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In vocational education and training there is, as in so many aspects of economy and society, a great deal of commonality between the United Kingdom and Australia. There are many good reasons for this: a common cultural heritage, a shared pre-disposition in favour of market mechanisms, a tremendous level of cross-fertilisation in the transmission of ideas, and a staunchly empiricist approach to innovation and improvement. This paper follows very much in this empiricist vein by asking what lessons Australia might draw from recent changes in the United Kingdom which have the ostensible aim of increasing employer engagement with training.
An industry-led vocational education and training system has been a stated policy goal in Australia since (at least) the creation of the Australian National Training Authority in 1994. The agency had a five person Board drawn from industry with an objective to provide training reflecting industry's needs and priorities. If anything, the rhetoric on the desirability of an industry-led system has intensified over time. The Deputy Prime Minister has recently stated the new government's intent in "placing industry demand at the heart of the skills training system".  This might also be seen as an acknowledgement that Australia has not yet found the right policies, programs and institutions to realise this goal. From this perspective it is a most opportune time for Australia to cast its eye over developments in the United Kingdom.
In December 2006 the final report of the Leitch Review, Prosperity for all in the global economy - world class skills, was published. The Review had been instituted by the government, through the Treasury, to consider the long-term skill needs of the UK economy in the context of continuing productivity shortfalls with other developed countries and the threats posed by rapidly growing economies such as India and China. The report provides the platform upon which subsequent policy developments have built, the centrepiece of which is, in effect, a proposed compact between the state and employers: the goal of the state is to boost the skills of its workforce, the goal of employers is for their workers to have relevant skills. The proposed compact reconciles these possibly conflicting goals by allowing employers to specify the skills it requires - within an overarching qualifications framework - and for the costs of skill acquisition to be apportioned between the state and employers depending upon whom is the primary beneficiary.
Formally, the UK government responded to the report of the Leitch Review in July 2007 with a statement outlining how it intended to give effect (in England)  to the recommendations made. Roll-out of many of the new programs and initiatives has occurred or is in train. While it is far too premature to arrive at any conclusions about the impact these may have had, there is sufficient detail about policy design and implementation to arrive at an informed judgement on which country's approach might best realise the aspiration of an industry-led vocational education and training system.
In the following section I examine briefly the evolution of vocational education and training policy in the United Kingdom and its constant tendency to "reform". I then move on to the issue of employer engagement with training and describe in more detail the main elements the "flagship" program intended to drive greater engagement, known as Train to Gain. Attention is primarily on England, with some references to Wales where differences in approach are of particular note. I conclude by offering three lessons for policy makers in Australia.
The skills agenda in the United Kingdom
The subordination of education and training policy to economic goals has a long provenance in the United Kingdom. It is typically traced back to a "headland" speech by then Prime Minister James Callaghan in 1976, although pre-echoes of it would go back to the creation of Industrial Training Boards in the 1960s under the Wilson government, if not earlier (Stanton and Bailey 2004).
There has, over this time, been a tension between an instrumental approach to further education and training and one that aspires to the civic, cultural and moral virtues of a well-educated population, with the former becoming ever more ascendant. Even in the area of adult literacy and numeracy, where the United Kingdom is lagging against many other countries according to findings from the first International Adult Literacy Survey, the remedial strategy adopted, Skills for Life, is premised around the contribution that basic skills can make to productivity (Appelby and Bathmaker 2006). The instrumental approach reaches its apotheosis with the Leitch report. Most significantly, the commissioning Minister was the Chancellor of the Exchequer (at the time, Gordon Brown), not the Minister with primary responsibility for education and training. Nothing more clearly signifies the subordinating of education and training policy to the broader national economic agenda of preserving competitiveness and promoting productivity growth.
An abiding feature of education and training policy in the United Kingdom has been the frequency of reforms. This may be attributable to an impatient political culture where government ministers feel compelled to make their mark within their allotted time. Education and training is especially alluring, as any number of social and economic objectives might be pursued under its head. It cannot, however, only be that. Keep (2006) describes a perpetually recurring policy reform cycle driven by the state's belief in the redemptive power of more education and training, its inability or unwillingness to exert sufficient influence or pressure upon other players, principally employers, to realise its policy goals and targets, and the subsequent failure in delivery prompting the cycle to begin anew.
