David Lammy - Institute for Employment Studies

Introduction

Good evening. Thank you for inviting me here tonight. I'd like to start by paying tribute to Jim Hillage for his contribution to the skills agenda. His research and evaluation - most notably of the Employer Training Pilots that were the forerunner to Train to Gain - has helped us to understand what works, and to shape some of our key interventions and policies. His recently awarded MBE is a well deserved recognition of the contribution Jim has made.

First DIUS Skills Minister

I have the privilege of being the first Skills Minister in the Department for Innovation, Universities and Skills - 'DIUS'.

Creating this department was one of the first things the Prime Minister did when he took over in June this year. This gives skills, along with colleges, universities, science and innovation - a new and direct voice in Cabinet.

DIUS's mission is to lead Government's work to make Britain one of the best places in the world for science, innovation and research, and to ensure we have a workforce with the world class skills the 21st century demands.

And in doing that, we are committed to breaking down the barriers that prevent people from improving their skills, getting a good job and progressing in work. We are committed to ensuring that in a fast changing world there is opportunity for all - regardless of their background.

Our commitment to economic prosperity and social justice are not mutually exclusive. Quite the contrary. Realising the talent of all our citizens and ensuring everyone has the opportunity to improve their lives, is perfectly consistent with improving the skills of the workforce to drive increased productivity and business performance. Both ends are served by a commitment to improving our skills.

The challenge

Lord Leitch perfectly captured the challenge. We need to 'raise our game'. We need to be in the world's premier league on skills, not languishing mid-table as we are now.

Our vision is to be a world leader in skills by 2020. That's a really stretching ambition to set ourselves, but it is an ambition we simply must realise if we want to compete and succeed in the global economy of the 21st century, and if we want our society to be one of opportunity for all.

We have achieved a lot already:

• 1.75 million achieved their first Skills for Life qualification since 2001 (met our target of 1.5m by 2007 early).
• 74% of adults in the workforce now qualified to at least level 2. 1.14 million adults up-skilled since the end of 2002 (met target of 1m by 2006)
• 250k Apprenticeships in England, up from 75k in 1997. Completion rates 60%, up from 24% in 2001/02.
• FE success rates up from 59% in 2000/01 to 77% in 2005/06 (met our target of 76% for 2007/08 early).

Those are real, significant achievements. But we can't afford to sit back and congratulate ourselves. The pace of change in technology, in global markets, and the rate of progress our competitors are making, means we need to see our achievements to date as a platform not a podium finish.

The demand-led approach

One of the first things DIUS did after its creation in the summer was to publish World Class Skills, setting out how we will work with employers, individual learners, unions, colleges and universities to deliver the skills revolution we need.

All of our reforms have in common the principle of shaping the system around the needs of our customers - employers and individuals - this is exactly what we mean by a 'demand-led' approach.

It:

• Gives employers the opportunity to lead the system, through the new UK Commission for Employment and Skills, and through their Sector Skills Councils.
• Gives employers, through their SSCs, a leading role in the reform and development of vocational qualifications for the sector, to ensure they deliver what Leitch called 'economically valuable skills'
• Is an FE system focussed on delivering excellent, responsive provision.
• National Skills Academies, give employer the opportunity to exercise direct influence over both the content and delivery of skills training for their sectors.
• Puts purchasing power in the hands of the customer through new demand-led funding models, the expansion of Train to Gain and the roll out of new Skills Accounts.

Critically, 'demand-led' also means stimulating greater, and better informed, demand for skills.

UK Commission for Employment and Skills

We're making good progress in creating the new UK Commission for Employment and Skills.

The Commission will strengthen the 'employer voice' at the heart of the skills and employment systems. It will maintain an overview of both our progress towards the ambition and the ambition itself to ensure it continues to reflect 'world class skills'.

This allows employers to tell Government what they need from the skills system, and telling us whether the system is delivering it.

Sir Michael Rake, Chair of BT and Business in The Community, will be the Chair of the Commission. It will be led by a small, influential Board of Commissioners, comprising top employers from the public, private and third sectors.

I am delighted to announce that we have just appointed Chris Humphries as the first Chief of Executive of the Commission. Chris is a great appointment. He has a wealth of experience, working with employers, understanding their skills needs, and championing excellence in training. All of this experience will be vital in his new role.

One of the Commission's first tasks will be to lead the reform and re-licensing of the network of 25 Sector Skills Councils.

Reforming Sector Skills Councils

We are reforming and re-licensing SSCs with a new, more sharply focussed remit focussed on: raising employer ambition and investment in skills; articulating the future skill needs of their sector; and ensuring that the supply of skills and qualifications is driven by employers.

Some SSCs are already making a real impact, engaging with employers in their sector to drive up demand, and working with us to make sure that the system is delivering what their employers need.

But Lord Leitch rightly identified in his final report last year that performance across the network is not yet at the level required to deliver the role we envisage. That must change, and it will.

The Sector Skills Development Agency is working with the Network to build capacity and improve performance, and the new UK Commission will carry on that work once it is fully operational next year. Alongside that, SSCs are working ever more closely together as a network to build their own capacity through collaboration, and peer support.

Vocational Qualifications reform

One of the most important aspects of the SSCs' role - and one of the most powerful ways in which they can ensure that the system is demand led - is leading the reform and development of vocational qualifications for their sector.

We must ensure that qualifications equip people with what Leitch called 'economically valuable skills'. That means bringing an end to the days of employers telling us our qualifications don't give their staff the skills they really need to do their jobs. And it means giving people the skills they need to find, stay in, and progress in, work.

