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2020 vision for skills

Priorities for the Leitch Review of Skills

• Introduction
• Policy context
• Executive summary
• The Leitch analysis
• Workforce training - the latest picture
• Achieving a skills revolution - five key demands
• Conclusion
• Appendix

Introduction

In spite of improvements in recent years, there is a broad consensus that major deficiencies in British skills are hampering the national drive to improve productivity and competitiveness and to address key social justice issues such as poverty and social mobility. There is also general agreement that skills will become even more important in the future as global, demographic and technological change places an even greater premium on a highly skilled workforce.

The TUC welcomed the announcement in the 2004 Pre-Budget Report that Lord Leitch would undertake an independent review on skills in order to address this key challenge. The remit given to the Leitch Review was t o identify the UK's optimal skills mix in 2020 in order to maximise economic growth, productivity and social justice and also to consider the policy implications of achieving the level of change required. The TUC submitted a detailed response to the initial consultation undertaken by the Leitch Review in 2005.

This current TUC report sets out five key priorities that we believe should be at the heart of the final recommendations of the Leitch Review, which are due by the end of this year. The report also analyses the key challenges facing the UK on the skills front and highlights that, in spite of good progress in recent years, millions of employees (especially those with the greatest need) are not receiving any training in the workplace. And the key reason for this that too many employers are not offering training to their staff even though the Government has put in place a range of significant incentives to help them do so.

Government initiatives, such as the Train to Gain programme, are now offering free training for all employees in England without the qualifications or skills expected of a school leaver. And the new network of Sector Skills Council are beginning to give employers and trade unions the opportunity to work together to develop sectoral skills strategies, albeit with limited policy levers and too much of a focus on an employer-led approach.

However, we still continue to have a situation where over a third of employers admit to not providing any training at all and two fifths of the workforce - over 8 million employees - say they have not received any training over the past year. Analysing current skills levels in the UK, the Leitch Review concluded in its interim report that 'the scale of the challenge [on skills] is daunting' and that the 'UK must raise its game' to a huge extent

The Leitch Review offers a golden opportunity to develop a new policy framework that will build on the Government's skills strategy and enshrine a new national consensus on meeting the skills challenge facing the nation. In particular, we need to achieve agreement on the need for a post-voluntary skills framework that will lead to an eradication of low skills in the workforce by 2020 or sooner.

And as this report shows, we will not achieve this until we come to accept that the existing voluntary skills framework is no longer fit for purpose. The prospect of a high skills economy and society by 2020 depends on empowering all workers to progress to their full potential and this means that we cannot continue to have a situation where nearly a third of employees do not have the educational attainment expected of a school leaver.

But what should a new post-voluntary skills framework look like? This report sets out five key demands that, if met, would go some way to establishing a new approach on skills in the same way as the Government is currently developing a new post-voluntary approach on pensions. As well as establishing a new vision for skills, it is crucial that the final report of the Leitch Review sets out a clear strategy and practical steps to achieve a step-change in skills and the TUC's 5-point action plan provides the foundations for such an approach.

Policy context

The recommendations on skills in this report also need to be seen in the context of a number of key policy themes and in particular that education and skills are an increasingly important contribution to achieving further improvements in economic and social priorities . The globalisation agenda is at the heart of this debate and the TUC's recent submission to the Government's Comprehensive Spending Review 2007 (Globalisation and the Comprehensive Spending Review, August 2006) prioritised improving skills levels to raise productivity. However, the submission also emphasised that any skills strategy needs to be linked to an active industrial strategy that addresses the opportunities of globalisation while protecting potential casualties. On this basis the submission included a number of proposals related directly and indirectly to skills policy, including a new fund to provide training and job search support for employees who lose those their jobs due to major changes in world trade.

The skills agenda is also inextricably linked to the Government's aim of tackling poverty and improving social cohesion and social justice by getting more economically inactive people into employment. While good progress is being made towards the ultimate goal of achieving an 80 per cent employment rate, there are huge challenges ahead on this particular policy front. Not least the fact that many older economically inactive individuals tend to be Incapacity Benefit claimants who require intensive support, including the opportunity to acquire and develop the necessary skills needed for them to achieve sustainable employment. The TUC therefore welcomed the fact that in Budget 2006 the Chancellor highlighted that the Leitch Review is considering 'whether and how to bring together at a local level employment and training services for not just the unemployed, but all seeking new skills'.

The urgent need for a new approach on skills for the economically inactive, especially those on Incapacity Benefit, was highlighted in a recent TUC report (Ready, Willing and Able, August 2006). This showed that over one million 50-65 year olds who want to work can't get a job because employers won't recruit older workers or retain the ones they already employ by investing in training or making minor adjustments for disabilities. The interim report by the Leitch Review has highlighted that 60 per cent of the growth in the labour market by 2020 will be attributed to employees aged 50-65 due to demographic trends. But the review's final recommendations need to acknowledge that as well as integrating welfare to work and skills provision, there needs to be a range of new measures to ensure that employers are working with unions to eliminate age discrimination and retain older workers.