Embedded within Keep's characterisation of the cycle are three systemic reasons for failure in delivery. The first is that the British state has a long-standing reluctance to intervene too heavily in the affairs of employers, the so-called "voluntarist" principle. In this circumstance its main recourse to drive behavioural change is to create incentives through use of public funding. This typically sows the seeds of its own failure as the concomitant of public funding is the need for accountability which manifests itself in a heavy-handed bureaucracy that impose high transaction costs upon those eligible to access the funding. Third, the bureaucracy is essentially mistrustful of other agents and is unwilling to cede control of aspects of funding and delivery. Smith and Smith (2007) similarly point to the lack of trust exhibited by the British state in employers relative to that in Australia.
If Keep's characterisation is even half-way correct, it would behove anyone to adopt a sceptical stance towards the longevity of the Leitch report and the resultant policy measures and programs. There is, in my view, some cause for optimism that policy makers have learnt the lessons of past failures.
The clearest manifestation of this is that the state has handed control of aspects of the vocational education and training system to quasi-employer bodies, notably the Commission for Employment and Skills and the Sector Skills Councils, and in some respects directly to employers. Sector Skills Councils, who are licensed by the Commission, are responsible for endorsing training content. Employers are the conduit to meet the state's targets. The new policy direction can therefore only succeed if employers truly value the training content, either by accepting the utility of existing qualifications or, through the relevant Sector Skills Councils, amending them so that they satisfy this requirement. Unless the training proves to be of value to employers, the projected take-up will not materialise.
As an aside, while the state may have accepted that trust of other parties is a necessary condition for policy goals to be realised, it has not absorbed the other lesson suggested by Keep's analysis of minimising the compliance costs associated with accounting for the use of public funds. These remain sufficiently high to allow private intermediaries to fill a market niche in navigating the training bureaucracy for providers and employers, and in doing so capturing a share of the available public funds.
Employer engagement with training
In The Worker and the Law, Lord Wedderburn (1986: 116) characterises the various legal tests used to define an employee as the elephant-test, so dubbed as an elephant is "an animal too difficult to define but easy to recognise when you see it". This analogy seems most apt for the concept of employer engagement, a phrase that trips off the tongue of all officials and stakeholders involved in training in the United Kingdom, but on which there is no unanimity as to its meaning (Cooper, Mackinnon and Garside 2008).
In 2005 one in three employers provided no training for their staff. One in five employers provided training towards a National Vocational Qualification (NVQ). Between these two extremes lie the remainder of employers (around half) who provided some on- or off-the-job training, and who may be characterised as engaged with training, or perhaps not. The English have adopted an operational definition in which those employers not providing training towards an NVQ are characterised as "hard to reach", and have set targets on the extent to which they are to become engaged with training.  There are differing views between England and Wales on the efficacy of reaching out to the hard-to-reach employers - whether to attempt to gain greater engagement through breadth (England) or depth (Wales).
The Sector Skills Councils have a role in promoting employer engagement that goes well beyond their primary function of endorsing qualifications. The Councils are the agencies which are expected to secure agreement - documented in Sector Skills Agreements - across employers in their sector around what, collectively, these employers intend to do in the training sphere. One suspects that this is a nigh impossible task, and the evidence to date shows there has been an "inevitable shift" away from the agreement as "a notional end point, a deal that has been done, to direction of travel agreements and the prospect of on-going negotiation" (GHK 2008: 7).
I have described the intent of the state as one of proposing a compact to employers. In government policy documents this is given expression through the phrase "our offer to employers". There is a realpolitik element to all of this: the state has, in effect, drawn a line in the sand in spelling out what it sees as its part of the bargain, and in turn expects employers to determine upon a counter-offer. There is a veiled threat that employers will be coerced if they fail to meet up to their side of the "bargain".  What this suggests is that the meaning of employer engagement is the level of employer-provided training that the state deems sufficient not to have recourse to mandatory approaches.
