10 January 2003

Across the advanced economies of the western world, governments, employers and unions have embraced education and training as a powerful mechanism for addressing problems as diverse as global competitiveness, high unemployment, skills shortages and poverty.

Amongst other measures, governments of both the left and the right have turned to the greater use of qualifications as instruments of policy. National qualifications frameworks have been erected as templates for the knowledge economy. Qualifications authorities have been set up, to establish standards and assure their maintenance.

In England, the details of qualifications, their assessment and aspects of quality assurance are handled by awarding bodies or providers that operate within the framework of a competitive market. The role of the Qualifications and Curriculum Authority (QCA) is to manage - with UK partners - the development of standards, to accredit qualifications once developed, and to regulate and audit the awarding bodies to ensure that the policy standards and probity requirements of the Authority have been met.

The subject I want to address today is how the QCA, in concert with other agencies, can play a strategic role in addressing the issues of skills shortages, international competitiveness, unemployment and social disadvantage, which rightly occupy the minds of governments, employers and employees.

That question is not one which has always been at the forefront of QCA thinking, or the chief expectation of those who look to it.

The reason for this is straightforward. In the political and media domain, the area of our work which attracts most attention is the performance of the school sector in narrow academic terms, and not the state of vocational education in schools, or the education and training of the existing workforce.

Now, meeting our school-related responsibilities - developing the National Curriculum, delivering the statutory tests, the regulation of the GCSE and A-levels and the maintenance of standards - is a necessary but in my view not sufficient condition for the QCA to succeed.

These school responsibilities are mission-critical, but they do not encompass the full purpose for which this nation and others have established national qualifications frameworks, and national qualifications and curriculum authorities.

At the centre of that purpose lies the relationship between work and skill.

By work, I mean rounded activity combining creative, conceptual and analytical thinking on the one hand, with the use of manual aptitudes on the other. Work is quite different from labour, which has none of these attributes or the satisfaction of work.

By skill, I mean:

• Cognitive skills - the foundation of general skills possessed by the worker (eg. literacy, numeracy, general educational competence)
• Technical skills - those skills which are associated with the purchase of labour on the open market (eg. recognised trade or professional skills)
• Behavioural skills - personal skills associated with the worker's ability to perform in the context of particular authority relations on the job
  In developed economies, the past century has seen three distinct phases in the relationship between work and skill.

The first stage is perhaps best illustrated in my own country, where the framework of policy relating work and skill dates back to what is famously known as Harvester Man.

In the early years of the twentieth century, Justice Higgins of the High Court of Australia heard a case brought on behalf of unskilled employees of the H V Mackay Harvester Company, which built horse drawn mechanical wheat harvesters.

The case argued that these employees should receive a minimum or basic wage. In deciding the matter, Justice Higgins made some assumptions about wages, on the basis of skill divisions in the labour market and the division of labour by gender in the household.

He decided that the minimum wage should be that amount which would enable an unskilled worker to live as a "human being in a civilised community and to keep himself and his family in frugal comfort".

He called for the household details of eleven of the H V Mackay workers, all of whom were full-time, and married with wives who carried out unpaid domestic work. He looked at their household accounts to determine their cost of living.

The only real difficulty was that the eleven Harvester Man households contained from one to seven children. Undaunted, His Honour decided that three children was the proper number of offspring for an unskilled Australian worker, and all subsequent basic wage awards have been on that assumption.

The model of the five person nuclear family in which the male was in full-time paid employment shaped broader social and economic policies for the next six decades. The notions of work and employment inherent in it had a profound impact on technical and further education - which was geared to entry-level employment - based trade training (or apprenticeships) - and also on primary and secondary education, which streamed young people into academic or vocational streams according to ability, and indeed gender.

The second phase in the relationship between work and skill began in Australia in the 1960s when, as had already happened in other parts of the western world, women entered the labour market in large numbers and moved into new modes of employment - part-time and casual.

A new model emerged, aimed at eliminating rigidities in the employment structure.

Gender segmentation and divisions between skilled and unskilled workers were broken down. The key concern became flexibility at enterprise level, expressed through enterprise bargaining in relation to salaries and other conditions, and through a competitive training market in skill formation.

Now the details of developments in England and other western countries are different from Australia, but the broad direction of change has been similar. We are all now in much more flexible sets of relationships between skill and work than we were 30 years ago.

But despite this, the dominant mood concerning work and skills is one of frustration with what has not been achieved and unease about what is to come:

Skill shortages are as common as ever

• Training provision and standards have become fragmented, and there is considerable confusion amongst potential clients, both employers and employees
• The middle of the labour market has been hollowed out - prized jobs go to highly skilled workers at the top, while low skill, low paid forms of employment proliferate at the bottom
• Rising numbers of people work increasingly longer hours, especially workers above 45 years of age in higher paid occupations
• Employers - in Australia at least - are in the main decreasing their involvement in education and training; their involvement is very largely focused on the behavioural skills rather than cognitive and technical skills; and more workers than ever are educating and training themselves.

