Government ‘wastes’ £41.8m on launch of new skills agency

The government has “wasted” at least £41.8m on setting up brand new skills agencies that are staffed with the same people seemingly doing the same jobs, angry HR chiefs have warned.

In April, the government will replace the Learning and Skills Council (LSC) with the new Skills Funding Agency (SFA) and the Young People’s Learning Agency, in a bid to simplify the skills system and become more responsive to employers’ needs.

The interim chief executive of the SFA revealed last week nearly all of the original 3,200 LSC staff had been transferred across to fill posts in the new agencies, with only three employees yet to be placed.

But employer bodies and HR chiefs questioned how the new agencies could offer real change if they were staffed by the same people.

New skills agencies: set-up costs

  • £3m to standardise transfer terms to local authorities
  • £2m-3m for pensions
  • £36.8m for premises.

Source: BIS

Helen Giles, HR director at homelessness charity Broadway, told Personnel Today: “This is simply about recreating the same useless quango that will be totally out of touch with employers’ real needs. A total waste of public funding at a time when we need to be cutting back public expenditure.”

Mandy Ferries, head of personnel at pub chain Wetherspoon’s, said: “I’m not sure if the LSC as a whole understands the frustrations of employers, and if the same people are still in situ then this issue will remain.

“If things continue to constantly change and bureaucracy levels remain as they are, then employers will simply disengage from the national skills provision.”

Personnel Today revealed in 2008 the LSC would be closed down to create two new bodies, in response to the Leitch Review of Skills. The SFA’s £4bn budget will house the new National Apprenticeship Service and is aimed at making the skills system more demand-led.

Tom Richmond, skills policy adviser at the Chartered Institute of Personnel and Development, said: “If you just have the same people on a quango carrousel going round and round and you are not getting new ideas, thinking and strategy injected into the system, we are not likely to see the huge changes needed.”

Manufacturers’ body the EEF has written to skills minister Kevin Brennan, warning that the decision to recruit the new SFA chief executive and eight-strong board entirely from former LSC directors would not enable the new agency to be any different from the LSC.

Nigel Fletcher, skills policy adviser, said: “Our concern is [the SFA] is supposed to be a new funding agency with a different ethos to the LSC, and it does raise questions about how the change of culture will take place if it is the same people doing the same jobs.”

A spokesman for the Department for Business insisted the new skills agencies would be fit for purpose. He said: “The SFA will be a completely different type of organisation to the LSC, with a different structure. It is important to ensure we do not lose the strong knowledge and experience that has already been built up by existing staff.”

He added that the changes were expected to make net annual savings of £17m from rationalising premises, IT and shared services, and better contracting and data collection processes.

Geoff Russell, chief executive of the LSC and chief executive-designate of the SFA, said: “The staff transferred under TUPE agreements. They have undergone a matching process to ensure that they are starting roles in the new organisations that make best use of their experience of operating the skills system in the LSC, but in the context of their new roles.”

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