Train to Gain
The aspirations of the Leitch review for the UK population to have world-class skills are given expression through "stretching ambitions" for skills acquisition. These are couched in terms of educational attainment, viz. at least 90% of adults to have acquired a Level 2 qualification or higher, 68% a Level 3 qualification or higher, and 40% a Level 4 qualification or higher. By way of comparison, the most recent data (last quarter, 2006) shows current attainment to be 70%, 49% and 30% respectively. These targets are imposed on government departments through Public Service Agreements with the Treasury. Meeting these, more than anything, drives the behaviour of policy makers and program administrators in seeking to give effect to the government's aspirations, and ultimately has real effects on delivery. 
The flagship program for promoting employer engagement in training and delivering the educational attainment of the current adult population in England is known as Train to Gain. Under this programme employers are the conduit by which individuals are identified, participate in, and complete skill acquisition courses leading to a qualification. For this to work, two conditions must be met. The first is to raise the level of employer demand for skills, and the second is for the demand for additional skills to be expressed in delivery of recognised qualifications. Wales has taken a different tack under its Workforce Development Programme. Under this programme, employers are also the conduit for delivering improvements in workforce skills, but through bespoke training courses which may or may not lead to qualifications being awarded upon completion.
The view is that very many employers, particularly the hard-to-reach employers have an insufficient appreciation of the value of investing in training. If they could only be induced to engage with training, then there will be a groundswell of employers switching away from the Dark Side. In other words, there is believed to be a "latent demand" for training among the disengaged employers.
Under Train to Gain public funding is used to subsidise the costs of skill acquisition. The delivery costs are fully met by the government for individual workers undertaking training with their employer towards an NVQ Level 2, while the employer bears the wage and salary costs for the time of the personnel involved. The extent of subsidy tapers off at higher qualification levels on the grounds that the private returns to employers and individuals are greater and the beneficiaries ought therefore to pay a co-contribution. Under the Workforce Development Programme the government contributes up to 50% of the cost where the training involves the delivery of recognised qualifications (irrespective of level), and up to 25% where it does not.
The full public subsidy for the delivery costs of an NVQ Level 2 arises from an earlier government initiative, Skills for Life, which grants a universal entitlement for all adults to have achieved at least Level 2 educational attainment through school - notionally said to be equal to completing five GCSE subjects at grade C or better - or further education. This entitlement is used to mount the argument that any "deadweight" costs (i.e. public funds being used to pay for something the employer would have themselves fully paid for without a subsidy) can be treated as nugatory.
The government has indicated that all public funding in England for adult vocational training (other than community education) is to be routed through Train to Gain and individual learner accounts. The Welsh Assembly Government has not gone quite as far, but has indicated that it intends to significantly reorient its funding away from institutionally based training towards its on-demand Workforce Development Programme.
Besides the subsidy on offer, the other element expected to induce employers to participate in both Train to Gain and the Workforce Development Programme is the provision of a free brokerage service. Brokers work with the employer to determine their business priorities and on the basis of an organisational assessment identify skill needs and offer potential solutions. Brokers in Wales are more oriented towards whole-of-business solutions, whereas those in England have a narrower remit to offer skill solutions.
A final exhortatory element is the so-called "skills pledge" where employers make a public commitment to support its employees to develop their skills, including that all employees should be working towards at least Level 2 qualifications, so as to place pressure to conform on employers who have not signed the pledge.
Will it work?
Train to Gain is projected to grow tremendously over the next few years: funding up from £270 million in 2006-07 to £1042 million in 2010-11, and learner numbers up from 242,000 to 807,000 over the same period. There is a lot at stake here: besides the spending commitment the government has invested a lot of political capital in taking up the mantle of the Leitch report.
It is an open question as to whether this new approach to funding and delivering continuing vocational training will work. It is dependent upon there being sufficient alignment between the aspirations of the state - to deepen and extend the skill base, boost educational attainment, and narrow the productivity gap between the United Kingdom and other industrialised countries - and those of employers. There are three specific points of tension:
whether, in England, Level 2 vocational qualifications are of value to employers
the extent to which skills acquired via public funding are of utility only to specific employers
the extent to which public funding is substituting for expenditure that employers would have themselves made anyhow.
