Leitch Review of Skills - Final Report
Leitch Review of Skills Final Report
Prosperity for All in the Global Economy - world class skills, Treasury, December 2006
Introduction
The final report of the Leitch Review of Skills was published on 5 December and the full report is available on the Treasury website at: www.hm-treasury.gov.uk. Launching his report, Lord Leitch reiterated the analysis in his interim report, saying that despite substantial investment and reform plans already in place, the UK's comparative international position on skills by 2020 will not have improved significantly unless urgent action is taken now. Furthermore, he states that 'the scale of the challenge is daunting' and this requires an ambitious vision that will lead to the UK becoming 'a world leader in skills' by 2020.
The TUC responded to the initial consultation undertaken by the Leitch Review in 2005 and also published a report (2020 Vision for Skills) earlier this year setting out five areas which the TUC highlighted as priorities, including: increasing investment in skills by employers and government and introducing policy reforms to achieve this end; strengthening the social partnership approach on skills, especially at the sectoral level, rather than continuing to prioritise an employer-led approach; introducing a right to paid time off to train; tackling the significant skills discrimination faced by certain groups; and, giving unions greater rights to bargain on skills and also strengthening the capacity of union learning reps.
Initial TUC comments
On the day of the publication of the final report, the TUC welcomed the scale of ambition and agreed that urgent action is necessary if we are to achieve a world class skills base by 2020. There are strong grounds for agreeing with Lord Leitch's analysis that 'skills is the most important lever within our control to create wealth and to reduce social deprivation' and that there is a pressing need for 'parity of esteem for the vocational route'. It is also welcome that the review links the achievement of a world class skills base by 2020 with clear targets linked to accredited qualifications. If these targets are met, low skills would be virtually eradicated and the UK would be a world leader on intermediate and higher level skills. And the review is also quite rightly specific about the necessary levels of investment required to move the UK up the international skills league (e.g. it specifies that 'additional investment in skills up to Level 3 will need to rise to £1.5-2 billion by 2020'.)
In its press release the TUC also strongly welcomed the move towards greater regulation of employer responsibilities when it comes to releasing employees for training to enable them to achieve the equivalent of a school leaving qualification. The review announced a commitment to introduce a new right to workplace training for employees without a Level 2 qualification [1] if employers failed to voluntarily achieve a challenging new target to upskill such employees by 2010. In its press release the TUC said that 'this means that the clock is ticking for the one in three employers who fail to train [and] those employers are now on notice to clean up their act by 2010'. In addition, the press release also said that 'Lord Leitch's call on employers to publicly pledge their commitment to increase skills sends a strong message to those employers who short change staff, and the UK economy, by refusing to train.' The TUC also welcomed the recommendation to establish compulsory education and training up to age 18 once the new Specialist Diplomas are properly established and also to double the number of apprenticeships by 2020.
On the following day (6 December) the Chancellor highlighted the main recommendations of the review in his Pre-Budge Report and the TUC stated that 'it was pleased to note that in his speech the Chancellor highlighted the importance of the new statutory right to workplace training advocated by Lord Leitch'. In addition, the TUC confirmed that it would ' be lobbying Government over the coming months to ensure that this new legal right to workplace training is framed in such a way that it will be automatically invoked in 2010 if employers fail to deliver [and that it] should also give employees a clear entitlement to paid time off to train within working time to achieve the relevant qualification'.
In its Pre-Budget press release the TUC also expressed some concerns around the focus in the final report on strengthening the employer-led approach on skills by highlighting that it will 'be calling on Government to set out a framework to give employees and trade unions a significant voice in the new institutional skills framework that will be established as a result of Lord Leitch's recommendations [and that] in particular, unions will need to have a significant stake in the new Commission for Employment and Skills and also increased representation on the relaunched Sector Skills Councils.' It is particularly important that the workforce, through trade union representation, is able to influence the new powers that SSCs are to be given around the design and approval of vocational qualifications.
