The general direction of skills policy in the UK over the recent past has been to create a market for training in order to improve the degree to which the skills people acquire are matched to those that the economy demands. A recognised weakness of the training market, certainly over the 1990s and early 2000s, was that it gave too much influence to training providers.
By placing employers increasingly at the centre of the skills system by granting them increased influence over the design and structure of various vocational qualifications the skill system will, policy makers believe, become more effective in responding to skills demand. This should, all other things being equal, build the demand for skills. Requiring employers to meet a greater proportion of the overall cost of initial vocational education and training will provide them with a financial incentive to ensure that the skills system meets their needs.
The critical issue is whether the push to create a more employer owned skills system will be able to drive up the demand for skills. The formidable problem the skills system has had to address over recent decades is that of under-investment in skills. Investments may well have increased over recent decades but this has been largely supply-side driven and questions have been raised about the economic value of the courses and qualifications that have been delivered.
Driving up the demand for skills from employers – and individuals – to a level that is commensurate with those countries with higher levels of labour productivity is a long-standing issue with which skills policy has grappled. Over the past 40 years, the results have been mixed. The signs are that at the current level of demand, the skills system is able to supply the skills needed. There are relatively few skill shortages in the UK economy.
How to ratchet up the demand for skills from employers and individuals has proved to be a formidable task facing policy makers. It is readily apparent that skills policy alone cannot fully address this issue. Skills policy is only one part of a strategic mix that includes policies aimed at innovation, enterprise, regional growth, etc. But should it be possible increase demand, it will be possible to gauge the extent to which the more demand-side oriented skills system is able to respond.