When employers take control of skills training in their own industry, will it herald the end of the Sector Skills Councils? Or will they work in harmony with SSCs, awarding bodies and LEPs in a “brave new world” of skills provision? Will Stirling investigates.
Ask a typical West Midlands metal-bashing – sorry, precision engineering – company whether they should speak to Semta, the National Skills Academy for Manufacturing, the Regional Development Agency (or now the Local Enterprise Partnership), the Manufacturing Advisory Service, EEF, the National Apprenticeship Service, an awarding body, a training agency or local colleges for help with skills, the chances are they wouldn’t have a clue.
Ask most of those bodies, however, who that company should speak to about skills provision and nearly every one would probably say “us”.
But come April 2014, skills delivery in manufacturing is going to change beyond all recognition of this convoluted mess of agencies and third party providers.
That’s what employers want and it’s what the government is saying it supports.
The evidence for doing this is plain: government commissioned the Richard Review that recommended employer-led skills, published in October 2012; it launched the Employer Ownership of Skills (EOS) pilot shortly after; employer-led skills are advocated in the Heseltine Review and referenced in the Single Growth Fund, and the government announced an Apprenticeship Funding consultation, where once again the employer will be put in charge.
Giving employers more power is proving very popular.
EOS Round II received 315 bids, from both small and large employers, who requested £1.5bn of applications for an available pot of £250m; a 6-to-1 oversubscription. Skills minister Matthew Hancock extended the “support infrastructure” on EOS with another £100m in the June spending round, stopping short of formally calling it Round 3. My mole tells me that, among others, JCB chief corporate development officer David Bell was instrumental in convincing government to extend this.
And it is about time employers had power.
While many companies have reaped benefits from skills training supplied by Semta, Cogent and the other SSCs, the agencies have their detractors. Despite the case studies of success in their engagements, the common reproach has always been that employers don’t want to be directed on skills by an agency whose staff have had, in some cases, no experience of manufacturing. Nor do they want this funding micromanaged by central agencies like the National Apprenticeship Service.
Rather than resisting the shift, which alters their authority in the skills market, however, Semta embraces the change.
“As the current employer funds expire, then SSCs in their current form are moving much more to become employer skills bodies,” says Semta’s CEO, Sarah Sillars. “Fundamentally the future will be about delivering services that are of value to employers that employers would wish to buy. It moves it to a much more commercial, supplier-demand model with employers.
“I absolutely support it 100 per cent,” she adds.
Then again, it would be hard not to. It is a fait accompli, and every industry body – EEF, the CBI, FDF, ADS – have given their nods of approval. The Federation of Small Businesses says OK but act cautiously, while others will say there is no time for more dithering.
Does this wholesale change from agencies to employers as the owners of skills development, however, mean the end is nigh for sector skills councils?
After all Proskills, the SSC for the process manufacturing industries and SkillSmart Retail, the council for the retail industry, failed to survive the March 2012 cull when performance-justified funding came in.
Not so, says Sarah Sillars. Semta has a big job to do in several areas that reflect the new “paradigm shift” in skills provision, such as being a partner in the ‘industrial partnerships’ and in providing new services like workforce development planning. How so?
In the Employer Ownership of Skills scheme, there are two strands of activity. One is via industrial partnerships, employer-led consorita that bring together bodies that might include the Local Enterprise Partnership, the local University Technical College, and awarding organisations such as EAL, with employers. These partnerships may have a stronger bid than a company working alone.
“The lead has to be what the employers want from the skills system, which will give them the outcomes they want by breaking out of the current barriers that the skills system is perceived to have for employers,” says Sillars. “That is an absolute paradigm shift to putting the opportunity for employers to shape the skills system, as long as they can demonstrate fundamentally improving GDP and create new jobs.”
Here she says, organisations such as Semta can be there to work with the employers leading those industrial partnerships on services they do not have the resources for.
The second strand under EOS is where individual companies are able to demonstrate step changes in generating growth.
Conceivably, when EOS Round 2 winning bids are announced in September, there could be a strong bias of these individual companies, an outcome that would question the function of a Semta, or non-employer partner, in a partnership.