At the heart of the TUC's 5-point plan for the Leitch Review is a new focus on tackling the high levels of skills discrimination encountered by a range of different groups in the labour market. In an increasingly diverse workforce we are wasting human talent with half of all women part-time workers employed below their potential and many migrant workers vulnerable to exploitation and unable to have their qualifications recognised. Stronger employment rights, including a statutory right to paid time off to train and including training in collective bargaining, could benefit many employees who face such prejudice and discrimination. It is therefore crucial that the Leitch Review acknowledges that reform of employment rights needs to be a priority in its final recommendations, especially as the findings of the review's interim report show that there needs to be a step-change in empowering the existing workforce and inactive adults to progress to higher level skills.

The Government has quite rightly acknowledged that improving skills is also an integral aspect of its aim to increase the proportion of high performance workplaces in the economy. We know that the presence of a recognised trade union is positively associated with policies that contribute to high performance workplaces as highlighted in research undertaken for the ESRC's project on the Future of Work (Michael White et al, Managing to Change? British Workplaces and the Future of Work, Palgrave Macmillan, 2004).

And we also know that employees get more training when the issue is negotiated with employers by unions rather than simply consulted on. Analysis of the 1998 Workplace Employment Relations Survey shows that in workplaces where training was negotiated, almost 40 per cent delivered an average of five or more training days a year per employee compared to just over 20 per cent of workplaces where training was only subject to consultation (quoted in The Learning Curve, TUC, 2006). These research studies demonstrate the positive links between high performance workplaces, union recognition and the negotiation of training via the collective bargaining system and the Leitch Review should be advocating policy reforms that would embed this model in many more workplaces than at present.

Finally, one of the recurrent barriers faced by policy makers is that the status of vocational* education and training continues to be one of 'second best' in the UK and there needs to be a significant change of culture and attitudes if we are going to achieve a skills revolution in the coming years. The TUC previously welcomed the 50 per cent target for participation in higher education and there is a strong case for Government considering matching this with an equivalent target for vocational training in order to build towards parity of esteem between the academic and vocational routes. And to realise that ambition, measurable progress needs to be made on a number of key issues, including closing the funding gap between FE* and other parts of the education sector, upskilling the FE workforce and significantly expanding quality apprenticeship opportunities.

Executive summary

Key challenges identified by the Leitch Review?

The interim report of the Leitch Review ( Skills in the UK: the long term challenge, Interim Report of the Leitch Review of Skills, December 2005) set out the key 'skills challenges' facing the nation, including the following findings:

• the UK has a serious legacy of low skills, is deficient at intermediate and technical levels and also likely to fall behind at degree level and above
• those with the lowest skill levels are least likely to receive work-based training
• skills gap accounts for a fifth of the productivity gap with Germany and an eighth of the gap with France and these countries and other international competitors have ambitious strategies in place for further improvements on skills
• the Leitch review interim report estimates that by 2020 nearly 20 million additional people will need higher skill levels than at present, ranging from basic skills* to degree level (see Appendix for details)
• we cannot depend on young people to solve our skills deficit in the immediate future as 'over 70 per cent of our 2020 workforce has already completed their compulsory education'
• in effect, the above analysis demands that a major plank of government reforms need to be focused on improving the skills of the existing workforce

Workforce training - the latest picture

The TUC's analysis of the latest government data on workforce training highlights that:

• over one third of employers (35 per cent) provide no training at all to their staff
• just under two fifths (39 per cent) of employees - nearly 8.5 million people - did not receive any training over the past year
• much of the training provided by employers is informal and does not lead to nationally recognised qualifications - in total, only 11.5 per cent of employees were training towards a nationally recognised qualification and only 5.5 per cent were receiving training leading towards an NVQ*.

Five key demands

This report sets out policy reforms across five areas that the TUC believes would create a viable post-voluntary skills framework capable of achieving the necessary step-change set out in the Leitch Review interim report. The TUC's five key demands are:

• 1. Employers and Government must invest more in adult skills

- the 2007 Comprehensive Spending Review should include more state funding for boosting workplace skills for adults, including union learning initiatives. Government should also act as an employer of best practice in relation to its own workforce and continue to use public procurement to embed training obligations in contractual arrangements

- employers must invest more in staff training that leads to formal qualifications and sustainable skills, and a range of policy measures need to be introduced to achieve this end, especially at the sector level

• 2. Unions must be real social partners in the Government's skills strategies

- there is a need to develop genuine social partnership arrangements on skills policy and delivery at national, regional and sectoral levels in order to drive forward a genuine demand-led approach that reflects the needs of both employers and individual employees

- the sector approach in particular requires a more robust social partnership approach as it has the potential to deliver some of the key elements of a post-voluntary skills framework. Sector Skills Agreements need to include a new regulatory dimension to drive up employer investment in training and to empower employees to access quality training in the workplace

