Building a demand led skills system in the UK

1. Building a demand led skills system in the UK Sino-UK TVET Dialogue Beijing, 13-14 April 2010 Moira McKerracher Assistant Director UK Commission for Employment and Skills www.ukces.org.uk

2. What do we mean by “demand-led” • A skills system that is responsive to the needs of employers and individuals – these are the customers • Employers need training programmes/qualifications that are: • Relevant to industry needs; include both technical and “softer skills”; of a quality that can be trusted, flexible in design and delivery • Individuals need training programmes/qualifications that are: • Flexible; allow progression & transfer; have currency in the labour market – respected by employers and education institutions, are portable.

3. Developments in the UK skills system • The quality and performance of the system is increasingly driven by customers rather than the planners or the supply side (schools, colleges, universities and training providers) • The Governments’s job is to provide high quality information about the employment and skills system for all stakeholders and • incentives • to encourage employers to be ambitious as businesses to move up the value chain, to have a real voice in the system and to invest in training for their workforce • to ensure individuals are well informed about courses and jobs, empowered to make the right choices and have the opportunity to give feedback on their experience.

4. UK Commission for Employment and Skills:A Strategic Advisory Body • Purpose: “to strengthen the employer voice, and deliver greater leadership and influence to achieve the best from the UK’s employment and skills systems” • Principal Roles: • “develop an independent view of how employment and skills services can be improved to achieve increased employment retention and progression, skills and productivity; • “assess progress towards making the UK a world-class leader in employment and skills by 2020” • “provide advice to inform strategic policy development, analysis and exchange of good practice to drive and shape the skills and employment system to meet the needs of employers and individuals; • “fund and manage the performance of the Sector Skills Councils and advise Ministers on their re-licensing.” • Reporting to: • Prime Minister, Chancellor, Secretaries of State for Business, Schools, Skills, and Employment, and First Ministers of Northern Ireland, Scotland and Wales

5. Employers have multiple roles in UK VET UK Commission for Employment and Skills Policy and system design Labour Market Information Sector Skills Councils Occupational standards and qualification accreditation Sector Skills Councils Employer investment in workforce development Sector Skills Councils Regional/sub-regional economic development Regional/sub-regional Employment & Skills Boards Delivery of training for local labour markets Governing Boards of Colleges and Universities

6. 1965-198129 levy-based Industrial Training Boards – covering only 50% of workforce, and unpopular in most sectors before abolition in 1981 1983-1993170+ voluntary Industry Training Organisations – weak, operating on ‘shoe-string’, with poor support from employers, despite attempts to strengthen 1991-200270+ voluntary National Training Organisations, with national trade association, formed from smaller ITOs – improved but still too small for effectiveness 2002-Current network of 25 Sector Skills Councils – stronger and funded from UK government, covering 90% of occupations across principal UK sectors Sector-based approaches in the UK:An evolutionary development process

7. Sector Skills Councils in outline • Independent, UK-wide, industry-led bodies, with Boards drawn from employers (& unions) in the sector with goals to • improve productivity, business and public service performance • improve learning supply including apprenticeships, higher education and National Occupational Standards • to reduce skills gaps and shortages • increase opportunities to boost the skills and contribution of everyone in the sector's workforce • 25 Councils, covering private, public and voluntary employment, and 90% of UK workforce occupations • Annual core & project budgets from Government totalling over £80 million per annum, with additional £s from companies

8. Manufacturing SEMTA Cogent Improve Skillfast Proskills Creative and Media Creative and Cultural Skills Skillset Energy Energy and Utility Skills Transport GO Skills Skills for Logistics Business services e-skills UK Financial Services Public sector Government Skills Skills for Justice Skills for Health Skills for Care and Development Lifelong Learning UK Hospitality, Leisure, Retail People 1st Skillsmart Retail SkillsActive IMI / Retail Automotive Construction Construction Skills Asset Skills Summit Skills Rural and Environment LANTRA The 25 SSCs cover 90%+ of UK workforce

9. Funding for Sector Skills Councils • All SSCs have to deliver a core remit for which they receive core public funding from the UKCES approximately £1.5 million per annum • The overall public and industry investment in SSCs varies widely. The average turnover of an SSC is between £4-£5 million per annum. • Some SSCs receive direct cash contributions from employers. But the vast majority is dependent on public funding albeit with substantial ‘in-kind’ contributions from industry.

10. Key Roles of UK Sector Skills Councils Three part remit commissioned by Government: • Raising employer engagement, demand and investment in skills • Ensuring authoritative labour market information for their sectors • Developing National Occupational Standards and ensuring qualifications meet employer needs

11. 1. Raising employer engagement, demand and investment in skills Evidence of success for relicensing would demonstrate: • Employers have a full opportunity to direct the work of the SSC through its governance arrangements, with trade unions • Strategic and business plans in place, financial management is sound, and customer/stakeholder satisfaction is high • The SSC has the resources, capability and partnerships necessary to deliver its remit • A ‘compelling offer’ of sector specific skills solutions, addressing the priority skills needs of the sector • The SSC has strong delivery partnerships in place to ensure that it can show strong impact on its sector

12. 2. Ensuring authoritative labour market information for their sectors Evidence of success for relicensing would demonstrate: • SSCs adhere to the UK Commission’s ‘common LMI framework’ • SSCs use robust national datasets & high quality research evidence to produce consistent and complete LMI • The LMI data covers the whole SSC sector, and can be disaggregated by UK nations and regions, and by sub-sector. • The SSC distil the current and future skills priorities in their sectors, in order to raise employer ambition • SSCs produce comprehensive skill needs assessments (Sector Skills Agreements – SSAs), endorsed by their employers

13. 3. Developing National Occupational Standards (NOS) & ensuring qualifications meet employer needs Evidence of success for relicensing would demonstrate: • Standards and qualifications are informed by current and future skills needs articulated by employers, and high quality LMI • An SSC’s NOS are up to date, reflect best practice, of high quality, and available for all occupations according to demand • The SSC has a Sector Qualification Strategy that ensures the right volume, quality and type of qualifications are available • The SSC ensures the currency and quality of Apprenticeship frameworks for all relevant occupations • SSCs collaborate on ‘generic’ NOS, such as those for leadership & management, customer service, administration etc.

14. Sector approaches to employer engagement - lessons from the UK experience • Comparatively, SSCs in the UK enjoy more public funding than similar models elsewhere in the world. • Countries wishing to establish similar models need to consider the governance, leadership, funding and operation of sector based organisations. • In the UK, the vast majority of SSCs are formally independent of the state, i.e. they are employer-led. • But they are funded and regulated by a state-constituted-body (the UK Commission for Employment and Skills) which is directly accountable to Ministers.

15. Employer engagement – some observations • No country has invented the perfect system to engage industry in raising its performance on workforce skills and training. • SSCs in the UK are the result of over 50 years of experimentation with sector-based approaches to skills and workforce development • SSCs offer considerable potential to find solutions but they are not the whole answer. • Every country needs a responsive suite of policies, including fiscal and infrastructure projects to boost labour productivity and long-term economic growth.

16. Employer engagement – some practical approaches • Sell the benefits of involvement in the development of standards and qualifications that meet their needs and can be used by them to improve their businesses and profitability • Ask for input only when its really needed – eg at the beginning of the development process to identify needs, and at the end to check that the standards and qualifications are fit for purpose • Go to them at their places of business rather than asking them to give up more of their time to attend meetings away from the workplace • Use electronic media eg websites and on-line consultations • Seek their involvement in standing sector groups with an agreed timeline and inputs, rather than constant ad-hoc requests for involvement.

17. UK demand-led standards and qualifications cycle