Recent work, most of it at Oxford, some of it in the United States and France, and some commissioned under a major research grant by my own former department in Sydney, has the potential to lead us forward.

Economists at Oxford have shown that the issues of skill and work can only be properly understood and addressed in the context of a wider array of social, political and economic arrangements. They say that too much has been expected of policy concerning work and skill, and that the origin of current problems does not lie simply in the system of skill formation. They say that United Kingdom policies on vocational education and training do not reflect the fact that skills are a quite subsidiary issue in explaining why demand is so stifled. Simply increasing the number of skilled workers will not take us out of a low skills equilibrium. It is not a question of supply, but of demand.

I quote the authors Keep and Mayhew, in the Oxford Review of Economic Policy 1999:

Unless and until first order questions, such as choice of product market and competitive strategy, and consequent second order decisions about work organisation and job design, are confronted, the underlying causes of Britain's skills problems will continue to be ignored. The danger of policies and institutional devices - which concentrate on boosting the supply of qualifications and formalised skills and knowledge is that they appear to offer a relatively swift and simple short cut to a wide ranging set of desired outcomes - increased competitiveness, greater productivity, rising GDP and greater social inclusion - without having to confront conflicts and difficult choices about how businesses choose to compete."
A decade ago it was commonly argued that the UK was in a low skills equilibrium while Germany was in a high skills equilibrium, characterised by a high proportion of high-skilled, value-added production and a large proportion of the population with good foundational and intermediate skills.

In Britain, we have now moved beyond that simple dichotomy into a clear third phase in understanding the relationship between work and skill. The concept of the skills ecosystem, which has arisen through the Oxford school, is a far more dynamic, discriminating and useful model.

Skills ecosystems are defined as clusters of high, intermediate or low level competencies in a particular region or industry, shaped by interlocking networks of companies, markets and institutions.

It is the high skill ecosystems which have received most attention: the cluster of biomedical and hardware/software firms in California; Germany's state-sponsored research/technology transfers; Italy's family and community networks of small enterprises; the hub-spoke shaped corporations of Japan.

As the Oxford literature points out, there are four common elements to these high skill ecosystems:

• An external catalyst for the region's growth such as government demand and investment, and key individuals as in the case of Silicon Valley
• Fuel to sustain initial growth, such as quality research universities and venture capital
• A supportive environment in the form of infrastructure (such as telecommunications, technology parks to allow collaboration and collective capital formation, international airports etc), a lax regulatory regime which supports risk taking, and a living environment attractive to knowledge workers
• Interdependence between firms which facilitates learning, adaptation and development.

One of our Board members was talking to me recently about the Canary Wharf development in London: very extensive residential redevelopment, major hotels, restaurants, bars and entertainment, a massive undertaking.

Because of skills shortages, large numbers of skilled personnel apparently were brought in from overseas, particularly from Sweden. The irony is that right next door to the development is Tower Hamlets, an area of high unemployment and low skills.

Now, that seems to be an example of an ecosystem out of equilibrium, but with enormous potential to be made healthy and sustaining, through effective management of business settings, institutional and policy frameworks, modes of engaging labour, the structure of jobs, and levels and types of skill formation.

In short, policy renewal in the area of skills formation depends upon preconceiving clients in a fresh way - as networks, systems and supply chains in regions, rather than simply as 'workers' and 'industry'.

It seems to me that the UK is much further down the track in establishing a potential to develop and manage sustainable skills ecosystems than many other countries in the developed world, and that the QCA has a critical role to play in enabling other agencies such as the LSC and the SSDA to fulfil their mainstream roles.

The Learning and Skills Council, through its 47 local offices, has enormous potential to build sustainable skills ecosystems at regional level throughout the nation - promoting the growth of skills and competencies required to support and extend productive relationships between companies, markets and institutions locally.

The LSC has established a geographical or spatial network nationally for the development of skills ecosystems, by using LSC funding to support employer engagement and the provision of training and assessment.

Intersecting with this, in the form of a matrix, is the emerging occupation-specific and employer-led Sector Skills Councils, and the Sector Skills Development Agency.

These are responsible for the development of occupational standards and training requirements by occupation - petrochemical, textiles, retail, construction, engineering, electrotechnical and so on - and for setting targets for training and skills in their sectors.

Now, the work of the Qualifications and Curriculum Authority lies at the points on this matrix where the horizontal lines represented by the regional Learning and Skills Councils intersect with the vertical lines represented by the Sector Skills Councils.