• 3. New legal rights to paid time off to train are essential

- adult employees without a Level 2 qualification should have a statutory right to request paid time off to train from their employer to achieve this educational standard in order to tackle those employers that refuse to allow their staff to access state-subsidised paid time off arrangements (i.e. via the Train to Gain programme)

• 4. Positive action is needed at all levels to tackle skills discrimination

- the Government should develop concrete proposals to tackle skills discrimination for a range of specific groups, including black and minority ethnic workers, disabled employees and older workers, along with further development of ongoing initiatives aimed at women. And Sector Skills Agreements should be strengthened so that Sector Skills Councils* are obliged to come up with initiatives for improving training opportunities for all these groups of employees with clearly prescribed targets and outcomes

• 5. Unions and workers must have an equal voice in workplace skills bargaining

- employers and unions should be incentivised to negotiate on training by including it as a collective bargaining issue in the statutory union recognition procedure

- as agreed in the Warwick Accord, the Government should examine options to enable trade unions to negotiate more collective arrangements such as Learning Agreements and Learning Committees

• - the new Collective Learning Funds proposed by the TUC, which are to be trialled over the coming year, offer a huge potential for persuading more employers to work with unions to develop a genuine culture of lifelong learning in unionised workplaces

The Leitch analysis

In December 2005 the Leitch Review published its interim report on skills and concluded that the scale of the challenge 'is daunting' and requires a massive step-change if the UK is going to achieve a world-class skills base by 2020.

Some of the key challenges highlighted by the interim report are as follows:

• compared to our international competitors, the UK has a serious legacy of low skills, is deficient at intermediate and technical levels (i.e. NVQ Level 3 or equivalent) and also likely to fall behind at degree level and above
• it is already proving difficult to achieve the Government's existing skills targets, never mind the scale of what is envisaged in the interim report
• our skills gap accounts for a fifth of the productivity gap with Germany and an eighth of the gap with France and these countries have ambitious strategies in place to further improve their skills base
• the interim report estimates that by 2020 nearly 20 million additional people will need higher skill levels than at present, ranging from basic skills to degree level (see Appendix for details)
• the report highlights that we cannot depend on young people to solve our skills deficit in the immediate future as 'over 70 per cent of our 2020 workforce has already completed their compulsory education' and this will require a major strategy on improving the skills of the existing workforce
• those with the lowest skill levels are least likely to receive any work-based training (e.g. the Labour Force Survey shows us that when asked, over two fifths of graduate employees say they have received training in the past 3 months compared to just over a fifth of employees without a Level 2 qualification and just over a tenth of employees without any qualification).
• the interim report concludes that there is a clear need to achieve an 'appropriate balance of responsibility between Government, employers and individuals for the action required to meet this level of change'

In effect this analysis requires the Leitch Review to come up with radical policy proposals significantly to upskill the existing workforce over the next 15 years and to achieve a national consensus on how to bring this about. And in particular, to achieve a national consensus on a strategy to eradicate low skills by 2020 or sooner.

The detrimental impact of the UK's low-skills crisis on both productivity and wider social issues has been documented at length. However, it is interesting to note that the OECD's Chief Economist, Jean-Philippe Cotis, recently highlighted that productivity in the UK is especially adversely affected by the poor state of workforce skills. Referring to the UK's failure to achieve significant productivity gains in recent years, he stressed that 'perhaps the major weakness in the UK is the very high share of the workforce having little or no formal qualifications beyond compulsory schooling: 30% of 25-34-year olds are low-skilled, a considerably larger share than in most other OECD countries ... and many adults lack the most basic literacy skills' (Annual Conference, Government Economic Service, 13-14 July 2006).

The need to focus on the adult workforce does not mean in any way that the Government should lessen its efforts to develop high quality vocational options for young people, for example, by ensuring that high quality Apprenticeships are available in all sectors of the economy and that the academic/vocational divide is tackled. As well as helping to meet the ambitions for 2020, this will be an even more important issue over the longer term as the flow of young people into the labour market gradually displaces the existing workforce.

But the analysis in the interim report of the Leitch Review is quite clear that much more needs to be done about the skill levels of the existing adult workforce, especially the low-skilled, if we are going to have any chance of building a world-class skills base by 2020. The TUC has supported the general thrust of this analysis, but contends that it will be impossible to meet the challenges set out unless the final Leitch Review report proposes a genuine post-voluntary framework for skills policy.

It is also important to note that this report focuses on developing a skills framework that will enable more employees to access quality training in the workplace, but we know that upskilling the workforce is just one side of the coin. Effective skills utilisation is the other side of the coin and varied research has highlighted that there is a 'low skills equilibrium' in the UK, with too many employees trapped in low-spec jobs with limited opportunities for development in their particular workplace even if they do receive training. Developing policies to tackle the 'low skills equilibrium', including measures to improve management and leadership skills, is a crucial factor and the TUC will be publishing a report on this aspect of the skills agenda in the near future.