There are many other recommendations in the final report that the TUC welcomes and these are highlighted in this briefing, but there also remain some additional concerns. For example, whilst the review quite rightly concludes that employers must significantly increase their investment in skills, there is a questionable presumption that this will occur as a direct consequence of making the skills system more 'employer friendly'. And welcome as they are, the Employer Pledge and the potential new right to access workplace training will not oblige employers to make a major financial investment as this training will generally be paid for and delivered by the Government's Train to Gain programme.
One of underpinning principles of the review (see below) is that there must be a new concept of shared responsibility, involving employers boosting investment in intermediate and higher level skills while Government takes on responsibility for ensuring all adults achieve a basic platform of skills (i.e. a first full Level 2 qualification). However, there are few specific policy instruments which will oblige employers to invest more in skills at these levels beyond the aspiration that greater employer engagement at the sectoral level could result in agreement on more collective action. In particular, it is interesting to note that the review did not make any major announcement about radically expanding Licence to Practice arrangements in spite of Lord Leitch previously expressing support for this in many of his speeches.
It is anticipated that the Government will be undertaking a consultation in the New Year on how the recommendations are to be implemented and the TUC will be consulting the affiliated unions in order to draw up a detailed response. The TUC submission on the 2007 Comprehensive Spending Review will also set out the TUC's thinking on the implications of Lord Leitch's recommendations for public spending in the coming years. In the meantime, this briefing provides more detail on the TUC's initial reaction to the recommendations in Lord Leitch's final report and also provides more detail on the recommendations themselves.
Main recommendations of the Leitch Review
There are eight main recommendations in relation to adult skills in the final report but the review has also made a number of key recommendations relating to young people. The recommendations are as follows:
- Increase adult skills across all levels and aim to virtually eradicate low skills by ultimately getting to a position where 95 per cent of all adults achieve a Level 2 qualification
- Route all funding for adult vocational skills in England, apart from community learning, through Train to Gain and Learner Accounts by 2010
- Strengthen employer voice on skills and also rationalise existing skills bodies by establishing a new Commission for Employment and Skills
- Increase employer engagement and investment in skills by reforming, relicensing and empowering Sector Skills Councils
- Launch a new 'Pledge' for employers to voluntarily commit to train all eligible employees up to Level 2 in the workplace and to review progress on this in 2010 - 'if the improvement rate is insufficient, introduce a statutory entitlement to workplace training at Level 2 in consultation with employers and unions'
- Increase employer investment in intermediate and higher level skills and ensure that government provision (e.g. Train to Gain and Apprenticeships) is reformed to support this aim
- Increase people's aspirations and awareness of the value of skills and also develop a new universal adult careers service
- Create a new integrated employment and skills service to expand and strengthen support for those out of work and also develop a network of employer-led Employment and Skills Boards
- Once the Government is on track to successfully deliver the new Specialised Diplomas, demonstrated by rising participation at age 17, 'it should implement a change in the law, so that all young people must remain in full or part-time education or workplace training up to the age of 18'.
Union Role?
As noted above, the TUC's initial comments on the launch of the final report expressed some concerns with the proposed balance of power between employers and trade unions in the new institutional skills framework and the lost opportunity to develop more of a social partnership model. Whilst it is welcome that there are clear commitments on TUC representation on the new Commission for Employment and Skills and union representation on the new Employment and Skills Boards, the TUC believes that these new bodies should be developing an industry-led approach on skills and that this should be matched with an equitable level of union representation. The TUC will use the forthcoming consultation to lobby on these points and also to press for greater levels of union representation on the relaunched Sector Skills Councils.
On the collective front, Lord Leitch did not support the TUC's recommendation to make training a collective bargaining issue in the statutory union recognition procedure. But this was not too surprising considering that the Government had already rejected this policy reform when the DTI reported earlier this year on its review of collective bargaining. However, the TUC had also been lobbying the Leitch Review to recommend that the Government should examine options to enable trade unions to negotiate on a collective basis on behalf of union learning reps via collective arrangements such as Learning Agreements and Workplace Learning Committees. And also to recommend that the Collective Learning Funds initiative proposed by the TUC, which is to be trialled in collaboration with the DfES over the coming year, should be scaled up as soon as feasible. On these inter-related issues, the review comments as follows:
'Employers could also go further, setting out plans to move their workforce to even higher skill levels and publicising their progress towards fulfilling their pledge. Collective Learning Funds, currently being developed by the DfES and the TUC, would encourage joint employer-union initiatives to increase the scope of training and development opportunities for their workforce and to commit new investment to this. In addition, these funds could encourage employers to co-invest their time along with the employer in a wider range of non job-specific training and development. Together with Workplace Learning Committees and Learning Agreements, where appropriate, these could also form a key part of any employer commitment to the pledge. They have been particularly emphasised as effective routes to improve training by employer organisations such as the Engineering Employers Federation and the CIPD' (paragraph 5.40).
