This second article in a series on policy options running-up to the General Election examines trends in training and the implications for companies.
Britain has steadily dropped down the international league table of skills level regardless of which government has been in power. An army of civil servants and a litany of different programmes had failed to reverse the trend. So in 1988 the present government decided that the only solution was to put companies in the driving seat. Training and enterprise councils were conceived.
By October 1992 a network of 82 TECs covered England and Wales (now 81), governed by boards of directors with majority senior private sector representation. Essentially they are local employer-led organisations bringing together key players – local authorities, enterprise agencies, chambers of commerce, careers services, FE colleges and other educational institutions, and voluntary organisations. They are meant not just to spend DfEE money but also to lever extra expenditure from the private sector, other government departments and the European Union.
The aim of each TEC, as defined in 1989 by the government, is “to foster economic growth and contribute to the regeneration of the community it serves. Its special focus (is) on strengthening the skill base and assisting local enterprise to expand and compete effectively.”
Training matters
For companies, TECs and the future of training policy matter, not only as a mainstream human resource management issues but also as community and public affairs concerns. Most large companies are deeply involved in supporting education, providing work experience and ultimately employing young people. Many also have a strong enterprise element to their community involvement programmes, releasing executives to serve on TEC boards and other partner bodies such as Business Links and enterprise agencies.
Training is also a growing internal concern as a ‘stakeholder’ issue. With jobs for life gone, staff are concerned about their ’employability’. Investment by companies in training can maintain staff commitment and motivation, as well as enhance productivity.
TECs programmes
TECs are charged with the primary responsibility for achieving National Education and Training targets. Their main training programmes are:
for training young people, Youth Credits and Modern Apprenticeships;
for unemployed people especially long term, Training for Work;
for those at work, helping companies to achieve Investors in People status.
Faced with achieving the monumental task of turning round Britain’s training deficit, TECs have had to cope with declining funding: budgets have steadily reduced from ?3 billion in 1990/91 to less than ?2 billion today. When not openly criticised, they are damned with faint praise – as in the recent “modest success” verdict of the House of Commons Select Committee on Employment.
TECs themselves are proud of their successes, citing for example the fact that eight in ten of the 400,000 on Youth Training in 1994/95 got jobs or went on to full-time education. Drop-out rates are down and pass rates up. New schemes like Training for Work and Modern Apprenticeships were essentially devised by TECs themselves, they say.
One area of persistent criticism has been governance, the accountability and openness of TECs, so much so that the Nolan Committee took up the issue. Detailed codes of conduct have now been drawn up, addressing issues like conflicts of interest among board members, and local TECs urged to adopt them.
Now TECs are trying to regain the initiative and overcome the view that they are mere implementers of policy set by others. TEC National Council is drawing up five papers on developments in the main policy areas, expected to be published in May. Topics covered include:
education and training for 14 to 19 year olds, although Dearing may have stolen the thunder;
lifelong learning;
training unemployed;
enterprise and the role of training in economic development;
the responsibilities of individual companies;
implications of the above for the funding, structure and accountability of TECs themselves.
Sometimes (unfairly) forgotten are industry training organisations. While TECs are essentially regional delivery agents for standard national programmes, ITOs set standards and devise training programmes for specific industries, some still funded by a compulsory levy on employers. Two of the best established are in the construction industry and the hotel and catering industry; this latter currently employs about 2 million people – a key economic sector as leisure and tourism grows – but as with other service industries historically poor investors in staff standards.
Policy options
From the Conservatives, we can reasonably expect broad continuation of existing policies, focusing on achieving the national education and training targets. The two competitiveness white papers have stressed the role of small firms in meeting those targets, proposing new initiatives, such as plans to get large companies to draw on their own expertise in training and offer advisors to small suppliers.
The third white paper, due in June, is expected to continue this emphasis and may go further in one particular area, on the enterprise side of the agenda. Ministers are known to favour further rationalisation of the number of agencies involved in providing business support services – for example merging TECs with chambers of commerce. The process of getting each TEC to apply for a three year ‘licence to operate’, currently underway, was seen by some as a way to rationalise the network through mergers and acquisitions. With the exception of central London, however, this now looks unlikely.