Workforce training - the latest picture

We are now in a much better position to analyse recent workforce training trends as a result of a relatively new annual skills survey commisioned by the LSC* since 2003 involving a sample of around 75,000 employers in England. The latest findings (National Employers Skills Survey 2005, LSC, June 2006) provide a fairly detailed quantitative picture of which employers are training (or not as the case may be) and the impact of this on the employee workforce in England. The following analysis of the latest survey highlights three areas: training provision by employers, training opportunities received by employees, and employer spend on training.

Training provision by employers

The latest National Employer Skills Survey (NESS) clearly demonstrates the scale of the challenge facing policy makers. As shown in Table 1, over one third (35 per cent) of employers in England say that they did not provide any training to their staff during the past year. In total this accounts for nearly half a million employers.

Table 1: Training provision by employers over past 12 months (England, 2005)
	ALL EMPLOYERS		EMPLOYERS THAT TRAIN
	Employers not training	Employers that train	Only induction or health & safety	Not just induction or health & safety
England	35% (486,600)	65% (903,600)	6% (54,200)	94% (849,400)
Eastern	35% (55,300)	65% (102,600)	6% (6,200)	94% (96,500)
East Midlands	34% (39,000)	66% (75,700)	7% (5,300)	93% (70,400)
London	38% (85,700)	62% (139,800)	5% (7,000)	95% (132,800)
North East	29% (15,600)	71% (38,200)	5% (1,900)	95% (36,200)
North West	36% (61,800)	64% (109,900)	6% (6,600)	94% (103,300)
South East	30% (72,600)	70% (169,300)	5% (8,500)	95% (160,900)
South West	35% (54,000)	65% (100,200)	6% (6,000)	94% (94,200)
West Midlands	40% (56,400)	60% (84,500	6% (5,100)	94% (79,500)
Yorkshire and the Humber	36% (46,700)	64% (83,000)	6% (5,000)	94% (78,000)

The table also highlights that there are some significant regional variations, with a higher incidence of employers in London (38 per cent) and the West Midlands (40 per cent) falling into this category. However, additional analysis in the survey shows that employers in London that did provide training were more likely to train a higher proportion of their staff than the equivalent employers in the West Midlands (e.g. in London 45 per cent of employers that offered training did so to at least 90 per cent of their staff compared to 42 per cent of the equivalent group of employers in the West Midlands).

At 71 per cent, employers in the North East were most likely to provide training to their staff, closely followed by the South East region where 70 per cent of employers provided training. However, this still means that significant numbers of employers in these two regions did not provide any training at all.

The NESS also provides data on those employers that only provide a minimal level of training largely because they need to meet legislative requirements under health and safety law and this information is also included in Table 1. Nationally, 6 per cent of employers that provide training fall into this category and there is little regional variation. The important point to note about this particular breakdown is that it is not the case that those employers offering more than just the basic minimum (i.e. 94 per cent nationally) are delivering high quality training opportunities to all their staff. In fact, as highlighted in the following section of this report, the NESS shows us that only a minority of employees receiving training are involved in learning in the workplace that leads to a nationally recognised qualification or an NVQ.

Training received by employees

As shown in Table 2 on the following page, almost two fifth of employees (39 per cent) in England did not receive any training over the past 12 months, accounting for nearly eight and a half million employees. Furthermore, the NESS concludes that the estimate of the proportion of employees receiving training - 61 per cent - 'is likely to be something of an overestimate' on account of methodological limitations with the survey (i.e. because of employees receiving training being double counted when they moved to another employer that also offered training).

Understandably, the regional variations reflect the analysis of employers in the previous section of this report. For example, 44 per cent of employees in the West Midlands did not receive any training over the latest 12-month period closely followed by the employee workforce in London (42 per cent). The North East stands out as the region where the highest proportion of employees received training (70 per cent) followed by the South East region (66 per cent).

The data also demonstrate that relatively few employees received training leading to a nationally recognised qualification or an NVQ over the past 12 months. In England as a whole, only 11.5 per cent of employees were training towards a nationally recognised qualification and only 5.5 per cent were receiving training leading towards an NVQ. Expressed as a proportion of all those employees in receipt of training, 19 per cent were in training leading to a nationally recognised qualification and 9 per cent were in training leading towards an NVQ.

The regional analysis shows that employees in the North East were most likely to be receiving training leading towards nationally recognised qualifications (16 per cent) or NVQs (9 per cent) than any other region. Employees in London were least likely to receive training leading towards nationally recognised qualifications (10 per cent) or NVQs (3 per cent). Interestingly, the analysis shows that employees were most likely to be engaged in training leading to formal qualifications in those regions with the highest union density (i.e. the three regions in the north of England).

This suggests that there could be a link between union density, bargaining on training, and the incidence of work-based training leading to qualifications. However, this conclusion cannot be confirmed without more detailed analysis that stripped out other relevant regional factors.