Our job is to accredit, at those points, occupationally-developed curriculum into new qualifications in the National Qualifications Framework.

We have a unique and critical role to play in the building of sustainable skills ecosystems across the country, and in working with DfES, the Learning and Skills Council, the Sector Skills Councils, the Sector Skills Development Agency, the Adult Learning Inspectorate, the awarding bodies and their federation, schools, further education colleges, private providers, business and industry, unions and local government to perform our essential core business in this area - which is promoting the development of new curriculum, and packaging it into new qualifications, and thus playing our part in the building of the human capital of this nation.

It seems to me that the QCA has not gone hunting for this in the past. It must. It must be out there creating and seizing opportunities. On this matter, it need not wait for remits from ministers. We have an enduring remit under legislation, which is about driving forward with the shaping of relevant curriculum into timely qualifications to develop the human and social capital of this country.

Let me conclude with brief reference to three things which QCA is pursuing to this end.

First, in my own performance agreement with the QCA Board - an agreement which cascades down into the performance agreements of the other senior managers - I have five key strategic objectives.

One of them is To realise our potential, as a national Qualifications and Curriculum Authority, to create and build the national stock of human capital.

The performance indicators are:

• The National Qualifications Framework is employed effectively as the critical instrument for workforce development
• New curriculum and qualifications are delivered in a prompt and timely manner in response to the requirements of the national market for education and training
• There is substantial growth in qualifications and work based training delivery from age fourteen on
• There is steady improvement in participation rates and achievement.

The second of those performance indicators - about timely translation of industry-driven curriculum into qualifications - clearly requires streamlining of current procedures. We understand the need to review current accreditation processes, to ensure that we can assist awarding bodies to respond promptly to the needs of industry for new modules and qualifications. Our approach to regulation should incorporate a lighter touch to accreditation, with more emphasis on self-evaluation and risk assessment. We need to provide simplified and accelerated access to the National Qualifications Framework, without compromise to standards and quality: some form of licensing of demonstrably effective awarding bodies to accredit new qualifications within certain guidelines, and with the QCA performing an audit function, is possibly the way forward.

Secondly, to better allow us to create and build human capital, and to deliver other elements of our core business, we are changing the structure of the QCA.

From the end of March there will be a new Division of Vocational Education and Training.

The function of this division is to maintain and enhance standards in vocational education and training, and to play a proactive role in national workforce development. It will anticipate and respond authoritatively and promptly to emerging needs for learning, assessment, certification and qualifications. The division will include oversight of the National Qualifications Framework and associated regulatory processes, and will work closely with the Learning and Skills Council, the Sector Skills Councils and the Sector Skills Development Agency.

Importantly, the division will include a field service with officers working in conjunction with industry and other agencies in regional locations, to assist the LSC and the Sector Skills Councils in the development of local skills ecosystems.

And thirdly, within the context of the government's forthcoming decisions on the 14-19 Green Paper, we will be giving top priority to the extension of vocational education in schools.

In my view, the growth of vocational education in secondary schools depends on a number of important conditions being met. One is to change the nature of the presumed dichotomy between academic and vocational subjects into one between general (or core) subjects, and specialist subjects.

This is not simply semantics: English, mathematics and ICT are examples of clearly core subjects which should be part of the general education diet of all young people; Latin, accounting, geology and the more remote branches of physics and mathematics, are just as much specialist elective subjects as are steel fixing, stonemasonry, floristry and plumbing. These subjects need not form part of the core provision for all students, but they should be there as steps along chosen pathways.

A second condition for the growth among 14-19 year olds of specialist education and training of the type we currently call vocational, is to provide more curriculum which is genuinely occupationally-based not simply occupationally-related; to deliver much of the teaching on-the-job, in the workplace; and for performance to be assessed by a process which is fit for purpose.

Method of assessment is particularly important: if a young person builds a splendid mahogany table, he or she should be assessed on the basis of this outcome itself, and not additionally required to undertake a written examination on how to do it.

The third condition follows. Increasing numbers of young people should be able to take non-traditional and flexible programmes, such as three days a week at school; one day a week in a further education programme; and one day a week training on the job, in the workplace, as an employee.

And finally, we need the National Qualifications Framework to recognise and accredit both the general education programme represented by the three days a week at school, and the specialist vocational programme undertaken in further education and the workplace. It must be a framework which provides a multitude of options for young people to become older people with career and training opportunities which open up before them rather than close off behind.

That is the task that we at the QCA have set ourselves. Together with the LSC and the SSDA, we have received a joint remit from Government to advise on the strategic development and implementation of the vocational qualification system. It is a very welcome and positive signal to move this ground-breaking agenda ahead.

Ken Boston