Voluntarism isn't working

Training. Everyone wants it. But fewer people are paying towards it, according to a major study undertaken for the Government.

Martin Jones reveals that employer expenditure on training fell by 26% between 1987 and 1993 - flatly contradicting the rhetoric of too many Ministers and business leaders. The latest survey shows employer spending on training was £10.6bn in 1993 compared with £14.4bn identified in an equivalent 1987 Survey. These are cash prices so, taking into account inflation over the period, the level of spending in 1993 is more like half that recorded 6 years earlier.

The two studies - both of which were undertaken by IFF Research - represent the most definitive analyses of employers’ training activity. The 1987 study was described as a "path breaking" exercise and it former the ‘baseline’ for almost all policy consideration since. It justified the belief that employers were voluntarily and enthusiastically training their staff and that abolition of the interventionist Industrial Training Boards 4 years earlier had been a success. The shift away from ITBs - with their levy raising powers - heralded a new, voluntary approach to employee training.

Now, the latest research suggests that Government policy since the 1989 "Training in Britain" White Paper has been wrong. The whole thrust of voluntarist Industrial Training Organisaiotns has failed and the apparatus of TECs - with their overwhelmingly private sector leadership - has been a flop.

Indeed, Martin Jones also reveals that TECs have secured negligible amounts of financial support from employers, according to research by the DfEE’s own internal quality watchdogs. A fifth of TECs raised nothing at all whilst, on average, TECs levered-in just £4,500. Not all of this was even in cash - some was delivered in-kind or by staff secondment. Frankly, that’s an embarrassment.

This is meat and drink to the staunchest of TEC critics. Just what have the captains of commerce and industry being doing these last 6 years? Why give the private sector two-thirds control of TECs if it fails to deliver real employer commitment measured in the way that entrepreneurs know so well - money? These are easy jibes and are had to resist. But there’s a more serious point.

A purely voluntary system allied with a structure based on TECs has failed to deliver. It’s time to think the problem out. And there’s no better time than now. Although the present Government can never repudiate its own creation, it may only have a few weeks’ life left. So has Labour got an alternative?

On March 28th last year, Labour released a policy paper which was intended to place the Party firmly against any form of interventionism. Whilst the TUC had been consistently arguing for a "modern training levy" to finance training, Labour took a lighter-touch approach. For 15 years before this, Labour had been committed to restoring a system of training levy/rebates and had suggested a supplement equal to about 1.5% of firms’ payroll. As the FT, in a charmingly unsubtle preview of the policy shift, put it "Blair scraps training tax on-jobs". In place of compulsion would be incentives. Following discussions with employer organisations, leading figures in the Party predicted that "a levy would be unnecessary if the goodwill is there".

So what would Labour’s incentives be? Firstly a "training TESSA" or individual learning account for every employee - adminstered through a "learn as you earn smartcard" probably linked to the National Insurance system. The first million workers would get £150 a year from government to match a £25 employee stake whilst employer contributions would attract tax breaks. Labour argues that learning accounts will give individuals a responsibility for their own training and personal development.

Secondly, Labour would beef up the Investors in People standard. They recognise that barely 23% of employees are in firms which have achieved the current IiP standard. So, Labour proposes that IiP will be boosted by: reducing the costs to small firms of IiP commitment; improving the quality and cost of training suppliers; an information campaign; enlisting support from unions and employer organisations; encouraging IiP through firms' and local authorities' purchasing; making public regeneration funding contingent on IiP commitments. Firms will 'be encouraged' to publish a statement of their training activity.

Lastly, Labour places great store by the Univesity for Industry. The costs of training and education should be dramatically reduced using technologically advanced distance learning materials and media.

Will this slim policy basket be enough? How should Labour finance and administer the "training TESSAs"? Is there any role at all for a system of levy and rebates - after all, forms of levy exist in engineering and construction (both statutory) and in broadcasting (a remarkable contradiction in terms, a levy which is voluntary). Other sectors might want to follow suit. More importantly, if Labour’s approach is firmly wedded to voluntarism as an article of faith, how can voluntarism be strengthened? And what if the next IFF study shows no improvement? Should there be a stick waiting if the carrot fails?

That’s why Tom Bewick’s article (see page ?) is fascinating. Australia asked all these questions (and more) in 1990. Rejecting the simple form of a pre-1980s style British levy, the Australian Government invented the "internal levy". This borrowed from the French model in which firms are obliged to spend a proportion of their payroll to train their own workers. The Australian scheme had 3 important pre-requisites: changing the workplace culture; involving employers and unions in setting the agenda; reforming the quality and responsiveness of training and accreditation. Evaluation of the scheme’s 4 year life showed it achieving improvements to skill levels - even during recession. More importantly, it benefitted small to medium sized firms and, especially, those firms which would otherwise not have trained their workers.

With Labour due to publish a further policy document within weeks, the lessons from Australia deserve closer examination. And with IFF finally revealing the truth about employer-led voluntarism, we hope that Labour, at least, will re-assess the orthodox opinion that voluntarism has suceeded where more robust partnership and intervention can only fail.