While this certainly does not meet the TUC's recommendation to provide a statutory underpinning for Learning Agreements and Workplace Learning Committees, it does nevertheless strongly endorse these collective arrangements for union learning reps and the potential for expanding the Collective Learning Funds model in the future. In addition, the review highlights that 'trade unions are increasingly involved in the skills agenda and are playing a key role in engaging both adults and employers, especially in workplaces where learning opportunities may have been limited in the past' and that the recent launch of unionlearn will help drive forward the union role on skills.
It is also welcome that the review emphasises that trade unions will have an important role to play in the formulation of the new statutory right to workplace training that will be invoked in 2010 if employers fail to deliver on the Employer Pledge to upskill employees without a Level 2 qualification (see below for more details).
Underpinning principles
The report also sets out a number of underpinning principles, as follows:
- Shared responsibility - employers, individuals and Government must increase action and investment, with the guiding principles being that 'employers and individuals should contribute most where they derive the greatest private returns' (i.e. intermediate and higher level skills) and Government should address market failure (i.e. by providing full funding for first Level 2 qualifications but much more limited and targeted funding at higher levels, with investment generally tapering off as the qualification level rises).
- Focus on economically valuable skills that provide real returns for individuals, employers and society.
- Demand led skills that meet the needs of individuals and employers.
- A system that can adapt and respond to changes in future demand for skills.
- Building on existing structures rather than constantly chopping and changing the institutional skills framework.
The TUC generally agrees with this framework of underpinning principles but questions the likelihood of the necessary levels of employer investment in intermediate and higher level skills being achieved without a more interventionist approach.
Overview of main recommendations
(Please note that due to the very different skills systems in Scotland, Wales and Northern Ireland, in general Lord Leitch recommends that the devolved administrations should consider the necessary reforms required of their skills systems in order to achieve many of the objectives set out below.).
Increasing adult skill levels across all levels
In order for the UK to become a world leader on skills by 2020 (i.e. to be in the upper quartile of the OECD league table) the review recommends that there must be stretching new targets, including doubling attainment at most levels. The main new targets are:
- 95 per cent of adults achieving the 'basic skills of functional literacy and numeracy', an increase from levels of 85 per cent literacy and 79 per cent numeracy in 2005
- 90 per cent of adults to be qualified to Level 2 (compared to 69 per cent in 2005) with a commitment to go further and achieve 95 per cent as soon as possible
- shifting the balance of intermediate skills from Level 2 to Level 3 and in line with this, ensuring that around 2 million extra Level 3 qualifications are achieved by 2020 and apprenticeship numbers are doubled to half a million
- exceeding 40 per cent of adults qualified to Level 4 and above (compared to 29 per cent in 2005) and extending this aim to the working-age population and not just to 18-30 year olds.
The TUC welcomes the scale of ambition on skills expressed via these new targets and also the fact that Lord Leitch has clearly pinned achievement on skills to qualifications, in spite of strong lobbying from some employer quarters that the role of informal and non-accredited learning in the workplace should be given a higher profile. It is particularly welcome that upskilling the existing workforce is a clear priority. In addition, extending the target on higher level skills beyond the current higher education target group of 18-30 year olds is very welcome and will lead to more opportunities for the existing workforce to achieve this level of skill.
Demand-led funding
Lord Leitch recommends routing all funding for adult vocational skills in England (apart from community learning and provision for disabled adults) through Train to Gain and Learner Accounts by 2010. The aim of this approach is to give providers 'a real incentive to deliver the skills that employers and individuals need, flexibly and responsively' and if they do not deliver on this aim the report is explicit that 'they will not receive public funding.' Whilst the Learning and Skills Council (LSC) will continue to manage the funding of these programmes (and others such as Apprenticeships), many of the LSC's planning functions will be taken over by the new Commission (see below).
