John Denham - Association of Colleges

Good morning. I'm delighted to be the first Secretary of State for Innovation, Universities and Skills to address this conference.

When the PM created DIUS, he brought together three strands of work, which are crucial to our future prosperity; and to building a society in which no one is left behind.

We have to make the most of the skills and abilities of every single citizen; we have to undertake first-class research and scholarship; and we have to turn the results into innovative products, services and businesses; which in turns rely upon the skills of our people.

That's what DIUS will work for. It means that we and our partners, including the AoC, are at the centre of determining what sort of country Britain will become.

I don't underestimate the responsibility that that places on everyone here.

The theme of this your conference 'shaping futures' is absolutely appropriate.

We have 10 years of real achievement behind us. Investhas doubled to over £12 billion.

Success rates have risen dramatically

Over 1.8 million people have gained a first Skills for Life qualification. 1 million have gained a first full Level 2.

That's quite a record. But the future challenges will be more demanding, not less.

We need you to understand what we are trying to achieve. And to join us in striving for the same demanding aims.

Providers who do listen and do not change with the times you will lose funding to other providers who do.

We will expect colleges to engage with employers as never before to provide the training employers and employees need where and when they need it.

But we will also expect you to engage more than ever before in joining up with Jobcentre Plus to develop the seamless service that individuals need as they make the difficult transitions from worklessness into their first job; and from that job into sustained, quality employment.

We will rely on you to achieve demanding targets for level 2 and level 3 qualifications. And to help deliver higher-level education on your own account and in partnership; and playing your full part in widening participation.

But we will also expect you to re-think pre-level 2 work so that it meets the needs of individuals whilst ensuring progression, and to stretch out to engage the hard to reach groups

You will continue to be under pressure to operate ever more cost-effectively.

But we will not want to see services withdrawn from the most deprived communities.

As always, it is a matter of getting the balance right.

We will always, with the LSC, try to get the targets right, the funding rules appropriate and the guidance clear.

But they will never be perfect. And where they are not, the prizes will not go to the people who chase a perverse incentive, but to those who work to deliver the overall vision.

At the end of the day, you are the only people who can ensure we get the FE system the country needs.

The future of the FE sector

Coming new into this job, it is striking just how many drivers for change are in the system.

We are reshaping funding to focus, at every level, on work related skills.

We are giving more power to employers and individuals - through an expanded reformed Train to Gain service and the development of Skills Accounts.

There is more competition between colleges and between colleges and other providers.

The qualifications framework is changing, with new roles for colleges and employers.

The sector is moving towards greater autonomy and self-regulation.

With the formation of DIUS and the DCSF, we are rethinking the mechanics of funding colleges.

How can we be sure that we will get the outcomes we desire?

FE and its users

The pressures for change do not come from government, but from society itself.

Because too many people are workless. Because employers have to recruit from overseas because they can't fill skilled jobs. Because, too many people have low qualifications and too many employers do not train.

The strength of colleges is your willingness to say - 'we will never blame other people for not taking advantage of what we offer; we will always adapt to meet their needs'.

Worklessness and FE

The UK currently has the highest employment rate in the G8.

But the pace of change in the global economy threatens those least well equipped to cope.

• 2.6 million people on Incapacity benefits
• Lone parents, 40% workless.
• Ethnic minorities are more likely to be workless.
• The challenges of our largest cities.

The challenge to change is not coming from Government but from the communities you serve.

There is pressure from employers to meet their training needs, particularly for the high level skills the economy now demands. There is also pressure from individuals who want to move into or on at work.

Colleges need to respond as:

• More money is diverted through employer led Train to Gain
• The demand for specialist training increases
• Colleges are asked to work more effectively with Jobcentre Plus and improve provision for the workless

The reality is that if colleges do not respond to this demand, they risk loosing the funding they need. More importantly they will also be failing the communities they serve.

So the skill systems and the benefit system must work together for the people to find a job and to create a better future for themselves and their families.

To achieve this we must engage closely with DWP and Jobcentre Plus programmes with colleges taking a lead in this work - so that more people can progress into jobs and, with better skills, into sustained employment.

We must support the Local Employer Partnerships featuring leading employers such as Tesco, Sainsburys and Vodafone and guarantee to offer 250,000 jobs to people in our highest unemployment areas, so that the jobseekers to get the skills that will keep them in work.

We must work even more closely with local authorities and help them to achieve their ambitions for local economies and the skills that drive them.

And because it is often as hard to move from a low paying job to a better paid career as it is to move from welfare into work.

So the new careers service for adults in England will be an advancement service helping all people in or out of work to take up jobs and learning opportunities and giving them the information about skills.

Pre-level 2

Last week when we published 'Adult Learning and Skills: Investing in the First Steps'.

We will not achieve either strong communities or world class skills unless we can engage those who have lost out and help them progress through learning into employment.

That is why we are investing £1.5 billion each year in pre Level 2 programmes.

We are not only interested in Level 2 and Level 3 qualifications. Imaginative, creative and flexible use of pre Level 2 investment can both meet the immediate needs of adult learners and ensure their progression into higher level qualifications and decent jobs.

I hope the message of Investing in First Steps will be clear that everyone involved in adult learning can help to shape our proposals and bring them to life.

