The Confederation of British Industry (CBI) has expressed concern over the Government's failure to reform funding to make post-16 education more flexible and responsive to local needs when it launched its national skills strategy in July.

The strategy, which was launched amid fanfare and summer heat on 9 July at the London Eye came with no immediate promise of extra funds to raise the level of adult skills in England.

The central message of 21st Century Skills: Realising Our Potential was for the system of post-16 education in England to be truly 'demand-led' - planned strategically to meet the needs of UK plc. But employers, particularly in engineering, had been hoping for additional money to expand the programme of Modern Apprenticeships.

While broadly supporting the strategy, the CBI was disappointed that the allocation of budgets for post-16 education remained highly centralised.

CBI senior policy adviser Maniza Ntekim said 80 per cent of individual Learning and Skills Councils' budgets goes straight to providers.

"Locally Learning and Skills Councils only have 1-2 per cent discretion. To really make a difference that needed to be freed up," she said.

"One of the areas we thought the Government could have gone further with was funding reforms," continues Ntekim. "Funding is key to changing the system, making it more responsive and more demand-led."

Andrew McCoshan, director of international learning and skills consultancy Ecotec Research and Consulting said that funding still goes through users: "If the young people going through the college door want to be hairdressers, then the college provides hairdressing courses, even if what the local economy really needs is engineers. That means the funding has not been in tune with what the local economy needs.

"The skills strategy attempts to make the system more employer driven," he said. "It's always been hard to get mainstream funding more employer-driven, so if [the Government] can crack that, it would be great."

By Margaret Kubicek