Reforming the skills system: lessons learned the hard way

In a new report published by the Institute of Directors and education and skills researchers CFE, the consequences of a flawed skills system to the economy are laid bare. Despite ten years of intense government activity and effort on the skills front, 58 per cent of company directors report that skills gaps are holding back the growth of their firms. 

The report, based on a critique of government policy in the 2000s allied to research carried out among employers, sets out to challenge existing thinking about skills policy and to offer an ‘employer’s eye view’ of the skills system. It analyses the latest skills strategy and concludes that while the new government’s approach to skills policy should be broadly welcomed, there are some worrying signs that it may repeat policy mistakes of the past.

Key points from the report:

  • Skills deficiencies continue to shackle businesses and undermine economic recovery. According to the survey evidence presented in the report, 58 per cent of company directors said that skills gaps were holding back the growth of their firms. 31 per cent of directors were struggling to fill vacancies in their workforce, and 47 per cent said that some of their organisation’s employees lacked the skills needed to do their job to the required level.
  • The Government skills strategy published last year, Skills for Sustainable Growth, offers a positive prospectus for the future of skills policy. It is based on sound principles and the commitments to free up the skills system and to move away from a target-driven, command-and-control model should be applauded. However, other aspects of the strategy disappoint: the simplification of the skills infrastructure is too timid and the encouragement of collective measures such as training levies is unwelcome.
  • The IoD/CFE report outlines six headline proposals to help realise the potential of Skills for Sustainable Growth and deliver a more effective skills system. They include recommendations to measure the effectiveness of the skills system rather than counting aggregate numbers of qualifications; to give true purchasing power to customers of training; and to free up training providers to respond to businesses’ needs.  

Commenting on the report, Miles Templeman, Director General of the Institute of Directors, said:

“There is much good in current skills policy, but from the employer perspective it can look too much like situation normal. And situation normal doesn’t work. It is vital that the Government concentrates on supporting the majority of employers that do invest in training, rather than being preoccupied about the minority that do not. Good intentions can easily result in unhelpful and unnecessary interventions. Employers will always be best placed to know what training they need: it is better to let competition decide what works in business, not government policy.”

James Kewin, Managing Director of CFE, said:

“Our research suggests that skills policy should focus on creating the environment in which employers can invest in the skills of their workforce and training providers can respond effectively to their needs. Employers, and those colleges and providers that supply training to them, have the potential to work together even more effectively than they currently do, but the role of government in this relationship should be informed by the lessons from previous policy interventions we identify in the report.”

For the full report can be downloaded here.