MPs told London skills system 'not fit for purpose'

The skills system is ‘broken’ and needs to be radically overhauled in order to ensure future generations of Londoners can meet the capital’s business needs, says London Councils.

Councillor Peter John, London Councils’ Executive Member for employment and skills, told an All Party Parliamentary Group inquiry on small business productivity today (Wednesday 16 July) that a lack of local influence, poor labour market information and a flawed system of incentives for skills providers were leading to Londoners losing out on jobs and firms struggling to fill vacancies.

Ninety-nine per cent of London businesses are small companies and they employ half the capital’s workforce (1). In a recent survey, businesses with fewer than five staff reported that one in three vacancies is hard to fill because of skill shortages and a lack of suitable candidates (2).

Cllr John called for changes to funding arrangements for the further education sector, as well as devolution of the skills agenda to a local level (3).

He said: “The skills system, as it stands, is not fit for purpose. There is a disconnect between the skills London is producing and the skills businesses, especially small businesses, need.

“Too much funding is being wasted on courses that employers do not need or want such as hair and beauty, car mechanics or health and safety.

“We need to address this urgently if we are to avoid producing a generation of Londoners unprepared for the labour market.

“That is why we are calling on the government to overhaul the way colleges and other training providers are funded and devolve more influence to boroughs, so they can ensure provision meets local economic needs.”

As part of its submission, London Councils, which represents all 32 London boroughs and the City of London, recommended several changes to the system.

• A greater proportion of funding for skills providers is linked to local economic need and measured by progression into work. At the moment, providers are funded according to the number of learners they attract and qualifications achieved.
• Funding is devolved to London Enterprise Panel (4), which would work closely with London boroughs to manage the adult skills system at a London level. Currently, funding is agreed at national level.
• More timely and forward-looking labour market information is published locally, regionally and nationally. 
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The inquiry panel were also told improvements needed to be made on the quality and level of business support offered to small and medium enterprises, and that a review of the policy on office to residential conversions should be conducted because of the negative impact on small businesses.

1. Small companies are those with a workforce of 250 or less. Figures are from the London Growth Deal.

2. From the UK Commission for Employment and Skills (UKCES) Employer Skills survey 2013. Employers also said 16 per cent of staff were not fully proficient in their job.

3. Examples of local authority activity to support business-led skills provision:

North London Strategic Alliance, a partnership of six north London boroughs, has led the development of the inter-regional London Stansted Corridor Consortium (LSCC) to promote economic development. LSCC provides a strategic network for collaboration between boroughs, employers and the FE sector, and is supported by ten FE colleges. It has mapped skills need against provision in the area, and produced an employer brochure to demonstrate innovative solutions from FE providers to meet local employer needs.

The Royal Borough of Greenwich has introduced an innovative employer-led approach to the planning and delivery of vocational skills. A series of specialist skill centres have been set up that offer high quality and flexible training from a wide range of providers. Different funding sources have been aligned to achieve better outcomes and more value for money. This has enabled the council to integrate adult learning, job brokerage, work experience and intermediate labour market placements, business support and start-up advice, employer engagement and apprenticeships.

The London Borough of Enfield and North London Chamber of Commerce are setting up a number of sector forums based on the growing and emerging economic sectors in the borough: construction, logistics, green industries, food and adult social care. They are business led, with issues identified, prioritised and agreed by businesses. These have covered recruitment, retention, training, skills, travel, transport, supply chain options, local procurement and infrastructure. An action plan is being developed to address priority issues.

4. The London Enterprise Panel is the local enterprise partnership for London and takes a strategic view of regeneration, employment and skills in the capital. It is chaired by the Mayor of London, and includes representatives from London’s boroughs, business and Transport for London.