Vince Cable’s AoC speech in full

Good afternoon.

It’s one year and a day since we launched the Government’s skills strategy and I spoke to this conference. I’ve returned – first and foremost – to express my appreciation for what you’ve achieved during the past 12 months and reaffirm my own personal commitment, and that of my department, to colleges.

I don’t pretend for a moment that it has been easy. As a sector you are having to do more with less. I know money is tight and will remain tight.

Nevertheless, in 2010/11 we have seen increases of over 10 per cent in adults taking basic literacy and numeracy courses, and greater availability of full qualifications at level 2 and 3.

The most recently published Ofsted reports reveal that almost 70 per cent of colleges were judged good or outstanding following inspections in 2010/11.

But the standout achievement has to be apprenticeships, which I shall speak about shortly. I know that for some colleges specialising in A-levels for academic pupils Apprenticeships might not be central to your mission. My own local tertiary college, Richmond, is one of those colleges which has outstanding A-level results. And there is really valuable post-school and adult learning and training of other kinds. But for the sector as a whole, the Apprenticeship approach to vocational training is of major and growing importance.

A year on, then, and my message is largely the same. Your work is vitally important – not just as a means of supporting economic recovery, but because it brings fulfilment to millions of people, and it strengthens the fabric of local communities.

I am hoping to see more of the same. I want to see colleges train even more apprentices, and to higher standards. I’d like colleges to seize opportunities arising from recent reforms – in higher education as well as further education. And I hope that ongoing efforts to unravel and eliminate the red tape which has encircled your institutions will make it easier for you to pursue your respective missions.

Let me start with apprenticeships: the subject, as many of you know, of a summit yesterday with small businesses, at which I announced some next steps for what is the Government’s flagship skills programme.

Last month’s provisional figures indicated a 50 per cent increase in people starting an apprenticeship in 2010/11, compared with the confirmed figures for 2009/10. Put differently, almost 450,000 people embarked on programmes offering new training, new work, better prospects – with numbers up for all age ranges and at all levels. There were 175,000 apprenticeship starts among the 25s and over, against 49,000 the previous year; 148,000 advanced level starts, as against 88,000.

In the toughest circumstances facing the country, apprenticeships have provided a source of real encouragement – for individuals and businesses, for ministers too. Crucial sectors like construction and manufacturing, as well as services, are investing in skills. And they couldn’t do it without a flexible and responsive FE sector.

I believe that the apprenticeship programme is moving in the right direction. 50,000 workplaces took on an apprentice for the first time last year. Completion rates – at 74 per cent – compare with the best internationally. All apprenticeship frameworks have adopted new quality standards. We have funding available to support at least 10,000 more higher apprenticeships.

We now need to consolidate the apprenticeship brand – making sure we maintain the confidence of learners and employers by delivering the right kinds of training.

But given the requirement to maximise returns on public investment in every area of policy, we have to allocate resources where they can have the greatest impact. In some cases, this means focusing on sectors where there are clear skills gaps. Elsewhere, it will involve prioritising key growth industries, smaller businesses and also apprentices under the age of 24. In today’s tough labour market, those just embarking upon a career need particular support. Indeed, the economic benefits of apprenticeships are highest for young people acquiring the knowledge and workplace skills that are the bedrock of any successful career.

We therefore intend, as the Prime Minister has announced today, to try out a radical approach to promoting business engagement and investment in skills and apprenticeships – one where public money is channelled through employers. We expect to make up to £250m available over two years through this route, subject to quality bids from employers and positive evaluations.

While the introduction of this pilot might sound threatening to some providers, and perhaps to some of you, it actually represents an opportunity for the best to expand. We aim to build on, not undermine, the strong relationships many of you already have with employers. Our approach will be flexible rather than bureaucratic – enabling you to work more closely with business and focus on the support they need to develop and grow.

We also plan to offer incentive payments for small employers who take on a new apprentice aged 16 to 24 – with resources to support up to 20,000 places during a trial year.

There are simpler ways to improve apprenticeships, of course. From the start of 2012, training providers and employers will no longer have to comply with any requirements which go above and beyond health and safety legislation.

For employers who want to advertise an apprenticeship vacancy, we will reduce the time it takes before they can go out and recruit someone. The maximum period between first contact by an employer with the National Apprenticeships Service to advertising the vacancy will be one month (it can be as long as nine months at present).

And for all learners and employers thinking about apprenticeships, we will increase the amount of objective and comparable information on providers that’s available to them.

These are all measures to reinforce apprenticeships as the gold standard for vocational training – to safeguard existing returns which deliver up to £40 for every one pound invested. As part of our emphasis on quality, we also want all apprentices to be offered the chance to achieve English and maths qualifications to Level 2, where they currently lack them.

We cannot afford for any provider to hand out qualifications without requiring learners to put effort into their training. Indeed, I’ll be commissioning an employer-led review into standards – to examine whether all programmes are sufficiently rigorous and delivering value for money. The review will report back to me by Spring 2012.

Let me turn now to another area in which colleges can make a very significant contribution: higher education.

I was a supporter of HE in FE long before I became secretary of state. That conviction has only grown over the past year as a result of talking to students on foundation degrees at Burnley College; indeed, virtually every college I’ve visited since last November, including Farnborough, Solihull, Birmingham Metropolitan, has been in the business of higher education and advanced skills.