At the moment, The Manufacturer understands that a “big proportion” of these bids are industrial partnerships, although one trade body we spoke to said Round 2 will not present the perfect vision of industrial partnerships that the UK Commission on Employment and Skills had first envisaged.
A big challenge for these skills councils moving on is that of simultaneously finessing three big asks:
1. The employer, not the government, is the customer. The private sector scrutinises pennies and has zero tolerance of partners that cannot prove value-add.
2. SSCs, Semta especially, need to assist more SMEs. Hitherto Semta has not always been well-known for providing skills solutions to the vast array of smaller companies who were the most needy.
3. An organisation measured on results that might be less generously funded post-“paradigm shift”, now simultaneously needs to reach more SMEs. This means a lot more work, stretching resources.
Under a previous administration, Semta was accused of hitting its targets by providing skills ‘outcomes’ (trained employees) by working with big companies, who could hoover up 100 or so apprentice training places at a time.
Great for the likes of BAE Systems and perhaps Nissan and GKN, but such target-hitting overlooked the vast backbone of British manufacturing – small firms.
When changes under EOS Round I in 2012 asked certain prime companies to over-train a percentage of its apprentice intake deliberately in order to pass the extra trained personnel to its suppliers, a solution was claimed.
Sillars says, “A key trigger for the success of the approved industrial partnerships is a step-change in showing large employers working with SMEs through their supply chains. With BAE for example, in the last round of Employee Ownership, they are overtraining 50 apprentices in the North West to be able to put them in their supply chains.”
That is one way of helping SMEs. But not all SMEs work in the supply chains of big primes. In fact there is a case to say steer well clear of using essentially government funding for assisting the big primes and their supply chains.
BAE, Rolls-Royce, Nissan – these firms, it could be argued, have a business reason to over-train their apprentice intake, to feed their tier one and two suppliers, knowing two things. Firstly, many of the apprentices their own suppliers have trained will gravitate to them anyway in time, a pattern exposed at Jaguar Land Rover by The Economist magazine in July. And it should be a standard practice for big primes to help train the staff at some of their key suppliers, to ensure business continuity, although this depends how many suppliers are unique or e.g. one of 2 or 3.
Semta says it can play an important role in facilitating this, through a service called the Semta Apprenticeship Service. “This can help recruit, do the assessments and pre-entry requirements for the SMEs, as an extension of HR,” says Sillars. “There are lots of routes to get to the SMEs in the brave new world.”
Mrs Sillars would not be drawn, however, on the absolute number of SMEs that Semta is helping today compared with 2010, before grant aid funding was reviewed. Three of Semta’s biggest activities today, she claims, are graduates, apprentices and supply chain skills assessments – all for SMEs. She does accept, though, that the shift in focus to SMEs, when there was a move away from grant funding, came because “there was a strong requirement for a heavy focus on SMEs that hitherto had probably not had easy access or visibility of the support they deserved.”
Semta’s boss is bullish about the future role of Semta in the skills landscape. “We are adapting, and we will have to adapt further, to the “paradigm shift” in how skills will be assessed and deployed.”
Will Semta’s role be subordinated as the customer becomes a more discerning private sector company, not the government?
“Not at all,” says Sillars. “In the last three years, since we began moving away from grant-in-aid, is to make sure that bodies like Semta are actually delivering the requirements that employers want. Therefore the strong SSCs that deliver services or support, or help organisations do their workforce development planning, give them high value intellectual support, they will continue to prosper and grow.”
Despite this optimism, many feel that the new funding changes in April will signal crunch-time for the sector skills councils and awarding bodies, as more companies – even SMEs, working with or without big customers – develop the capability to bid for and operate their own skills training. Someone close to the SSC for the chemicals and nuclear industry, Cogent, told The Manufacturer in July that he sensed it was close to cutting jobs and possibly merging with another SSC.
There will be winners and losers in the “brave new world” of skills provision in UK manufacturing, but at least the employer is guaranteed a prize.