided much
training to employees. Funds for selective subsidy of training at
level 3 will be limited and, to maximise benefits, Regional Skills
Partnerships will have a key role in helping to focus the funds on
local and regional skills gaps in areas where employers are
sufficiently committed to improvements to contribute to the costs.
This recommendation should be cost neutral, since it should be
taken up in developing new funding planned to be spent under the
National Employer Training Programme.
The Department will be testing the effects of an additional
subsidy for level 3 in trials in the North West and the West
Midlands. In addition, the Department and the Learning and Skills
Council could evaluate the implementation of this recommendation
by:
- monitoring the type of skills training funded at level 3,
employer contributions, employer and employee feedback on the
impact individual skill and business needs and, over the longer
term, the effect on local skills gaps; and
- (as for recommendation 1) periodically seeking views on whether
the public investment is having the desired impact, for example
from Sector Skills Councils and organisations such as the
Confederation of British Industry.
- The Sector Skills Councils need sufficient time and
capacity to develop as genuinely employer-led bodies providing
sector expertise in developing skills training and formal
qualifications.
Sector Skills Councils are the best placed organisations to take
the lead on incorporating employers perspectives into the
development of skills. The Councils are at different stages of
development. Some are well established organisations with secure
funding sources and with high levels of employer commitment, but
many have been set up only recently. While the Councils are working
to develop effective engagement with employers, there is a serious
risk that enthusiasm for the Councils important role both within
the Sector Skills Councils and among public sector organisations
responsible for and working with them could result in some Councils
becoming overstretched and unable to contribute effectively to key
initiatives such as the Framework for Achievement. There is a
further risk that overstretched Councils may be unable to deliver
their core tasks effectively and could lose the commitment of the
employers they are supposed to represent. The Department and the
Sector Skills Development Agency should continue to take stock of
the expectations placed on the Skills for Business network and on
individual Sector Skills Councils in order to identify where Sector
Skills Councils are at risk of becoming overstretched, and work
with them to prioritise the workload over a reasonable time frame.
The Department and the Sector Skills Development Agency should
continue to work with Sector Skills Councils to strengthen long
term capacity and capability. Sector Skills Councils should look
for ways of setting priorities for the needs of their sectors
through working with the nine English regions, their key
stakeholders and partner organisations.
This recommendation should either be cost neutral or cost saving by
setting realistic priorities for Sector Skills Councils and
avoiding possible costs of failure due to lack of capacity for
Councils to achieve expectations.
The Sector Skills Development Agency could evaluate the
implementation of this recommendation by:
- monitoring the organisational effectiveness and efficiency of
individual Sector Skills Councils; and
- periodically seeking independent views from employers, and from
organisations such as the Confederation of British Industry and the
Qualifications and Curriculum Authority, on whether Sector Skills
Councils are contributing effectively to improving skills for
employment.
- The Department and the Learning and Skills Council
should seek to maximise value for money from the National Employer
Training Programme by using public sector funds to leverage funding
by employers of skills training that will benefit their
businesses.
There is a risk that some of the employers engaging in
the Employer Training Pilots would have undertaken the subsidised
training they received anyway. In moving from the pilots to the
National Employer Training Programme, the Department and the
Learning and Skills Council should minimise the risk of public
subsidy displacing employers own investment in training, for
example by supporting brokers in negotiating packages of training
in which employers and the public sector share the costs, and
public sector funds are focused on additional training. As a major
plank of the Programme, brokers also need to persuade hard to reach
employers to participate in employee training. It is not clear from
the pilots how successful the current incentives will be at
achieving this objective, but the Department and the Learning and
Skills Council are designing the implementation of the National
Employer Training Programme to minimise this risk. So far the
pilots have proved popular with employers and employees. Should the
Programme not prove attractive to employers and employees in key
sectors, the Department and HM Treasury should consider alternative
incentives that employers and employer groups have suggested, such
as tax credits or reductions in corporation tax to cover costs of
training.
This recommendation should reduce the risk of waste by developing
the National Employer Training Programme based on evidence from the
Employer Training Pilots.
The Department could evaluate implementation of this recommendation
by:
- requiring brokers to assess the extent to which publicly funded
training is genuinely additional, brings new funding from
employers, and leads to participation by employers who have not
previously provided much training to their employees; and
- using this information from brokers, and their accumulated
experience of working with employers, as the basis for an early
review of the value for money of the National Employer Training
Programme.
- [back from footnote 1] The Skills
Strategy White Paper: 21st Century Skills: Realising Our Potential:
Individuals, Employers, Nation, Department for Education and
Skills, July 2003.
- [back from footnote 2]Skills White
Paper 2005: Getting on in business, getting on at work, Department
for Education and Skills, March 2005.
- [back from footnote 3] Learning &
Training at Work 2000, Department for Education and Skills,
December 2000; figures based on employers with 10 or more
employees.
- [back from footnote 4] National
Employers Skills Survey 2003, Learning and Skills Council (research
by Ernst & Young), and 2004.
- [back from footnote 5] National
Employer Skills Survey 2004, Learning and Skills Council.
- [back from footnote 6] Skills for
Business Network: Phase 2 Evaluation Main Report, Research Report
10, Policy Research Institute, Leeds Metropolitan University for
the Sector Skills Development Agency, September 2005. The
proportion of all employers providing training in 2004 varied from
91 to 43 per cent by sector.
- [back from footnote 7] For example, UK
productivity in 2003, measured by Gross Domestic Product per
worker, was 11 per cent below that of the combined average for
other G7 countries, which includes Canada, France, Germany, Italy,
Japan and the U.S. Source: International Comparisons of
Productivity, Office for National Statistics, February 2005.
- [back from footnote 8] Productivity in
the UK 3 The Regional Dimension, HM Treasury and Office of the
Deputy Prime Minister, November 2001.
- [back from footnote 9] ibid.
- [back from footnote 10] C&AGs
report, HC20 Session 2004-05, December 2004.
- [back from footnote 11] C&AGs
report HC29 Session 2005-06, May 2005.
- [back from footnote 12] For example,
through the National Employer Skills Survey 2003 and 2004.
- [back from footnote 13] Realising the
Potential: A review of the future role of the further education
colleges, Sir Andrew Foster, November 2005 .
- [back from footnote 14] The Impact of
Training on Productivity and Wages: Evidence from British Panel
Data, Dearden, Reed and Van Reenen, Institute for Fiscal Studies
(2005).
- [back from footnote 15] Realising the
Potential: A review of the future role of further education
colleges, Sir Andrew Foster, November 2005.
- [back from footnote 16] Agenda for
Change, Learning and Skills Council, August 2005.
- [back from footnote 17] learndirect
provides e-learning to enable learning to take place at work, home
or in one of over 2,000 learndirect centres; our earlier
examination of learndirect can be found in Extending access to
learning through technology: Ufi and the learndirect service,
report by the Comptroller and Auditor General, HC 460 Session
2005-06, November 2005.