The arrival of Business Links has clarified the position in some parts of the country, but exacerbated rivalries in others. For companies involved in the full range from Business Links, enterprise agencies and chambers to TECs, rationalisation will be unsettling in the short term but may be welcome as yielding benefits later.
Labour
March saw the abandonment of Labour’s long standing policy on a training levy, to the discomfort of traditionalists and unions. The alternatives are individual learning accounts and Investors in People. But the fundamental question “who pays?” remains, still with three possible sources – government (and hence tax payers), companies and individuals. The levy looked too much like a new tax. Making government funding conditional on a ‘voluntary’ contribution from the individual and encouraging companies to chip in certainly looks better. But Labour has not solved the problem of how to make ‘bad’ employers pay up – those who won’t invest in training and poach staff from other companies – without hitting ‘good’ employers at the same time.
Labour’s main emphasis is on helping long term unemployed people, especially the young. Gordon Brown has already published his plans to offer a place to all under 25s through one of four routes:
directly through employers, with a six month wage subsidy and one day a week on training;
through voluntary organisations, with a sum on top of benefits, again with one day training;
full time education
through a new environmental task force, linked to a national Citizens Service, with the same conditions as voluntary organisations.
This is to be funded by a windfall tax on privatised utilities. Individuals who don’t agree to participate face partial withdrawal of their benefits.
Gordon Brown is also proposing a University of Industry, along the lines of the Open University, offering distance learning but using new technology. Labour no longer plans to abolish TECs, but will be under great pressure to increase local authority, trade union and voluntary sector representation on boards. The result will be to leave the role of TECs more complicated and their position less clearly the main gateway for training.
On the enterprise side of the agenda, Labour wants to establish regional development agencies to plug the perceived funding ‘gap’ by providing grants and loans to new and small businesses. The model is the existing development agencies. These may team up with local authorities and try strategic regional economic planning, a source of rivalry with TECs. So, as on the training side, the enterprise picture is likely to become more complicated, not less, and the problems of accountability not solved.
Lib Dem influence
The Liberal Democrats are less worried about the tax question and are still committed to a remissable training levy. Their concern is to catch the free-loaders without penalising companies which invest heavily. So the levy is planned at 2% of payroll costs less approved existing training expenditure, with an exemption for very small firms. Collected through the tax system as for PAYE, the proposals require an audit of training reports submitted by companies in a prescribed format ( a potential role for TECs?).
The Lib Dems want to force employers to release staff under 19 years old for a minimum of two days a week to gain nationally validated qualifications. Also proposed are joint learning accounts, between employers and employees for those in work, and between the state and the unemployed, to encourage greater ‘ownership’ of individuals own training.
Critical challenges
There remain issues fundamental in training and to companies’ community affairs activities which the political parties have yet to address explicitly. One is the estimated 200,000 young people who slip through the net, not in work nor in education and training, mainly those who leave compulsory schooling without basic skills. The voluntary sector has traditionally provided programmes but payment by results (output related funding) has taken its toll. Loss of benefits under Labour’s plans may help the system to recapture some of these young people but will drive others further out into the informal economy, petty criminality or worse.
A second fundamental question is the nature of TECs themselves – the ‘paid piper’ issue. With the government paying the bills, it really calls the tune. TECs can only be autonomous private sector bodies in those areas where they have independent resources. And none of the political parties is offering real freedom.
This lack of resources is most apparent on the enterprise side: for the most part, TECs are only one of the local players, not the captain of the team. That role is increasingly passing to the government regional offices (GROs), holders of the single regeneration budget (and increasingly EU) purse strings. On this third fundamental issue, there is no sign that government of any hue will give TECs and their business board members the means to make real their responsibility for local economic development.
But Europe may change this. Currently 60% of EU money for training is subsumed into the national exchequer to co-finance main programmes, with 40% going to sector leaders like FE colleges, local authorities. But Brussels is insisting on a rule change. Soon money will be available directly to regions, albeit through GROs, provided that there are plausible regional plans and strategies bringing in all key players. So if TECs can seize the initiative, Europe may offer enough resources for TECs to gain a measure of independence. A fact their creators, the present government, may find somewhat ironic.
Corporate Citizenship Briefing, issue no: 27 – April, 1996
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