Why providers should give employers some control over training funding

In a few weeks, the UK Commission for Employment and Skills will launch its pilot scheme with the government to help businesses engage directly with the skills agenda. The scheme – which has been in development for six months – will see up to £50 million in the first year and £200 million in the second devolved to employers to enable them to contract with providers to design and develop the employer-facing training their business needs.

For those of us who have been in this game for a while, this marks a departure from the norm. Businesses always used to be incentivised to get on board with government initiatives delivered by training providers. What will happen when the situation is reversed, and employers are given the power to incentivise us?

I genuinely believe this pilot will offer those delivering work-based learning more opportunities than ever before. Savvy providers with a good track record of working with business will supply a premium product – the training businesses want, when they want it – thus becoming the trusted delivery partners of their local employers. And this isn’t just about public money. Employers will be prepared to invest more of their own resources into training if they feel they own the product and know they’ll get a return on their investment.

The proposals have been supported by many of us working in the sector, who can see the potential for developing sustainable partnerships based on the needs of local communities rather than the whims of those in positions of power. But of course, there are questions. Chief amongst those is the vexed question of accountability.

For many years, accountability has been the watchword for those of us working in the public sector. But we have begun to confuse ‘accountable to’ with ‘accountable for’ and outputs with outcomes.

Under the ‘accountable for’ mindset, we have monitored, audited and reviewed every penny going through the system. That all this monitoring is taking money away from the chief beneficiary – the learner – is an irony not lost on those of us working in FE.
So money comes in from the taxpayer to the treasury. It’s measured out and send through to departments (did you hear that KERR-CHING? – that’s a bit coming off for admin).

Let’s use apprenticeships as an example. Our friends at the Department for Business, Innovation and Skills send money through to the Skills Funding Agency (KERR-CHING!) who send it on to the National Apprenticeship Service (an agency of an agency – KERR-CHING!). Continuing its journey downhill, money flows to providers (KERR-CHING!) who use some of it to convince employers to take on apprentices (KERR-CHING!). Finally, some of it reaches the sea – or at least, is used to train apprentices.

How much of the taxpayers’ money eventually reaches its destination? We don’t know for sure, but one estimate is that one pound in every two is spent on administration and back-office functions in some form.

If this meant that we ended up with world-beating skills and productivity, perhaps this wouldn’t matter. But the fact is that we’re slipping below many of our international competitors. We have now fallen from 11th place to 17th in the productivity league tables. We simply can’t go on with a system that haemorrhages money without always delivering the goods. No-one is suggesting that employers control the entire FE budget. I don’t think many businesses would be hammering down my door to take ownership of basic skills development, for example.

But giving employers control over some of the budget for employer-facing training? That’s a different matter. They know exactly what skills their business needs – they have a vested interest, after all. They can contract directly with us to devise solutions which meet those needs. They will be responsible for making sure that those solutions are translated into higher productivity, which in turn leads to more and better jobs for people who need them. Rather than just measuring outputs – like the number of learning hours, or the volume of qualifications – we need to measure outcomes that actually matter, like the amount of private investment, the number of jobs created, and the quality of those jobs. Employers are accountable for that. For many in the sector, moving away from being accountable for funding to being accountable to employers and learners will require a big shift in mindset. Easy? No. But worthwhile? Definitely.

Tony Lau-Walker is chief executive of Eastleigh College and a Commissioner at the UK Commission for Employment and Skills