Commission for Employment and Skills
As well as being employer-led, the new commission will incorporate a number of existing bodies, including the Skills Alliance, the Sector Skills Development Agency, and the National Employment Panel. It will have two key areas of responsibility:
- Reporting on progress towards the new targets, assessing the skills system's objectives and delivery, and recommending policy and operational improvements and innovations
- Managing the Sector Skills Councils and a new network of Employment and Skills Boards.
A key stated objective 'is to 'depoliticise' the skills agenda by securing a broad political and stakeholder consensus' on meeting the new scale of ambition on skills. The review suggests that the Commission reports to the Prime Minister or Chancellor of Exchequer supported by the relevant Secretaries of State (i.e. DfES, DWP and DTI and equivalents in the devolved administrations). The Commission will be chaired by 'an eminent business leader' and will 'compromise senior, high profile figures, including .... the General Secretary of the TUC'. It will also include representatives from other areas, including academia and the voluntary sector.
Sector Skills Councils (SSCs)
The review recommends reforming, relicensing and empowering SSCs to give them the capacity to lead on: developing occupational standards and approving vocational qualifications; collating and communicating labour market data; raising employer engagement, demand and investment; and, considering collective employer action to address specific sector skills needs. The Commission will performance manage SSCs and relicence those that are failing. The review argues that giving SSCs much greater control over the design and approval of vocational qualifications (only those approved by SSCs will qualify for public funding) will give employers much greater incentive to engage with SSCs. The Qualifications and Curriculum Authority (QCA) will have a much reduced role under these new arrangements and the general aim will be to deliver a simplified qualification system. This will be driven forward by a commitment to require SSCs to 'develop a short list of valid qualifications, with a very significant reduction in the overall numbers by 2008' (there are currently 22,000 qualifications in existence).
The Employer Pledge and Statutory Entitlement to Workplace Training
Building on a recent voluntary employer Basic Skills Pledge initiative in Wales, the review recommends that the 'Government work with employer representative organisations in making a skills pledge' which would involve 'a specific promise to the workforce that every eligible employee would be helped to gain basic and Level 2 equivalent skills - with tuition costs from the Government and time allowances at work.' In effect take-up of the pledge would by and large be delivered via the Train to Gain programme and the review recommends that the Government should 'consider giving small employers wage compensation for these time allowances' in addition to the free Level 2 training and free brokerage service. In effect this is already the model being delivered under Train to Gain, with employers with less than 50 employees receiving wage compensation in addition to the free training and brokerage (but only for employees pursuing a Level 2 qualification). The review states that the pledge initiative will need high profile 'champions' and the Chancellor of the Exchequer has since announced that he has appointed the previous Director General of the CBI, Digby Jones, to take on the role of a Skills Envoy to promote take-up of the pledge by employers.
The review recommends that if this employer pledge does not deliver on the new challenging Level 2 target by 2010, i.e. 'if the improvement rate is insufficient', [2] the review recommends that Government should 'introduce an individual legal entitlement to workplace training for employees lacking a Level 2 qualification or equivalent through Train to Gain in England, in consultation with employers and trade unions.' The TUC is concerned that the employer-led Commission for Employment and Skills would appear to play a key role in triggering the establishment of this new right, especially as the review is not explicit about what body would have the final say. For example, the review says that 'if, in the light of inadequate progress towards world class, the Commission and Government judge it as necessary [our emphasis] the new entitlement would ensure that the UK meets its 2020 ambition' (paragraph 5.52).
While it is recognised that the Commission will play a role in monitoring progress towards the new Level 2 target, it is imperative that accountability for invoking the new right is removed from this body and that a clear statistical benchmark that cannot be disputed is set as an automatic trigger. Otherwise, there will be widespread suspicions that the majority of employers on the new Commission would simply move the goalposts in the run-up to 2010 if it appeared that the voluntary approach on training had once again failed to deliver. Without a clear assurance along these lines, there will be widespread disillusionment among a wide range of stakeholders about whether the Government is really committed to introducing a statutory right in 2010.