These colleges have a strong grasp of regional business needs and the flexibility to meet them. They are attuned to local employers – including smaller firms – and, as a college principal said to me the other day, they are adept at offering courses that fit with the rhythm and patterns of people’s lives: around family, work and other responsibilities.

As you know, the HE White Paper contains measures to make it easier for a broader range of providers – including FE colleges – to compete for undergraduates. We are freeing up student number controls through a core-and-margin model – which colleges can bid for – and we’re removing regulatory barriers to achieve a more level playing field in higher education. I congratulate Newcastle College and New College Durham for securing Foundation Degree Awarding Powers over the past year – the first colleges to do so – and I encourage other institutions to explore the opportunities that are now out there.

I am however still getting reports that some FE colleges’ attempts to offer their own HE courses are being discouraged by their university partners. College principals have expressed fears that some universities may revise their validation charges and franchising arrangements.

It would be a backwards step if FE colleges were squeezed out of the market by universities clawing back franchised places. FE colleges have a very important role to play in offering students greater choice. Anti-competitive behaviour is obviously unacceptable. If FE colleges can offer good-quality degrees at a more competitive price than a validating university does on its home campus, then I’m all in favour. I have made this point to vice chancellors at the Universities UK conference, and HEFCE will be looking carefully at any restrictive practices by universities. Do inform my department of any cases which affect you.

It is also a legitimate goal for colleges to extend their influence beyond these shores. The ways in which higher education has become a global market are widely appreciated, but similar trends are emerging in further education as well. It was clear, at the excellent WorldSkills competition in London, that skills possess a lingua franca of their own.

A national strategy in China has identified the need to train 3.5 million more technicians and establish a network of 1,200 training centres by 2020. In India, it is estimated that – by 2022 – 90 per cent of new jobs will be based in retail, construction, textiles and automotive engineering and required skilled people to fill them. Their target is for 500 million skilled individuals in the Indian workforce by that date.

We’re well placed in this country to help these countries and reap the benefits. We have the experience of creating bespoke training alongside employers. We’re well versed in the use of educational technologies and distance learning. Above all, we have some excellent teachers and college leaders.

Building on WorldSkills and other activities, the Government is stepping up its efforts to support education as an export. The skills strand of the UK India Education and Research Initiative includes helping the Indian government to develop its skills infrastructure. Following the memorandum of understanding signed by John Hayes with the Chinese Ministry of Education over the summer, there are plans for an apprenticeships programme to be piloted in China.

Now, I know that there are issues here causing concern in the sector, including some of the recent changes to the student visa system. It is clearly in the best interests of legitimate colleges and genuine students that a tough line is taken on bogus organisations and those who abuse the system. But, at the same time, we want to ensure that FE colleges offering quality provision can attract and benefit from international students. I regard our colleges and universities as one of our most successful industries and I am determined that we remain open and see this sector grow. BIS will continue to monitor the situation with the UK Border Agency and Home Office, and will liaise closely with the AoC.

There are other issues that need to be examined so that the sector can reap greater benefits from international activity – for instance, on gaining recognition of qualifications and institutions in certain markets. BIS is working with the relevant organisations to explore how such obstacles can be overcome. We want to make sure that FE is in the strongest possible position to punch its weight internationally.

Turning briefly to issues of a more domestic nature, John Hayes spoke to you earlier in the week about progress on giving colleges and providers greater freedom to operate in the best interests of students and employers. The Education Act 2011 has now received Royal Assent, lifting a range of duties and enhancing self-governance powers. The legislation will bolster other changes we’ve introduced – like the removal of central targets and the shift to single adult skills budgets. Reaction so far to these changes has been encouraging – enabling colleges to respond more rapidly to local demand from both learners and employers, and requiring them to spend less time in negotiations with the funding bodies. I want the impact of bureaucratic reform to be evaluated on an ongoing basis – so that any negative consequences can be fixed and ideas for the further removal of red tape adopted, wherever practical.

One last point from me today. As you know, I’ve spoken before about the enormous social value of this sector – drawing on the experiences of my parents (a father who taught Building Science in an FE college, a mother whose later life was transformed through adult learning) and those of my constituents, who’ve gained so much at Richmond Adult Community College. It is reassuring to have these personal stories entirely corroborated by the independent commission led by Baroness Sharp. Margaret’s report demonstrates that colleges – in her words – “occupy a pivotal space” through “contributing to widening access to learning, community cohesion and the development of civil society and enterprise”.

Go to any part of the country, and you’ll find tangible evidence of this pivotal role. Wirral Metropolitan College is preparing offenders nearing release and others performing community service for formal training employment. Craven College in Skipton has set up a network of local providers to support students with learning difficulties. The College of Haringey, Enfield and North East London now hosts advisers from Tottenham JobCentre, relocated after fire damage to its premises during the riots.

Examples are legion, yet it unfortunately remains the case – as I acknowledged this time last year – that colleges rarely receive the plaudits they deserve. Nevertheless, there is – across the Coalition – firm endorsement for all that you’re doing to strengthen hundreds of communities, support thousands of businesses and improve the lives of millions of people.

So, thank you again – for your work over the last 12 months and in anticipation of your successes in the months and years to come.