Table 2: Training received by employees over past 12 months (England, 2005)
England	Employees not receiving training	Employees receiving training	Employees receiving training leading towards a nationally recognised qualification	Employees receiving training leading towards an NVQ
England	39% (8,377,200)	61% (13,102,800)	11.5% (2,470,000)	5.5% (1,181,400)
Eastern	39% (865,800)	61% (1,354,200)	13% (288,600)	5% (111,000)
East Midlands	40% (692,000	60% (1,038,000)	11% (190,300)	6% (103,800)
London	42% (1,587,600)	58% (2,192,400)	10% (378,000)	3% (113,400
North East	30% (288,000)	70% (672,000)	16% (153,600)	9% (86,400)
North West	40% (1,128,000)	60% (1,692,000)	14% (394,800)	8% (225,600)
South East	34% (1,196,800)	66% (2,323,200)	11% (387,200)	4% (140,800)
South West	40% (840,000)	60% (1,260,000)	11% (231,000)	6% (126,000)
West Midlands	44% (998,800)	56% (1,271,200)	13% (295,100)	7% (158,900)
Yorkshire and the Humber	38% (790,400)	62% (1,289,600)	15% (312,000)	7% (145,600)

Employer spend on training

The 2005 NESS has for the first time attempted to estimate employer spend on training by emulating the methodology used in a previous survey commissioned by the DfES* ( D. Spilsbury, Learning and Training at Work 2000, DfES Research Report 269, 2001). The estimate from the 2000 survey came up with a figure of around £23 billion and the 2005 NESS estimates that employers are currently spending in the region of £33 billion.

Table 3: Employer spend on training per annum (England, 2000 & 2005) £ billion
	2000	2005
Total training costs	£23.5bn	£33.3bn
Trainee labour costs	£10.3bn	£16bn
Fees paid to colleges and training providers	£2.6bn	£2.4bn
Training facilities	£1.8bn	£2.7bn
Management and administration of training	£3.7bn	£5.1bn
Trainers' labour costs (on-the-job training)	£4.3bn	£6.5bn
Other course-related costs	£0.8bn	£0.7bn

Note: the source of the 2000 data is, D. Spilsbury (2001) Learning and Training at Work 2000, DfES Research Report 269.

However, the NESS 2005 does strongly qualify this latest estimate of employer spend, highlighting that most of this is attributed to what is usually termed indirect spend by employers. For example, it says that 'the labour costs of those receiving and of those delivering or organising training account for just over four-fifths of total employer expenditure' (£27.6 billion or 83%). And that 'in comparison, the total of around £2.4 billion spent on fees to external providers of off-the-job training is relatively modest, accounting for just 7 per cent of total training costs.' Comparisons with the 2000 survey (see Table 3) also show that employers are now spending less on fees to external training providers than they were in 2000, when employers spent a total of £2.6 billion on fees.

These findings reflect the trend in the previous section of the report showing that employers are by and large providing informal workplace training that does not lead to the acquisition of recognised qualifications by the majority of employees. While this form of training may meet employers' short-term business needs in some instances, it is a short-sighted approach and over the longer term will do little to address the low productivity levels found in too many companies and organisations in the UK. In addition, this approach to training certainly does not meet the longer-term skill needs of individual employees and also the economic and social priorities of Government.

In addition to increasing overal employer spend on training, the Government needs to consider policy levers that will encourage employers to utilise their spending on training in a more strategic manner to enable more employees to achieve sustainable skills and qualifications. The other key issue is to ensure that employer spend on training is targeted at the total workforce and in particular at those employees who traditionally are ignored when it comes to training and development opportunities. As highlighted in a recent TUC report (Training - who gets it? November, 2005) HR trends are increasingly moving towards a 'self-directed' learning model in the workplace which is exacerbating the 'training divide' by making training even less accessible to those with few or no qualifications.

Considering the findings above, it is little wonder then that a very recent analysis by the Government concludes that 'many employers continue to regard education and training as a cost to be avoided or cut, rather than an investment in an asset to be valued and [that] advocacy may not be sufficient' to address this challenge (Skills in England 2005, vol 1, LSC, July 2006). The challenge for Government is to come up with a policy mix that will most effectively drive up employer investment in training and the following section of this report sets out a post-voluntary skills framework with this overriding aim in mind.

Achieving a skills revolution - five key demands

In the words of a recent commentary, there is a clear and unambiguous need for the Leitch R eview 'to do for skills what the Turner review has done for pensions' (Has the Voluntary Approach to Skills Had its Day? Education Guardian, 11 July, 2006). Further piecemeal reforms to the voluntary skills framework would do little to help matters, as it is evident that the capacity of the existing policy framework is being stretched to its very limit and the Leitch Review has highlighted that it will be difficult for the Government to even meet its existing relatively modest skills targets.