In effect, if such a right was implemented it would constitute a legal right (in England) for employees without a Level 2 qualification to access Train to Gain provision to achieve such a qualification. However, very significantly, the review does also state that the right could be used to trigger paid time off at work to achieve a relevant qualification via other means than Train to Gain provision. It says that 'with the agreement of the employer, employees should also be able to access this entitlement through paid time off if more convenient.' However, the legal framing of the new entitlement will clearly be of great importance in this and other respects. The review emphasises that the new right 'will need to be carefully designed so that it minimises bureaucracy and avoids being overly prescriptive' and that 'it must be designed in consultation with employers and trade unions.'
A number of potential qualifying criteria are also proposed, including the following: the entitlement should only be available to those accessing a first, full Level 2 qualification; an employee must have been in a job for a certain length of time before they can access the entitlement; and the enforcement regime should be drawn up in the light of 'whether there would be alternative ways for employers to satisfy regulations, such as allowing employees time off for training instead of participating in Train to Gain, before risking employment tribunals or other administrative mechanisms'. The review team estimate that 'this new entitlement is likely to increase take-up of Train to Gain significantly' and especially in sectors with a high proportion of eligible employees (e.g. 37 per cent of employees in the Wholesale & Retail sector would be eligible compared to 27 per cent across the whole economy).
Intermediate and higher level skills
The review includes a number of recommendations to increase employer investment in intermediate and higher level skills and to ensure that government provision (e.g. Train to Gain and Apprenticeships) is reformed to support this aim. At the intermediate level it recommends a huge expansion of Apprenticeships with the aim being to increase the number to half a million by 2020 compared with quarter of a million at present. In order to make Apprenticeships more attractive to employers, the review recommends that SSCs should have greater control over their design and content and also that Sector Skills Agreements should include 'clear commitments and targets, including for the number of Apprenticeships'. It is also recommended that the 'Government should consider creating a new entitlement as resources allow so that every young person with the right qualification should be able to take up an Apprenticeship place.'
On higher level skills the review recommends changing the targets faced by HE institutions to increase the focus on workforce development and away from a sole focus on participation in HE by young people (i.e. the 50 per cent target for 18-30 year olds). In support of this approach the review also recommends that a portion of higher education funding be delivered through a similar demand-led mechanism as Train to Gain in England, contributing to young and adult HE attainment levels. It is argued that this change 'will radically alter the incentives facing HE institutions, encouraging them to work with businesses in a way that they have not done to date.' The UK's deficit of high quality management and leadership skills is also prioritised by the review and a number of recommendations are included on this front, including extending existing DfES support in this area to very small businesses.
Embedding a culture of learning
The review contains a number of recommendations designed to create a 'new offer to adults to help increase a culture of learning across the country, ensuring everyone gets the help they need to get on in life.' This new approach will involve the following four elements being developed:
Raising aspiration and awareness - involving a new national sustained campaign to raise career aspirations and awareness of the benefits of learning, backed up by local outreach activity.
Making informed choices - in England this will be driven forward by the development of a new universal careers service for adults which will operate under the well-know learndirect brand. In addition all adults in England will be entitled to a free 'Skills Health Check' building on the success of a similar approach in Sweden
Increasing choice - giving individuals in England choice and control via the new Learner Accounts which they can use to pay towards accredited learning of their choice, and ensuring that lessons are learned from the existing schemes in Scotland and Wales.
Ensuring individuals can afford to learn - Improving financial support systems so that they are targeted on those most in need. In England this will largely be achieved by establishing a Skills Development Fund for people doing qualifications up to Level 2, which will replace the existing Learner Support Fund. In addition, the Career Development Loan initiative will be expanded for those pursuing qualifications at Level 3 and above.
