governance good practice guide

the Leitch review of skills

introduction

Soon after Sir Andrew Foster was commissioned by the Department for Education and Skills (DfES) to review the further education (FE) sector (late 2004), Lord Sandy Leitch, chairman of the National Employment Panel (NEP), was asked to examine the nature of the skills needed by UK business and the economy - in terms of increased productivity, growth, benefit to society and human capital.

The Leitch Report was commissioned by the government and is entitled Prosperity for All in the Global Economy - World Class Skills. It complements the Foster Report, White Paper and the Further Education (FE) Bill by highlighting the areas of focus for long-term skills strategy across the UK.

It is seen as vital that the government identifies a positive strategy for an improved skills profile because, while the UK has high employment, our productivity lags behind other European Union (EU) partners and the global might of China and India.

While the UK may not be in a position to compete with others' large scale capital investment or natural resources, there remains a need to invest in our people. We need to attract learners into skills and employability from the age of 14 and retain them, building clear progression into the education and training system.

Government can not fund all the change needed. Employers must make a bigger contribution. The Foster and Leitch reviews support the National Employer Training Programme, providing access to free training for low-skilled workers.

Click here for further information on for the Foster Report.

the Leitch report on skills

The final report, with recommendations to Government, was published on 6 December 2006 - a year after the interim report.

It states that inadequate skills will lead to a decrease in competitiveness and economic growth and presents a demand-led, targeted approach to increasing skills and employment - focused on outcomes, measuring attainment (rather than participation), covering all adults and based on the development of economically valuable skills.

The report sets out how the UK should raise its ambitions on skills, by committing to the following four ambitious targets by 2020:

• 95% of adults to achieve the basis skills of functional literacy and numeracy
• 90%+ of adults to be qualified to at least Level two, with a commitment to go further and achieve 95% as soon as possible
• shifting the balance of intermediate skills from Level two to Level three, and boosting the number of apprentices to 500,000 a year
• 40%+ of adults to be qualified to Level four and above, with a commitment to progression.

The report suggests that employers, individuals and government should spend more on skills - with government spending increasingly focused on areas of market failure.

It makes a number of recommendations to help the UK to meet its four main objectives, including:

• strengthening the employers' voice
• creating a new UK-wide Commission for Employment and Skills (CES)
• boosting the role of Sector Skills Councils (SSCs)
• increasing employer engagement and investment in skills.

The CES would bring together the work of the Sector Skills Development Agency (SSDA), the NEP and the Skills Alliance. It would report on progress and be responsible for SSCs and the network of Employment and Skills Boards (ESBs). It would report to the prime minister or chancellor and have strong interest from ministers. Chaired by an eminent business leader, it would have representation from the Trades Union Congress (TUC) and Confederation of Business Industry (CBI).

The report recommends the rationalisation of the skills system, placing employers more at its heart and reducing supply-side planning of skills provision.

A network of employer-led ESBs, reporting to the CES is recommended. Their role would be to engage local employers, articulate local labour market needs, scrutinise local services and recommend improvements in integrating labour market and training support.

Train to Gain (T2G) would be empowered to work with a full range of employers, not just the hard to reach, providing a simplified, economically valuable skills system, driven by demand rather than by central planning. Providers would receive funding only when they attract customers and deliver what they want (ie colleges and other providers would be funded only when individuals enrol and successfully complete courses/programmes).

This would transform the incentives of providers, requiring them to respond to specified employer and individual needs rather than simply recruiting students to meet supply-side targets.

The report highlights the need to change people's attitudes towards learning and skills through a high profile, sustained awareness programme. This should include better careers guidance, learning accounts, clearer national entitlements to learner support, developing a new adult careers service and offering a new Skills Development Fund for Level two and basic skills.

In order to increase sustainable employment and progression, with better integration of jobs and skills, Leitch recommends a new integrated employment and skills service based upon existing structures.

Costs would be shared between government, the employer and the individual - allowing clear principles of shared responsibility.

The report recommends significant streamlining in the Learning and Skills Council (LSC) and in its work with its partners. The LSC would continue to be responsible for T2G, learning accounts and apprenticeships.

Sector Skills Councils (SSCs) would be reformed, re-licensed and empowered to focus on:

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

The report recommends that the SSCs should reform the qualifications structure by streamlining the current extensive list of approved qualifications by 2008.

In order to increase the adult population with Level four qualifications, the report proposes changing the targets away from 18-30 to the whole working age population - with a proportion of higher education (HE) funding being channelled through a similar demand-led T2G brokerage model. Increasing private investment in co-financing university chairs by employers is also recommended.

Leadership and management would become the responsibility of the SSCs and skills brokers, in order to increase demand.

conclusion

Consultation on the Leitch report is taking place between December 2006 and spring 2007, when Government will give its formal response.

The Leitch Report provides a "map" of skills goals and the changes needed to accomplish them between 2007 and 2020. It is seen by government as essential to the UK's economic and social prosperity and will have a momentous impact on priorities for the UK government spending review, FE funding and the FE system.

Click here to view the Leitch report online at the HM Treasury website.