Below we set out policy reforms across five areas that the TUC believes would bring about a viable post-voluntary skills framework capable of achieving the necessary step-change set out in the interim report of the Leitch Review. The TUC's five key demands are as follows:

• Employers and Government must invest more in adult skills
• Unions must be real social partners in the Government's skills strategies
• New legal rights to paid time off to train are essential
• Positive action is needed at all levels to tackle skills discrimination
• Unions and workers must have an equal voice in workplace skills bargaining

All of these themes support a central thrust of existing Government policy on skills as set out in the two Skills White Papers published in 2003 and 2005. This involves significantly raising demand for skills among employers and employees and ensuring that high quality, flexible provision is in place to meet this demand. The TUC supports this approach but believes that the policy proposals below would accelerate and intensify demand side pressures, which are the key to addressing the skills challenges in the UK, as well as building the capacity of the supply side to respond.

More investment in adult skills

If one accepts the analysis in the Leitch Review interim report, a clear conclusion is that investment in adult skills needs to increase significantly and that there is an urgent need for a new consensus on the balance of contribution by Government, employers and individuals.

Government's contribution

The 2007 Comprehensive Spending Review should boost state funding for workplace skills particularly for adult employees (including continued funding for the Union Learning Fund* and unionlearn). It is widely acknowledged that skills funding for adult employees compares poorly with other parts of the education and skills sector. And the labour market trends in the interim report highlight that this will become a more pressing issue, e.g. 60 per cent of the growth in the labour market by 2020 will be attributed to employees aged 50-65.

Government also has a key role to play in boosting investment in skills through its role as a major employer, both at central government level and also via other major parts of public services, including the NHS and local government. The TUC supports the LSC's decision to designate the improvement of the skills of public sector employees as one of its six core annual priorities, but believes that the Government can do more on skills as an employer in its own right. For example, by taking action to ensure that all eligible public sector employees are empowered to take up the government's 'Level 2 entitlement' and that all young employees have access to high quality Apprenticeships.

The Government can also do more to use public procurement in a proactive manner to drive up skills investment by employers working on public sector contracts. The TUC has continued to campaign for the positive transposition of the new EU procurement directives into UK law and is also highlighting the value of proactive procurement policies in the run-up up to the London 2012 Olympics to promote sustainable workforce skills. The Government needs to build on recent positive commitments to use procurement policy, as outlined in the report of the Women and Work Commission and the National Employment Panel's report on increasing the employment and business growth of black and minority ethnic groups.

However, there is further potential for Government to use procurement to boost the skills agenda. For example, when assessing best value with regard to contract bids, the Government should take into account whether or not a company is a signatory to the relevant sector skills agreement or at the very least demonstrating genuine support for sectoral strategies brokered by the relevant Sector Skills Council. In addition, companies bidding for government contracts should meet the skills requirements contained in collective agreements between unions and employers. For example, when private suppliers win NHS contracts, as a minimum they should be required to match the skills investment agreed in the Agenda for Change programme (i.e. by fully implementing the Knowledge and Skills Framework) and to spend an equivalent percentage of their payroll on staff training.

Employers' contribution

However, it needs to be acknowledged that state funding is not unlimited and that there must be a concerted effort to get employers to invest more in workforce skills, especially as Government needs to prioritise its funding on addressing 'market failure' in the system (e.g. to upskill those employees who have not achieved a minimum standard through the formal education system). The Government is already taking forward some measures to address this, in particular by increasing the fee assumption (i.e. proportion of costs) that employers and individuals pay for training delivered by colleges and other providers from 25 per cent to 50 per cent by the end of this decade.

However, as the analysis in this report shows there is an urgent need to implement a range of further policy measures to increase employer investment in training and in particular to tackle the 35 per cent of employers that currently do not invest at all in workforce skills. Among those employers that do train, there is a need to influence them to re-focus their current investment on providing much more training leading to formal qualifications and sustainable skills rather than informal training focused on short-term business needs. The priority policy levers that Government should introduce to achieve this, including a statutory right to paid time off to train, strengthened collective bargaining on training and measures to tackle skills discrimination are covered in more detail below.

Trade union/employee contribution

In recent years trade unions have played an increasingly important role in enhancing skills at the workplace level, especially as a result of the pioneering work of Union Learning Reps. Government support for union activity on skills has been crucial, in particular through the Union Learning Fund and more recently via government support for a new body called unionlearn , which has been established to provide a stronger and more coherent framework for union-led activity on learning and skills. The trade unions already have a target to have 22,000 ULRs in place by 2010 and to engage quarter of a million learners each year in the workplace and to build on this in subsequent years. There has been good progress on this target, with the latest figures showing that by summer 2006 there were 14,000 trained Union Learning Reps who directly helped over 100,000 employees into learning over the past 12 months.

