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Written Statement - Skills for Economic Renewal

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Leighton Andrews, Minister for Children, Education and Lifelong Learning

Skills at all levels are vital for economic growth and a fairer society. Skills contribute powerfully to productivity in business, to raising household incomes, and helping in some cases to lift children out of poverty.

Our approach to the skills agenda has 3 priorities:

(i) helping people into work;
(ii) raising youth engagement and employment – on which subject a written statement was issued in January; and
(iii) releasing the full potential of skills as a driver for economic progress. Here we focus on action in support of Skills for Economic Renewal.

Economic Renewal: A New Direction places skills at the core of the Assembly Government’s collective effort to create economic advantage for Wales. This means that we place a greater emphasis on meeting employer and learner needs and aligning resources with national priorities. Our approach is based on building a genuine partnership with employers on workforce skills. Jobs and growth matter most and we will work flexibly with business to achieve this, recognising the role of the six priority sectors and Wales’ Anchor Companies and Regionally Important Businesses as appropriate.

We see 3 key skills challenges to be addressed in supporting Economic Renewal. The first revolves around skills gaps and ensuring a strong supply of appropriately skilled young people entering the labour market. The second is reducing the skills mismatch between employer needs and the skills of those who are currently out of work. The third is making best use of existing skills in the workplace and upskilling the workforce.  Alongside traditional sources of labour market information, the Wales Employment and Skills Board (WESB), and the 6 new employer-led Sector Panels will bring challenge and intelligence to the ongoing debate on skills needs, policy and practice.

To give focus to our work, we are simplifying the skills offer, with special attention on basic skills in the workplace, leadership and management skills, apprenticeships, discretionary support targeted at companies with growth potential, and ReAct support to those who are seeking to improve their skills so they can minimise any period of inactivity following notice of redundancy.

The Workforce Development Programme will continue to act as a main gateway for businesses to access a wide range of skills programmes. It is a proven and effective service, which helps employers to achieve their business objectives.

Informed by the evaluation of ProAct and the success of Skills Growth Wales, the discretionary funding available through the Workforce Development Programme will be deployed in future  in line with the principles and priorities established through those programmes – targeting funds where they will make the greatest difference to growth and job creation.

Helping to tackle upskilling in the workplace, the Basic Skills Employer Pledge Programme will receive £10 million additional funding through the European Social Fund (ESF) over the next four years and will facilitate a dramatic increase in delivery of basic skills learning with around 1000 companies and 30,000 individuals set to benefit.

The skills of business leaders and employers in Wales are critical to generating and capitalising on new economic and employment opportunities. This is why, over a five-year period to December 2014 the Assembly Government, with a contribution from the ESF and businesses themselves will be working with 15,000 private and third sector organisations to expand and enhance Leadership and Management.

We will continue to promote Apprenticeships as a high-quality learning option, and, while retaining an all-age framework, place a new emphasis on delivery for young people.  Quality and outcomes continue to count and while Framework success rates for Level 2 and Level 3 apprenticeships combined have risen from 54% in 2006/07 to 75% in 2008/09 we are not complacent and are using new contracts to help raise the bar even higher.

The £400m work based learning contracts for 2011/14 will be announced shortly. Responding to Economic Renewal priorities new contracts will support delivery in key sector areas, as well as explore how we can best meet the needs of Anchor Businesses.

The recession made it tough for young people wanting to progress into an Apprenticeship. We responded rapidly by introducing the Young Recruits programme and Pathways to Apprenticeship. Young Recruits, by offering a wage subsidy to employers recruiting a 16-24 year-old apprentice has been instrumental in unlocking demand for apprentices. To date we have approved 1001 applications for the Young Recruits programme. 

Pathways to Apprenticeship is an intensive, college-based option for young people unprepared for, or unable to find, an Apprenticeship place with an employer.  For 2011/12 onwards Pathways to Apprenticeships will be aligned with the priority sectors. Approximately 2000 places will be offered in 2011/12. To help ensure as many of these young people as possible can move into a full employment-based apprenticeship our work-based learning providers will be treat individuals coming through from this programme as a priority.

The Assembly Government’s ReAct programme has helped over 19,000 people to get the skills to assist them in finding new employment since the recession began.  From 1st April ReAct II will introduce a number of important changes to the support available.  Our new emphasis will move from training aimed simply at updating the skills of redundant workers to an enhanced support structure to encourage employers to recruit and train redundant workers.

To help public sector workers, the Deputy Minister for Science, Innovation and Skills and the Minister for Business and Budget have announced £5 million of funding for “Adapt” - a Career Transition, Single Point of Contact Service.

Skills for Economic Renewal will address the needs of those currently out of the labour market that, in the future, have a major contribution to make to a prosperous and productive Wales. The Steps to Employment programme, replacing Skill Build for adults, will be live from August 2011. It will be joined by a new Traineeships programme for young people as detailed in the January Statement.

The UK-wide Welfare Reforms have major implications for our efforts to tackle worklessness in Wales. The support provided by the Assembly Government has to be linked with support available through UK Government welfare schemes particularly the new Work Programme. We must ensure that the UK Government proposals for the introduction of the Universal Credit and the Work Programme do not disadvantage people in Wales. We are committed to ensuring Wales gains fully from non-devolved and devolved services working effectively together. We are clear that Welsh Assembly Government spending will not substitute for, or duplicate, appropriate UK Government employment investment in Wales.

Through the Joint Employment Delivery Board, we will work with the Department for Work and Pensions to bring forward proposals to develop the necessary cross-Government relationships and protocols needed to deliver coordinated support for businesses. We plan to be in a position to announce a simplified ‘single employer offer’ to support recruitment and training later this year.

Higher level skills are essential in Wales’ transition to a more high value-adding economy. Under the guidance of the Higher Education Funding Council for Wales, Universities are working to ensure that the content and balance of undergraduate delivery recognises opportunities in the labour market, such as for Science, Technology, Engineering and Mathematics, and other professional provision such as accountancy and business.

Responding to changing demand, we see Universities offering more part-time courses, and part-time professional qualification programmes, and promoting Foundation Degrees linked directly to employer need. Just short of 3000 people have now benefitted from the Go Wales scheme which supports the retention of graduates within the Welsh economy through placements with employers.

We know that skills for economic renewal require excellence, creativity and aspiration across the whole skills system.  We look to the For Our Future strategy, the Transformation Agenda, FE and HE Governance Reviews, and fundamental reform of post-16 funding arrangements, to serve as key levers of change. We recognise also that this ambition if it is to be realised, must be shared with employers and individuals.

We will continue to listen and be led by evidence of what works and delivers good value for business, employers and government. We are greatly encouraged by what employers are telling us about the responsiveness and relevance of the Assembly Government skills offer, and are confident that the framework of support available will provide a solid foundation to underpin economic renewal in Wales.