It will be in these areas that program parameters will be (re)negotiated through the Commission for Employment and Skills and through the Sector Skills Councils and the funding agencies. Even if an accommodation can be reached between the state and employers over these questions, there are two aspects of the delivery platform that require attention: the development of a thriving network of Further Education colleges and other training providers able to make the transition to work-based learning; and enabling users to navigate much more readily a highly complex system ("hiding the wiring").
Finally, it should be noted that some commentators are of the view that boosting skills through acquisition of formal qualifications may have only a modest productivity impact. In other words, skills may not be the answer, or at least, not a sufficient one.
Lessons for Australia
Reiterating a point made in the introduction about the cross-country transmission of ideas, government officials in the United Kingdom readily acknowledge that Australia has been a source of inspiration for a number of its policy initiatives. Three are consistently identified:
the role of quasi-industry bodies in oversight of the content of training package qualifications
a relatively clear and straightforward qualifications framework
accreditation of enterprises to deliver nationally recognised qualifications in their own right.
There are many attributes of vocational education and training of which Australia can be rightly proud such as its open access to people of all ages, the quality of our leading TAFE institutes. But, there are always valuable lessons that can be drawn from comparative analysis, particularly with countries with whom we share so much in common, and who have embarked upon a new path. I propose three.
#1 Australia lacks a coherent economic narrative for public investment in training
The Blair and Brown governments have tended to favour an approach to policy development that is based on reviews, often done independently of government, and articulation of policy through white papers.
There have been several reviews and white papers on aspects of skills policy over the past decade, none more significant than the Leitch review. Its terms of reference were wide-ranging, even bold, in setting out a 2020 time horizon for the United Kingdom achieving the status of world class skills.
There are critics of the Leitch report who would contend that the "market failure" argument advanced in the report is not especially compelling. Whether or not that is true, it is virtue of the report that it does make a coherent case, one that provides a constant marker for all subsequent government documents and program delivery.
The same cannot be said for Australia. True, there have been some important reviews at State and Territory level, the best of which are the 2003 Schofield review on workforce development in South Australia and the 2006 IPART review of the skills base in New South Wales, although both have subsequently had a chequered adoption by their respective governments. At the Commonwealth level, arguably the last "landmark" report was the 1994 Fitzgerald review Successful Reform: competitive skills for Australians and Australian enterprises.
Some may argue that this lack of review is unimportant, that there is sufficient articulation of the underlying policy rationale in COAG communiqués, budget papers, Ministers' speeches and the like. In my view this is misplaced as it fails to see the value to good policy making in having a coherent rationale for public investment.
First, the greater transparency of this approach serves as a rallying point for advocates and critics alike, thereby exposing the policy to greater public scrutiny as a result. If the scrutiny is withstood, the policy is likely to be more robust.
Second, it provides a clearer guide to policy makers and program administrators in formulating budget allocations and eligibility criteria. For example, there is presently over $6 billion spent annually by Australian governments in training programs, but no argument is put (or, in the absence of a rationale, is able to be put) as to why that amount ought not to be doubled or halved. In other words, the current level of government investment is quite arbitrary, reflecting only the logic of past budgets and the birth and death of discrete training programs. In England, under Train to Gain, the amount of public funding is determined by employer take-up of the program.
Third, a coherent rationale would clearly recognise the different interests of the respective parties involved in training - employers, individuals, and training providers, as well as government - and thereby achieve a clearer alignment between their respective goals and the costs and benefits that accrue to each party. Train to Gain provides a tapering public subsidy as the qualification level rises, consistent with the public good argument established in the Leitch report, i.e. it recognises that employers and individuals gain more benefit from higher-level qualifications, and therefore should pay a greater share than for lower-level qualifications. Similarly, the Workforce Development Programme contributes a smaller share of public funds where the training is not intended to lead to a qualification on the grounds that the skills acquired are less likely to be transferable to other employers. The Leitch report also provides the groundwork for a move away from the voluntarist system.
#2 Train to Gain and the Workforce Development Programme are superior models for the delivery and funding of adult vocational training than existing worker traineeships
The question mark hovering over existing worker traineeships, first strongly challenged by the three reviews (in Queensland, Tasmania and Victoria) undertaken by Kaye Schofield in the late 1990s, remains in place. Around a third of all traineeship commencements are for existing workers (Cully 2006).  .