As highlighted above, the Government's reforms to the fee assumption over the coming years will require individuals to pay more for FE courses that do not fall within the Skills Strategy priorities. In addition, if the Collective Learning Fund model (see below for more details) is ultimately scaled up, there is a real prospect that more employees and employers will be encouraged to enter into reciprocal arrangements so that both sides commit to increase the time dedicated to non-job-specific training and development

Genuine social partnership

The 2003 Skills White Paper went some way to establishing a new national consensus on a demand-driven skills strategy with the backing of key stakeholders, such as the TUC and CBI, who agreed to join a national Skills Alliance. And there has been significant progress on workforce skills in recent years, with a continuing decline in the proportion of low-skilled employees and an increasing number of training opportunities delivered in the workplace via the Apprenticeship and Train to Gain programmes. However, the scale of ambition set out by the Leitch Review demands a real step change in the level of demand for skills articulated by employers and employees.

The TUC believes we need to build stronger social partnership arrangements on skills at national, regional and sectoral levels in order to drive forward a demand-led approach that reflects the needs of employers and individual employees. There are real concerns that the original commitment in the 2003 Skills White Paper to boost both employer and employee demand for skills has gradually been replaced by a much greater focus on developing an employer-led skills strategy that does not place enough weight on the needs of employees.

The TUC has continued to highlight that one of the factors contributing to the UK's skills deficit is the lack of a robust social partnership approach to skills, something that underpins arrangements in many of the European countries that continue to lead us on skills. The Leitch Review must address this central issue if it is going to achieve a new consensus on a building a post-voluntary skills framework. This will require a change of approach in the formulation and delivery of skills provision at the national, regional, and sectoral levels, giving trade unions a much stronger voice than at present.

The sectoral approach in particular has the potential to deliver some of the key elements of a post-voluntary skills framework, but this would need to be accompanied by a much more robust form of social partnership than simply obliging SSCs to have at least one union Board member. A recent report by the Sector Skills Development Agency (Lessons from Abroad, SSDA*, 2006) highlights the benefits of sectoral approaches in other countries entailing more regulatory levers/fiscal incentives than in the UK but also stronger employee voice to ensure 'that both the wider public functions of qualifications and the sector-specific needs of employees are met'. The reality is that unions often have a much clearer grasp of the longer-term skill needs of the whole workforce than employers, who often tend to focus on providing informal workplace training to meet short-term business strategies and to limiting substantive training opportunities to their more well qualified staff.

If the sector skills approach in the UK replicated the model in some other countries, the TUC believes that new Sector Skills Agreements being brokered by Sector Skills Councils could do much more to deliver on the priority policy levers highlighted below (i.e. paid time off to train, action on skills discrimination, and building collective bargaining on skills at the workplace level). They could also examine the potential of other policy measures to increase employer investment in skills, such as the extension of Licence to Practice arrangements and the use of training levies in sub-sectors where it is evident that voluntary arrangements are failing. However, using the sector level to implement elements of a new post-voluntary framework on skills along these lines will require the Government to address the growing dominance of an employer-led approach to skills strategies and to replace it with an employment-led approach where unions have equivalent influence.

The TUC is also concerned that the Government does not abandon its stated mission to support all FE colleges in playing a central role in the Skills Strategy. Privatising further education services (as the CBI is partly advocating) would do more harm than good for Britain's skills base. All the evidence is that the public sector often outperforms the private sector and that undermining public provision may put the whole system in jeopardy.

The time barrier

Various research studies have demonstrated that one of the biggest barriers to training in the workplace is the limited access to paid time off to train during working time, especially for adult employees with few or no qualifications. This barrier is particularly acute for women, who are more likely to be balancing work with caring responsibilities. In recognition of the time barrier, the Government launched the Employer Training Pilots (ETP) offering a range of incentives for employers to provide paid time off for employees to achieve basic skills and NVQ Level 2 qualifications. These pilots proved to be very popular with employers and employees and led to the development of the national Train to Gain programme that is currently being rolled out across England.

However, there are limits to what a voluntary programme like this can achieve, especially as the evaluation of the pilots showed that many employers who were averse to training their staff declined to participate even though the pilots offered free training delivered on site along with free advisers to help employers select the most appropriate training and provider. The key question is what Government can do to put pressure on employers to participate in Train to Gain and to open up more training opportunities for their staff. One simple measure would be to give adult employees without a Level 2 qualification a statutory right to paid time off to achieve such a qualification (a right currently enjoyed by 16-17-year-olds). This right would incentivise all employers to access the state subsidised training available under Train to Gain. In addition, all Sector Skills Agreements should look at how varied arrangements for paid time off to train could be taken forward in their particular sector.

Positive action on skills discrimination

There is a growing awareness that concerted action is required to tackle the discrimination faced by many groups in the labour market when it comes to accessing training and development opportunities. For example, we know from research that training opportunities in the workplace are currently skewed to those that already have the highest skills and qualifications and also that Union Learning Reps are playing a crucial role in empowering low-skilled employees to improve their access to training and development.

Skills discrimination and occupational segregation are major problems. The Women and Work Commission and the EOC Inquiry into Occupational Segregation have both set out strategies to help women access more training and skilled jobs in particular sectors traditionally dominated by male employees (e.g. construction and engineering). The TUC has welcomed the commitment in Budget 2006 to fund a package to take forward the skills recommendations in the Women and Work Commission and to drive elements of this forward at the sector level. Trade unions will support and develop this work.