SSCs will determine which qualifications should be included in the nationally recognised framework, and tell the LSC which qualifications should be priorities for receiving public funding.

From next year, the LSC will trail process whereby SSCs advise each on which qualifications should be priorities for public funding. That is to say, public funding won't automatically be available for qualifications that employers don't want.

Many employers already deliver excellent, in-house, training programmes that meet their needs, and equip their employees with a broad base of economically valuable and transferable skills.

At present, however, much of this training does not count towards a recognised qualification.

The QCA is now working with some of those employers to test different models and approaches to getting their training recognised as part of the national system of accredited qualifications

FE Reform and the new standard

Last year, there were around 3.98 million adults learning in the FE sector.

Our FE system is good and improving - 77% of all college students succeed, up from 59% in 2000/0.

We have increased public investment in the FE system by a record 48% in real terms between 1997 and 2006.

A new higher standard for employer responsiveness and vocational excellence will provide a badge of quality that employers can look for when seeking training.

The new standard will accredit a provider's responsiveness to business needs; their excellence in delivering training to employers; their commitment to continuous improvement and sector specialisation and the outcomes and impact achieved.

This summer, the standard was made available to the 70 providers that tested it, and it has since been made more widely available. Take-up has exceeded expectations - there has been very strong interest from the FE sector, and encouraging levels of interest from HEIs and employers in being accredited. First accreditations are expected to come through this month. We are planning a national launch of the Standard next spring.

National Skills Academies

One of the most innovative ways in which we are seeking to transform the skills landscape in the UK is through National Skills Academies.

NSAs are public private partnerships which put employers firmly in the driving seat, giving them a strong influence over both course content and delivery methods in return for their support and investment.

National Skills Academies are encouraged to be innovative in every way, including how they deliver their programmes and how they achieve national reach.

For example, the NSA for Construction will be transforming major construction projects around the country, such as those linked to the Olympics, into work based learning centres. These will be supported by mobile training centres, which will offer learner support, tuition and access to on-line materials.

This approach will offer learners a unique combination of practical and theoretical skills, enabling them to learn amidst the excitement of being part of a major construction project. When the learners finish their courses, they will be uniquely qualified for the world of work and will hit the ground running.

Each National Skills Academy will adopt its own model of delivery but all of them are expected to adopt innovative and leading edge approaches.

National Skills Academies have also proved an excellent vehicle for attracting employer sponsorship. Significant pledges of employer investment have already been achieved - around £12 million for the first five National Skills Academies.

We are on target to have 12 Academies in place by the end of 2008. Five academies have already been approved, I shall be announcing a sixth tomorrow, and we have six more in business planning.

Train to Gain

Train to Gain is right at the cutting edge of public service reform. Just one phone call to the Train to Gain helpline gives employers access to:

• Free, impartial skills brokerage service to help them identify their skills needs, and source the training that will best meet those needs.
• Brokers will also signpost employers to a wide range of other business development tools and support provided by Government.
• Training will be delivered at the time and place that suits the employer; skills for life and first level 2 training is free to the employer; and from next year, match funding will be available for level 3 programmes through Train to Gain.

Train to Gain is already a great success. Since it was rolled out nationally in the autumn of 2006, Train to Gain has engaged over 52,000 employers; more than 240,000 learners have begun learning programmes, and almost 100,000 have achieved their first full level 2 qualifications. And employer satisfaction - a pretty good measure of whether the service is 'demand led' - stands at 86%.

That performance so far gives us a real platform on which to build. Public investment through Train to Gain will be over £600m next year and it will rise to over £900m by 2010/11.

We have reviewed the first year of Train to Gain, and will set out later this month detailed plans for how we improve and expand the service to support employers of all shapes and sizes, in all sectors of the economy, to invest in their businesses by investing in their skills.

Skills Pledge

So, Government is doing all it can to put employers' and learners' needs at the heart of everything we do on skills. But to realise our ambition, we need employers and individuals to play their part too.

We want employers to make the Skills Pledge - a visible commitment to supporting their staff to improve their skills and gain recognised qualifications.

All employers that make the Skills Pledge will have access to the Train to Gain brokerage service and to subsidised training. Over 400 employers, employing some 2.5 million people, have already made the Skills Pledge.

That is a good start. We need to build on this, with many more employers coming forward to show their commitment to skills.

Individuals

I've talked about what we are doing to shape the system around the needs of employers this evening; the same approach is equally true for individual learners.

We need to create a 'culture of learning' in this country, where people recognise the role skills can play in helping them to improve - to change - their lives.

We will create a new universal adult careers service, working in partnership with Jobcentre Plus to deliver a tailored employment and skills advice and support that better meets the needs of low-skilled and unemployed adults.

New Skills Accounts will give individuals greater ownership and choice over their learning, and help eligible benefit claimants to access training that will support their return to work.

Conclusion

So, Government is doing all it can to shape the system around the needs of the customer - employers and learners. A system driven by demand, not supply.

We are committed to a demand-led approach. That is the way we will realise our vision for a nation with world class skills, a productive and prosperous economy, and a just society where there is opportunity for all.

Through SSCs and the new Commission for Employment and Skills, employers have a tremendous opportunity to lead the system.

And we need them to seize that opportunity with both hands. The opportunity to lead the system. To shape it around their needs. And the opportunity to use skills to drive the performance of their businesses.

Without employers who want to lead, we can't have an employer led system. With employer demand, we can't have a demand-led system.

We simply must invest in our nation's skills. Working together, we can reap the rewards.