UK skills reform must make system fit for purpose

As all employers know, restructuring a large organisation is a time-consuming and stressful business. It inevitably creates uncertainty, and unexpected problems arise.

For that reason, many businesses will have been less than overjoyed to hear of another proposed change to the structure of skills funding bodies – a system already in need of stability and simplification.

Such changes have been happening with particular frequency in this area of government. The Learning and Skills Council (LSC) is being abolished next year after less than 10 years in existence, to be replaced by three new organisations. Meanwhile the Department for Innovation, Universities and Skills itself lasted less than two years before being merged with the business department to create the Department for Business Innovation and Skills (BIS).

Now it seems the Skills Funding Agency (SFA), one of the LSC’s successor bodies, is being reformed before it has even been launched. It was reported recently that further changes are in the pipeline as consideration is being given to devolving responsibility for drawing up skills strategies to Regional Development Agencies. These would then be implemented by the new skills agency, whereas previously it had been understood that sector skills councils would take the lead on such strategies, with the SFA acting as a light-touch funding body.

While this latest intervention was unexpected, the debate over whether skills policy and funding should be set on a regional or sector-specific basis is certainly one worth having. There are arguments on both sides, but as a manufacturing organisation it has always been our view that it makes more sense to look at specific sectors of industry, rather than regional geography.

There may be some types of industry that are defined principally by their region, but most manufacturing companies will be characterised much more strongly by the sector in which they operate. Aerospace production has its own distinct problems – for example, whether companies are based in Belfast or Cambridge – and shortages of key skills will tend to affect an industrial sector as a whole. To put it another way, the ‘what’ is more important than the ‘where’.

The more fundamental question, however, is what having another set of reforms is seeking to achieve. Are we still on the road to a more demand-led system of funding for skills, as mapped out in the Leitch Review? Or is thinking now moving more towards regional determination of skills needs and planning of training provision?

We hope that the answers to such questions will be informed by responses to the latest consultation by the UK Commission for Employment and Skills. The commission made simplification of the skills system an early priority for its work, and produced a report last year on the issue which made a lot of sensible points. It has just finished a consultation on the next steps.

The backdrop to all of this is the parlous state of public finances. We can’t assume that skills funding will be maintained at levels seen in recent years. Getting any further reforms right could direct more of the money to training rather than supporting a complex bureaucracy.

This latest intervention from BIS looks set to spark renewed debate on these issues, and we can expect some interesting responses from sector skills councils, which are likely to be the biggest losers from the proposed reorganisation.

Agreement on the right skills infrastructure to meet the UK’s growing demand for higher-level skills has been a long time coming. By all means let’s have that debate – but let’s make sure that whatever the outcome, the system stands at least some chance of surviving an election and being fit for purpose for more than a couple of years.

Lee Hopley, head of skills policy, EEF

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