There are also many other areas of skills discrimination that need to be tackled and the Leitch Review should recommend that the Government develops concrete proposals to tackle this for other groups, including black and minority ethnic workers, disabled employees and older workers. One means of achieving this aim would be significantly to strengthen the equality and diversity remit of Sector Skills Agreements so that Sector Skills Councils are obliged to come up with concrete initiatives for improving training opportunities for all these groups of employees with clearly prescribed targets and outcomes.

While the TUC agrees that focusing public spending on low skilled adults is correct, the current requirement that funding is available only for a 'first' qualification means that many people with outdated qualifications will be excluded. This will have a greater impact on particular groups, for example, older workers and women, especially those returning from career breaks. The TUC believes it is important that the Leitch review recommends the removal of these funding anomalies.

An equal voice in workplace skills bargaining

There are a number of potential reforms at the workplace level involving greater cooperation between employers and trade unions on skills which could have a major impact on raising the incidence of training.

Embedding training in the collective bargaining system. Raising demand for skills in unionised workplaces could be greatly enhanced if employers and trade unions came together to negotiate strategies to collectively raise their game on skills. Research has shown that employees get more training when the issue is negotiated with employers rather than simply consulted on (analysis of 1998 Workplace Employment Relations Survey quoted in The Learning Curve, TUC, 2006). In workplaces where training is negotiated, almost 40 per cent deliver an average of five or more training days a year per employee compared to just over 20 per cent of workplaces where training is only subject to consultation. More employers and unions could be encouraged to negotiate on training by including it as a collective bargaining issue in the statutory union recognition procedure as this would send a strong signal that this approach should be emulated in voluntary agreements. The Government should also ensure that building the collective approach on skills in the workplace is a priority in all Sector Skills Agreements.

Learning Agreements and Workplace Learning Committees. In an increasing number of workplaces, employers and trade unions are negotiating Learning Agreements and establishing Learning Committees to support the role of Union Learning Reps (ULRs) in promoting training opportunities, especially for people with Skills for Life* needs. This is proving to be a highly successful approach and (as agreed in the Warwick Accord), the Government should examine options to enable trade unions to make more employers establish such collective arrangement in order to help tackle barriers faced by Union Learning Reps in promoting learning and skills in the workplace.

Collective Learning Funds. The recent Further Education White Paper contained a commitment that the DfES would work with the TUC to help take forward a proposal to develop a Collective Learning Fund model. This model is based on the premise that there is a need to deliver more training in the workplace beyond that which is the direct responsibility of either the employer (job-specific training) or the State (e.g. free Skills for Life and Train to Gain provision). For example, this could cover generic higher level IT training that is not required for an individual's current job but increasingly seen as a necessary skill in the wider labour market.

CLFs would be joint employer-union initiatives that would encourage employers to increase the scope of training and development opportunities for their workforce and to commit new investment to this. In addition, CLFs would explore how employees might be encouraged to co- invest their time along with the employer in a wider range of non- job- specific training and development. This training and development would be broader that simply meeting the immediate needs of the job in question. There would also be some form of government support, perhaps via the Train to Gain programme. The DfES and TUC have agreed that the CLF model should be trialled in a small number of workplaces over the coming year. Over the longer term this lifelong learning model should be scaled up so that it becomes the norm in workplaces rather than the exception.

Conclusion

There is no easy solution to the skills challenge facing the UK. The interim report of the Leitch Review has highlighted that the challenge is even more daunting than was previously thought. The danger is that the comprehensive analysis in the interim report is not followed up with an adequate programme of action in the final recommendations (expected later this year). Simply tinkering with the existing voluntary skills framework is not an option. Nor is simply describing a vision with no new definite steps to achieve it. The final report of the Leitch Review must challenge the Government to introduce a post-voluntary framework that will provide a real prospect of achieving a world-class skills base in the UK by 2020.

Appendix

The Leitch Review has analysed more ambitious skills scenarios for 2020 through the following measures:

• tackling the stock of low skilled adults without qualifications, basic literacy and numeracy;
• investing more in intermediate skills; and
• further increasing the proportion of adults holding a degree.

The Review recommends that the following additional targets should be considered:

• reducing by 3.5m the number of 16-year-olds coming into the workforce without basic skills
• enabling an additional 3.5m adults to gain basic skills
• enabling an additional 3.5m individuals to achieve a Level 2 qualification
• enabling an additional 3.5m to achieve a Level 3 qualification
• enabling an additional 3.5m to achieve a degree (or other Level 4 qualification) and increasing the HE* participation target from 50% to 65% of those aged 19-30

Source: Skills in the UK: the long term challenge,Interim Report of the Leitch Review of Skills, December 2005

Report (8,500 words) issued 4 Sep 2006