There are two fundamental contradictions with the Australian approach to existing worker traineeships. First they are, by and large, not entry level workers. Traineeships, as with apprenticeships, are designed as entry level training programs. Second, employers receive a pure, ex-post windfall gain in the commencement incentive payment as these workers are already on their books. These fundamental contradictions require examination, and are what at heart lies behind the ongoing Australian Industry Group project, Skilling the Existing Workforce.
Train to Gain, as a program model, appears to resolve these contradictions. First, it recognises the mutual interests of the state and employers in boosting the skills of existing workers, but it does so as continuing vocational training. Second, the provision of the skills brokerage service clearly situates the training of existing workers within the overall skill requirements of the enterprise. Third, consistent with existing worker traineeships, it delivers nationally recognised qualifications. The Workforce Development Programme also meets the first two criteria, and its funding is biased towards also meeting the third criteria. Both programs only subsidise, wholly or in part, the delivery costs of training, with employers fully meeting the wage and salary costs of the trainees.
#3 Training policy in Australia is compartmentalised from a broader skills agenda and insufficiently evidence-based
The Leitch review was framed around the skills of the UK population. By adopting a discourse of skills, rather than training, it was able to range across all sectors of education. The Commission for Employment and Skills has, through its charter letter, a remit covering adult basic skills, vocational education and training, and higher education. This is in contrast to the remit of its closest counterpart in Australia, the to-be formulated Skills Australia, which is limited strictly to vocational education and training.
It is true that higher education institutions in the United Kingdom have yet to embrace fully the recommendations of the Leitch review, nor is it yet a strong feature of government policy in this sector. There are developments, however, including a national approach to articulation from further to higher education, and extension of Train to Gain into higher education. This is in stark contrast to Australia where higher education, despite its overwhelming vocational character, is adrift from the skills debate.
A final aspect of skills policy development in the United Kingdom is the weight given to policy experimentation and its assessment and refinement. Train to Gain emerged from a three year pilot program, the Employer Training Pilots involving 20,000 employers in different regions. A number of significant program parameters were varied on the basis of the independent evaluation of the pilot (Institute of Employment Studies 2006), the two most important of which were the removal of the subsidy which met the wage and salary costs of training participants and the tapering of the subsidy for delivery costs by qualification level. This was done so as to reduce the exposure of the government to "deadweight" costs, which were found to be significant in the evaluation.
The extent of monitoring and reporting on progress against policy objectives is also invested with considerably more resources than in Australia. For example, the biennial National Employer Skills Survey, the primary vehicle for monitoring employer engagement with training, involves 74,500 employers, more than sixteen times the sample size of the equivalent survey done in Australia. This level of refinement feeds into the labour market monitoring function of the Sector Skills Councils, i.e. it feeds into the intelligence about how best to shape the offerings of the vocational education and training system to meet the demands of employers.
There are many aspects of the Australian system that could reasonably be characterised as industry-led, most concretely the role played by Industry Skills Councils (and their equivalents at State and Territory level) and enterprise registered training organisations. Smith and Smith (2007) argue that Australia has been more successful than England in realising the goal of an industry-led system, which they attribute to the maintenance of corporatist arrangements and a greater level of trust in employers exhibited by the state.
But industry-led does not equate to industry demand-led, which is what is plainly implied in pronouncements by Ministers and officials when using the term. It remains very much the case that the overall weight of public funding in Australia is driven not by demand from industry (or individuals) but through baroque state planning processes where officials attempt to second guess what it is that industry would value. In other words, it may be industry-led, but it is supply-driven.
In contrast to Australia, the approach of England and Wales can be characterised as demand-led and industry-driven. Most notably, placing the trigger for all public funding in the hands of employers and individuals is a fundamental change from the past and a fundamental point of difference from Australia. It must be recognised that this is not without risks, such as whether the demand for projected training places exists and how the network of Further Education colleges will operate in an environment with no secure funding.
What is happening in the United Kingdom is a policy experiment that Australia should continue to observe closely.