Employment and Skills
In Budget 2006 the Chancellor added to the remit of the Leitch Review by asking it to consider how to better integrate skills and employment services in order to tackle the major barriers facing low-skilled claimants achieving sustainable employment. For example, it is estimated that one third of unemployment benefit claims each year are repeat claims from people with low or no qualifications. The review makes a number of recommendations in this area, including establishing a 'new single objective of sustainable employment and progression opportunities' among all the relevant agencies and especially between DWP/Jobcentre Plus and DfES/LSC. For example, the focus of Jobcentre Plus has always been on job placement achievements and there has been some criticism that this has been to the detriment of longer-term skills acquisition and sustainable employment. The new adult careers service in England will do much to support the new approach as will a new programme to help claimants requiring Skills for Life support.
The other major recommendation in this area is to establish a network of employer-led Employment and Skills Boards to give employers a central role in recommending improvements to local services, mirroring the national role of the Commission for Employment and Skills. The review argues that the existing complex array of regional and local bodies with a remit for employment and/or skills 'confuses employers and leaves them unclear as to where they should engage at a local level in order to influence the delivery of skills and employment services'. The new Boards would be licensed by the national Commission and would undertake similar functions to the Commission at the local level, including monitoring the labour market and raising employer engagement. The review suggests that the criteria for licensing them could include:
- Leadership by eminent local employers, with trade unions and independent representation
- A large enough scale to be recognised as a functional economic area, while sufficiently local to allow effective scrutiny of services
- Agreement that the Board must operate within the national framework for employment and skills.
Young people
Whilst the review largely focuses on adult skills, Lord Leitch also made significant recommendations relating to young people, in particular the proposal to double the number of Apprenticeships by 2020 (see above). However, what received most publicity was his recommendation to introduce compulsory education or workplace training up to the age of 18 once the system has the capacity to deliver on this commitment. The review states that 'once the Government is on track to successfully deliver Diplomas, with rising participation at age 17 and significant improvement in OECD rankings, it should implement a change in the law, so that all young people must remain in full or part-time education or workplace training up to the age of 18'. It is not clear from the review when exactly this policy reform would be implemented but it is tied to the introduction of the new Specialised Diplomas for young people in England. The first of these Diplomas will be introduced in 2008 but it will take until 2013 for the Diploma programme to be fully implemented across the whole of England. Interestingly the review does refer to the importance of the 2008 review of progress promised in the 14-19 White Paper, which 'will be important in identifying what more can be done to achieve' a fully integrated 14-19 phase in England.
Conclusion
There is much to welcome in the final report of the Leitch Review, in particular the scale of ambition that has been set out and the recognition that this has to be mapped against specific targets linked to accredited qualifications. The review also quite rightly recognises that there is a need to be specific about the necessary increase in investment in skills required of all parties in order to gauge what the respective contributions should be.
The review has also partly grasped the nettle on the regulation front by recognising that we cannot continue to bear the economic and social costs of the scourge of low skills in the UK. The commitment to introduce a statutory right to access workplace training is a significant measure, which if framed and implemented properly, will empower many employees to gain paid time off work in order to gain a Level 2 qualification.
In relation to young people, the commitment to move to compulsory education and training up to the age of 18 and to expand Apprenticeships will do much to tackle the UK's dismal failure when it comes to post-16 staying on rates. There are also many other welcome recommendations in the report, such as the need to establish a new careers service for adults and to improve the financial support system for adults who are independently pursuing vocational qualifications.
However, there are also has some concerns, in particular relating to the emphasis on moving to a largely employer-led skills system which risks marginalizing the needs and aspirations of the workforce. The TUC will continue to argue for building a more inclusive approach underpinned by social partnership arrangements. And there is a major danger that the presumption in the review that employers will increase investment in employee skills once the system is made more employer-friendly may not materialise. The TUC will be addressing these points, and other issues raised by affiliated unions, when it responds to the consultation on the implementation of the Leitch Review proposals in the New Year.
[1] Qualification level equivalents in this brief are as follows: Level 2 equates to 5 GCSEs at A-C grades, Level 3 equates to 2 A-levels, Level 4 and above equates to degree level and above (or their vocational equivalents, e.g. NVQ levels, 2,3 ,4, 5)
[2] The review is not explicit about the exact definition of what it means when it specifies, If the improvement rate is not sufficient. However, it is anticipated that progress will be measured using the trajectory for achieving the new Level 2 target for 2020 and checking this against the necessary progress required by 2010 in order to achieve the 90 per cent figure by 2020.
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