£250m pilot to give employers power over skills training

20th November 2011

Businesses will be given the power to design, develop and purchase the vocational training programme they need under a £250 million plan announced today by the Prime Minister. The move is designed to boost economic growth and ensure that the UK workforce has the skills that businesses require.

In the New Year employers will be invited to bid for a share of the new £250 million government fund. It will route public investment directly to employers - enabling them to invest in the training they actually need.

Prime Minister David Cameron said:"I know times are tough - especially for young people - who are trying to get their foot in the door and launch their career. That is why I am determined to do all that we can to give people the very best skills, training and opportunities to succeed; and why despite tough spending decisions we are investing in record number of apprenticeships.

"We are seeing an incredible take up of these apprenticeship places. I want that to continue, which is why we are taking action to make it easier to take on apprentices, and now we are giving employers the power to take control of the training so that it best meets the skills they need.

"I hope this radical new approach will encourage even more employers to take on apprentices and ensure that the UK workforce has the skills we need to boost growth."

Business Secretary Vince Cable said:"Skills are central to the UK economy and our long-term competitiveness. Despite some good progress our system needs more flexibility and we are treading water by international standards.

"We have to fundamentally alter the relationship between employers and the state - giving employers the space and opportunity for greater ownership of the vocational skills agenda, including the chance to bid for direct control of public funds. This will encourage greater competition in the market as we strive for sustainable growth."

The vision of greater employer ownership has been championed by the UK Commission for Employment and Skills (UKCES) - a Non-Departmental Public Body that provides strategic leadership on skills and employment issues.

Charlie Mayfield, Chairman of the UK Commission for Employment and Skills and the John Lewis Partnership, said:"Skills are not a separate agenda but integral to growth. We have seen some progress but not enough. Too often the skills system appears to businesses as a government-led enterprise rather than one led by employers.

"We need more businesses working together with their supply chains, sectors or localities to develop the skills they need. The best way to do this is to route funds directly to employers, placing the responsibility and reward for how money is spent with the employer, not government."

The competitive fund will route public investment directly to employers and will be backed by significant resources from existing skills budgets. Funding for 2012/13 will be up to £50m, with an additional £200m in the second year - subject to evidence of high-quality proposals from employers and ongoing evaluation.

It will test different approaches, come up with new ways of engaging employees and potential employees, other firms and their supply chains to develop news ways of investing in skills, and working with the further education and skills sector.

It will be open to collaborative proposals from businesses of all sizes and from all sectors of the economy. Bids will need to demonstrate how public investment will leverage private investment, support Apprenticeships and show a commitment to raising skills levels in their sector or supply chain.

Nigel Whitehead, Group Managing Director Programmes & Support, BAE Systems:"BAE Systems welcomes today's commitment by the Government to give employers greater ownership of vocational skills. We are committed to working with other employers to maximise the impact of our investment in skills. We are aiming to provide more than 500 work experience placements throughout the UK, including in areas of high unemployment. We are also committed to continuing to run a substantial apprenticeship programme and to encouraging an expansion of apprenticeships in our supply chain".

The government expects to issue a formal prospectus on the fund jointly with UKCES early in 2012 so that projects can begin later in the year.

Today's announcements are part of the government's growth review. Building on the programme of reforms set out in the first Plan for Growth the next stage of the review is focusing on education and skills, infrastructure, logistics, mid-sized businesses, rural economy and open data. More details and actions will be announced later this month.