New skills strategy will cost employers

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16th Nov 2010
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Under the coalition government’s new skills strategy, large employers will have to cover the full cost of basic skills training for staff aged 24 and over from 2013-2014, while small-to-medium business will be expected to pay half. They may also all be asked to pay training levies.


 

The move follows the government’s decision to cut the further education and skills budget by 25%, axing all funding for adult education for the over 25s, and its scrapping of the £1 billion Train to Gain scheme, which will see the bulk of the money being transferred to apprenticeship schemes.
 
A new £100 million co-funding pot will be set up to help SMEs provide Level 2 basic skills courses – the equivalent of GCSEs – however, but it will not apply to Level 3 courses or above, the equivalent of ‘A’ levels or higher. Instead individual workers will have to take out a loan from government if they are unable to afford the upfront costs, although employers can opt to pay some of the fees if they choose.
 
Skills Minister John Hayes said: “Replacing Train to Gain with funding for workplace training prioritised on SMEs will help employers with a small workforce train low-skilled staff. And as we continue to expand apprenticeships and reinvigorate community learning, more people will be able to build their skills and fulfil their potential.”
 
He also confirmed plans to finance 200,000 adult apprenticeships places by 2014-2015. In 2008-2009, 140,000 adults started apprenticeships, 60% of which were entry-level, but the aim is to ensure that they move on to more advanced courses. “In most sectors, an individual will not be considered to have finished their apprenticeship journey until they have reached this level,” the report said.
 
In a proposed return to policies last seen in the 1960s and 1970s, meanwhile, Vince Cable, the Business Secretary, said that organisations of whatever size may be asked to pay statutory and voluntary training levies “or other collective arrangements” to underwrite the cost, where they “have identified the need for collective action on skills and consensus can be secured within an industry”.
 
The plans entitled ‘Skills for Sustainable Growth’ likewise proposed the creation of a “licence to practice” for workers in some sectors. “We want to encourage a wider set of industries....to consider where the introduction of clear professional standards will benefit an industry”, the report said.
 
The goal of introducing both a levy and the licence to practice was to overcome some firms’ reluctance to train personnel in case they lost them to rivals, Cable explained.
 
Although the Industrial Training Act of 1964 had introduced a payroll tax of 1% to pay for training by 27 sector-specific industrial training boards (ITBs), most were abandoned in the 1980s, although the construction and engineering sectors still pay one.
 
But Alison Wolf, a professor at King’s College London, who is writing a report for the government on vocational education, told the Financial Times that opinions were mixed as to whether the ITBs had achieved anything of value and there was concern that some employees placed staff into unnecessary training just to “get the levy back”.

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