Employment-led sector bodies needed

A piece is missing in the jigsaw of lifelong learning and post-16 reforms. Alongside the architecture of the LSC - with its local arms focussing on sub-regional skill needs - we need a network of strategic bodies that bring sectoral employer and employee interests to the table. Forming new and effective bodies has now become a pressing and significant challenge that next faces Ministers in the new Department for Education and Skills.

In recent years, National Training Organisations have developed a sector-based voice underpinned by a clutch of critical functions - not least, responsibility for shaping the Modern Apprenticeship frameworks in their industries. Ministers have declared them "pivotal" to the future success of their ambitious post-16 agenda - with their sector-based expertise, run by committed employers and employment interests, NTOs were seen as the ideal vehicle to bring about a more "demand-led" system.

Whilst Government has recognised NTOs' importance in boosting the demand for skills and improving the supply of learning, it has also clearly signalled that change is required. In January, it published a consultation paper signalling reforms to NTOs so that sectors might play a much greater strategic role in addressing productivity and skills gaps and supporting the LSC's funding and planning system. More recently, the Government has also launched a workforce development strategy and tasked the Performance and Innovation Unit - the Prime Minister's own civil service think tank - to lead this.

The 73 current NTOs are a mixed bunch. Some NTOs - not necessarily the largest and richest ones - have earned an outstanding reputation by forging alliances between employers and employees that have dramatically boosted the skills base of their industries. Others have showed courage and determination by standing up to poorly performing firms in their sector.

The Skills Task Force last year commended the sector based approach but complained that "there are still too many NTOs leading to confusion for employers" and in some cases NTOs were "still too small to undertake the full range of responsibilities necessary".

This was diplomatic. Two DfEE research reports last year had found that 7 out of 10 NTOs did not know how many micro-firms or SMEs existed in their sectors. Although 60 per cent of NTO Board members are employers, only 10 per cent of board members are from employers with 20 or less staff. Few NTOs had any reliable data on take-up of Modern Apprenticeship, NVQs or Investors in People in their industries whilst over a half of NTOs had never used the Labour Force Survey (LFS), NOMIS or the Annual Employment Survey. And despite over 60% of NTO Board members being employers, few firms saw any need for them to contribute financially. In fact 57% of businesses surveyed thought the Government should be the sole funder - with only 1 in 6 accepting that employers who should mainly fund NTOs. Another case of dependency culture?

The overwhelming conclusion from this research suggested that a significant number of current NTOs lacked the strategic capacity to create lifelong learning through a skills revolution. Too many "employer-led" NTOs are not owned by industry at all. They are small outfits with invisible employer boards who lack clout in the broader arena and do not represent sectors that have real economic significance. Other strategic players – like the LSC, RDAs and the devolved administrations – find them low-calibre and parochial. This is hardly surprising when over 40 NTOs have annual turnovers of less than £500,000 and most are entirely reliant on public funding.

There is, however, another agenda to the NTO reform. Many work-based learning providers have adapted to the changing labour market and recognised the need for skills to become demand-led. Over many years, the learning landscape has been dictated by suppliers and this has deeply alienated employers and employees alike. The content of learning, the place, timing and pace at which it is delivered have been set by established learning institutions and not by the customers of learning - individuals and employers. This must change and effective sector bodies will force the pace of change.

The minister with responsibility for adult skills and NTOs, John Healey, will need to keep his nerve on the proposed shake-up of NTOs. Like the discredited TECs, the poor performers will want to hang on. But, with about 20-25 highly credible, better funded and more partnership orientated sector bodies, government will be able to enter into a genuine public-private partnership with industry, employers, trade unions - and perhaps even providers - about how to deliver the nation’s skills needs.