Government launches new skills strategy

In July 2003, the UK government unveiled its new skills strategy white paper aimed at addressing England’s long-standing skills and productivity weaknesses. This feature examines the background to the white paper as well as the main elements of the new strategy, and reflects on some of the key challenges it is likely to face

On 8 July 2003, the UK's Labour Party government published its latest white paper on skills. The white paper, entitled 21st century skills: realising our potential, sets out an England-wide strategy for improving the skills and productivity of the workforce. As such, it aims to tackle what it calls 'deep and pervasive problems' that have resulted in the UK suffering from a significant productivity and skills deficit relative to its major competitors. Output per hour worked is at least 25% higher in Germany and the USA, and over 30% higher in France, than in the UK. Only 28% of the UK workforce have an intermediate-level qualification, compared with 51% in France and 65% in Germany. It is also estimated that there are over 7 million adult workers, or around 30% of the UK workforce, without a level 2 qualification or above - ie five 'good' GCSEs (exams taken at the end of compulsory secondary education) at grades A*-C or a National Vocational Qualification (NVQ) level 2.

Launching the new skills strategy, the Chancellor of the Exchequer, Gordon Brown, said: 'Skills are Britain’s Achilles’ heel, particularly at intermediate level. There is no greater economic issue to which we have to devote our attention.' The white paper argues that improving workforce skills is crucial to developing a more competitive economy and an inclusive society, but insists that this will only happen if there is 'step change' on the part of government, employers and individuals. To achieve this, the government argues that the needs of employers will have to be placed 'centre stage'. The single overarching aim, therefore, is to ensure that 'employers have the right skills to support success in their businesses and organisations, and individuals have the skills they need to be employable and personally fulfilled'.

Background - the Performance and Innovation Unit’s project on workforce development

For the past two decades, policy-makers have defined the UK’s long-standing 'skills problem' as one of poor or inadequate supply of skills. In attempting to rectify the problem, they have concentrated almost exclusively upon a succession of measures aimed essentially at increasing the volume and quality of education and training. This approach has not gone uncriticised, however, with some commentators arguing that it neglects a set of deeply embedded structural weaknesses in the UK economy that depress or weaken employers’ demand for, and usage of skills. Until recently, however, such arguments made little impression on policy-makers.

In light of this, a project on workforce development undertaken by the Cabinet Office Performance and Innovation Unit (PIU), the published results of which emerged in 2001, appeared to mark a significant watershed. The PIU questioned the official policy orthodoxy that the UK’s long-standing weaknesses in the area of vocational education and training (VET) could be explained primarily as problem of inadequate skills supply, ie as a failing of the education and training system. Instead, it insisted that skills were a 'derived demand' contingent upon firms’ wider business and organisational strategies. Rather than endorse the official line that the problem lay solely on the supply side, the PIU suggested that the UK might be faced with a much more intractable problem of 'systems failure' that encompassed both the supply of, and the demand for, skills. Certain firms, it suggested, could find themselves trapped in a low-skills, low-quality equilibrium, producing low value-added goods and services with a low-skill, low-waged workforce. In doing so, it hinted at the need for a more 'joined-up' strategy that might have included attempts to shift firms’ competitive strategies towards higher value-added and more skill-intensive approaches. Since 2001, UK policy-makers have been struggling to come to terms with the implications of the PIU findings. It is vital, therefore, to read the new skills strategy in this light.

The new skills strategy

As the white paper makes clear, the aim of the skills strategy is not to launch piecemeal initiatives or programmes but to learn from past mistakes and develop a 'joined-up' approach across government, the social partners and other key agencies. The centrepiece is the creation of a new national 'Skills Alliance'. Led by the Department for Education and Skills (DfES) and the Department for Trade and Industry (DTI), the alliance is presented as a 'new social partnership for skills' between government, the Confederation of British Industry (CBI), the Trades Union Congress (TUC) and the Small Business Council, working in partnership with other key delivery agencies. Its aim will be to drive forward the implementation of a new strategy 'delivery plan'. Other key proposals contained in the white paper include:

