Let’s pull together to plug skills gap

Skills development should be a shared responsibility between the state,
employer and employee, says Education and Employment Secretary David Blunkett

In its latest report, the Skills Task Force highlighted a serious skills
gap. It found that more than 30 per cent of adults do not have five good GCSEs
or the vocational equivalent.

But Britain’s skills deficit is not new. A century ago a Parliamentary committee
report noted the low numbers of British technicians entering the workforce
compared to the US and Germany. Twenty years ago we became aware of our skills
shortage the engineering field relative to Japan, Korea, and other rapidly
growing economies.

More recently the Moser report reminded us that we still lag towards the
bottom of the rankings for basic skills, and over 20 per cent of our adult
population have very low literacy and numeracy ability.

Schools target

In the long term we will tackle many of the underlying problems through
improved school standards.

As a result of this Government’s literacy and numeracy initiatives, children
are already achieving substantially better results in primary schools and these
pupils are now feeding through to our secondary schools. Three-quarters of
young people now remain in full-time education or training until at least the
age of 17. Participation in higher education has expanded rapidly, and the
Government intends to extend this still further.

Those who go to university benefit from an expensive facility largely funded
by the state: twice the amount of public funding as someone who left school at
16. It is an excellent investment because people with a degree will, on
average, earn substantially more than those with lower qualifications in their

It is right, therefore, that students should contribute a proportion of the
full cost. At the same time, we have given students access to loans to meet the
costs of maintenance and fees, repayable only when they can afford it. These
arrangements achieve a fair balance between the needs of individuals and the
benefits which they and their employers will later accrue.

Industry gaps

But there are other skills which the economy and society need just as badly.
Recent surveys have highlighted craft and technician-level gaps in particular
industries such as information technology, engineering, catering and business

To take one example, in the gas industry there is currently a serious
shortage of qualified fitters. Last year only 128 young people joined the
register of qualified gas installers (Corgi) register, far below replacement
needs for this workforce of nearly 100,000. The Government is committed to
working with industry to bridge such skills gaps.

If there is a need, why are these sectors and industries not yet investing
sufficiently in the training to deliver these skills? And if the skills are in
demand, why are individuals not taking up the opportunities of training and
career advancement?

Investment dilemma

There are many reasons why markets work imperfectly, and take too long to
correct themselves. One of the main ones is the fear by employers that if they
train staff, other employers which save money by not training will poach them
away by offering slightly higher wages. For example, an employer in the gas
industry reports having invested heavily in quality training two years ago,
only to lose 80 per cent of the trainees the following year.

So, in responding to the recommendations of the Skills Task Force, I am keen
to work with industry to explore innovative portable loan schemes for training.
Under one model of "transferable loans", employers would only repay
for staff who stayed with them. If the employee moved within the industry, the
new employer would pick up the loan repayments – and the industry as a whole
would cover any risk of default. This would enable each employer to gain the
full benefit of investment in training, paying for it over an extended period.
Industry-backed loan schemes would mean substantially lower interest repayments
than conventional loans offered by banks.

Training initiatives

The Government wants to work with employers, through their National Training
Organisations, to pilot such industry-backed loans. Several NTOs are now
consulting with industry representatives on the precise application of the
concept in their own particular industry. The sectors where I hope this could
be developed include engineering, automotive manufacture, aerospace, catering,
road distribution, textiles, film and broadcasting, construction and IT.

The state could contribute on behalf of targeted individuals, for example,
through the training contribution of £750 already available within the New Deal
for young people. Employers will need to act co-operatively to make schemes

Industry-led loan schemes of this kind would fit well alongside the new
Individual Learning Accounts which come on stream this autumn. Where industry
loans do not cover the full cost of training, an individual may be able to
benefit by using the discounts available through their learning account.
Learning accounts will be a key mechanism in supporting learning by the
individual. These joint financial commitments will help develop a sense of
shared responsibility between employers and employees for training and skills

Future vision

My vision is an even broader one: that all adults will, in due course, have
access to loans to meet the costs of learning, supplementing the contributions
the state already makes via its funding of schools, colleges and other
training. With this in mind, we will revamp the existing career development
loans so that more individuals can access funding at the time of need, loans
might be taken up through a range of intermediaries – employers, training
organisations, local credit unions or banks. By this method the individual, the
employer and the state would all contribute directly or indirectly to the costs
of learning.

Making lifelong learning work is above all about enabling individuals to
take responsibility for their learning, sharing the costs and the commitments
with their employers and with the state.

We aim to ensure a fair deal for all learners, whether they choose the
college or university route, or train in the workplace, or study by distance
learning. The prize is the expansion of skills and knowledge which this country
so desperately needs in this new century.

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