  • giving employers greater choice and control over publicly-funded training in a bid to create what the paper calls a more 'demand-led' system;
  • an entitlement to free tuition for all adults aiming to achieve a first full level 2 qualification as a skills foundation for employability;
  • increased support for adults wishing to gain a first level 3 qualification (two A levels or an NVQ level 3) in sectors or areas where there are skill shortages;
  • piloting a new means-tested grant of up to GBP 30 per week for adults studying full time in further education for a first full level 2 qualification and young adults studying for a first full level 3;
  • the development of the new Sector Skills Council network (UK0211105F) – now termed the Skills for Business Network – to act as the main voice for employers and employees in each of the main sectors of the economy, responsible for identifying sector skill needs and how best to respond to them;
  • a stronger regional focus, with Regional Development Agencies (RDAs) asked to take the lead in forming 'regional skills alliances' designed to ensure that learning opportunities meet local needs. Other key partners will include the new Skills for Business Network (see above), the local Learning and Skills Councils, the Small Business Service and Jobcentre Plus;
  • expanding the network of union learning representatives (UK0305102F) as a key player in encouraging the low skilled to participate in training;
  • reforming the qualifications framework to make it more flexible, credit-based and responsive to the needs of learners and the economy;
  • strengthening and extending Modern Apprenticeships (UK0210105F) as a 'top quality vocational route' designed to meet the needs of employers, and lifting the current age cap (currently 24 or under) so that young people who start their apprenticeship at any point before their 25th birthday can complete; and
  • the inclusion of information and communications technology (ICT) as the third essential basic 'skill for life', alongside literacy and numeracy.

The above measures, in particular the level 2 entitlement, reflect the government’s determination to focus public support on those groups with low skills. At the same time, the white paper prepares the ground for a national roll out of the current 'employer training pilots' (UK0302106F), whereby employees receive free training and employers are compensated for giving them the necessary time off. However, the most striking feature of the different initiatives listed above is the fact that they all focus on increasing the supply of skills and qualifications.

Social partners' response

The launch of the government’s skills strategy drew a warm response from the social partners. The TUC general secretary, Brendan Barber, said: 'Today’s announcement that government, employers and unions are to work side by side in the Skills Alliance is a great boost to those unions and employers who are already working together to improve training in workplaces across the UK. A highly skilled workforce is ultimately in everyone’s interest – the individual workers, their employers and the UK economy.' Praising the government for putting 'fresh impetus' behind the drive to boost workforce skills, the director-general of the CBI, Digby Jones, welcomed the fact that employers were to be given 'greater say in the content and delivery of training programmes'. 'For too long', he said, 'there has been a mismatch between the needs of employers and the services of training providers.' Urging the government to turn the white paper’s promises into 'practical realities', Mr Jones welcomed the government’s decision not to resort to 'inappropriate' regulation.


The new national skills strategy is a clear statement of the UK Labour government’s approach to addressing England’s skills and productivity gap. How far it will succeed in tackling such 'deep and pervasive' problems remains to be seen. However, it is certainly possible to question how 'new' the new national skills strategy is. In the aftermath of the PIU project, policy might have taken one of two directions. One possibility might have been to build on the PIU’s findings and develop a genuine 'demand-led' approach to complement the government’s usual battery of supply-side measures aimed narrowly at the education and training system. This would have involved a new role for government intervention in trying to shift more firms 'up-market', as well as targeting areas such as job design and work organisation in bid to influence the productive utilisation of skills. The other option was for policy-makers simply to revert to what they knew best, and stick with the familiar diet of initiatives aimed at boosting the supply of skills and qualifications.

It would appear that policy-makers have chosen to take the latter, already well trodden, path. Although the 'new' skills strategy makes occasional references to the need to assist firms to upgrade their business strategies and capacity for innovation, the emphasis is on improving managerial skills, the provision of better information and advice, and the diffusion of best practice. Stronger forms of intervention, designed to push firms 'up-market', are ruled off-limits. It is interesting to speculate whether such back-pedalling from the PIU’s findings has occurred because ministers were not persuaded by the PIU analysis in the first place, or whether they did believe it only to conclude that such interventions were politically and ideologically unacceptable in the UK. Either way, it remains to be seen whether the latest round of supply-side measures can succeed where others have failed. If they cannot, the new 'Skills Alliance' may find itself staring at the same intractable problems armed only with the same old policy weapons for tackling them. (Jonathan Payne, SKOPE)

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