Expanding opportunities

By 2010-11, total spending on education, employment and training for young people and adults will be £12.4billion a year compared to £6.5billion in 2001-02.

At the centre of the programme is a major expansion of apprenticeships with over £1billion of Government funding - enough to increase overall places from 250,000 today to more than 400,000 by 2010/11.

The skills entitlement will be backed by legislation:

• A right to basic skills training where needed, coupled with the biggest ever investment in this area with over 3.6 million learners on 'Skills for Life' courses over the spending review period.
• A right to free, first-time full level 2 adult training and provide over 800,000 places in 2010/11 - a 30 per cent increase on 2007/08.
• Over 500,000 full level 3 adult training places in 2010/11 - an increase of 148 per cent on 2007/08. And there will be a full legal level 3 right for those aged between 19 and 25.
• By 2010/11 Skills Accounts will help individuals access around £500 million's worth of adult learning, increasing to nearly £1.5 billion by 2015.

I have also asked the LSC to ensure that capital money will be spent on buildings of the highest environmental standards.

Delivering these opportunities

Colleges have a key role over and above the delivery of the courses. Your role as leaders in local communities could not be more important.

Engaging with employers, private and public, to promote the advantages of offering apprenticeships.

Or persuading more employers of the value to them and the wider community of delivering on the skills pledge.

Apprenticeships

Apprenticeships are universally well-regarded. Young people and adults are desperate for the kinds of training - and the jobs - that apprenticeships can help to deliver.

Our target of 400,000 would reach the Leitch target 8 to 9 years early but we have to make sure that there are enough employer places and that each place is of the highest quality.

Too many Apprenticeships have an uncertain relationship with employers. It's not good enough. They have to be about real job opportunities, with real content and delivering real skills. More employers need to deliver this.

Without real jobs and employers they aren't real Apprenticeships.

There is a key role here for the Association of Colleges, along with other partners to promote the benefits of Apprenticeships across industry and increase investment in skills.

The resources are there if the demand is.

For the first time, we will target funding at expanding apprenticeships for adults aged over 25. This will mean 30,000 additional places costing £90million over the next three years.

Apprenticeship for those aged over 19 will total 125,000 by 2010/11 alongside 281,000 places for those aged 16-18.

And the PM has asked us to give young people a credit worth between £3,000 and £15,000 that they can take to an employer to show the value of the training they would bring with them.

Engaging with employers

We cannot meet our targets without further transforming the relationship between colleges and employers.

It's a complex area, but I think there are three key strands.

• Driving forward Train to Gain, and removing some of the restrictions and inflexibility of the first year.
• Developing your own college's capacity to deliver the courses, including the specialist and higher level courses that employers need.
• And developing FE's own distinctive contribution to innovation and knowledge transfer.

Train to Gain

Train to Gain works because its core idea is that training should be designed around employers' needs.

Over a quarter of a million learners have taken part. We will increase investment to over £1 billion in three years time.

But to win that business, providers need to show they can deliver what employers demand - and that they can adapt and help employers to adapt to a changing world.

We have reviewed the first year of Train to Gain. It is clear we must introduce new flexibilities for providers and employers.

We will introduce a support programme for providers to help all reach a position where they can both engage in Train to Gain and be successful in delivering it to employers.

We will lift the funding cap for providers, allowing them to do more business as their performance improves.

We will reduce the bureaucracy in Train to Gain ensuring that those who can combine high volume with high quality can do so. And that new entrants who can match the best for quality can enter the market and ensure that employers get the skills and qualifications they demand at the right time, in the right place and at a fair price.

And we will change the service so that employers will find it more relevant.

First a massive new investment in SME skills focussed management training, increased from £4 million a year to £30 million a year. That will support some 20,000 owner-managers in around 14,000 companies.

Second, Train to Gain must take into account sector skills needs; and in return for SSCs stimulating demand we will earmark Train to Gain funds for use in specific sectors.

Third, Train to Gain will work across all of the levels of skills and training that employers and employees need.

College Capacity and working with employers

We need to develop the capacity to work with employers at higher levels.

Increasingly this will be through specialist networks, developed under the CoVE programme and improved through the new standard for employer responsiveness and National Skills Academies.

But we also need to develop FE college and provider capacity at Level 3 and above. Foundation Degrees will be an important part of this but there is also a general demand from employers for high-level technical skills.

I want to see a sector that can confidently bring its expertise and capacity to help answer that demand.

We have recently passed legislation allowing colleges to offer their own Foundation Degrees. Those who do will need to be clear about the nature of their offer. In particular how they ensure, on their own or in partnership with HEIs, that local employers can get what they need.

Qualifications

Developing the qualifications framework is crucial to employer engagement and employer confidence.

Ed Balls recently announced that QCA would be separated into a curriculum and qualifications development body and regulator entrusted with upholding standards.

SSCs will help to develop the content of qualifications and to ensure that they represent what employers need.

For many years employers have complained that we haven't recognised the best training that they offer to their employees. Employer accreditation is a vital step forward in the reform of qualifications. And by Christmas we expect to announce the first few who will have their training recognised in this way.

These changes will also improve the ability of colleges and providers to develop and award their own qualifications.

Of course, the big test for colleges and employers offering qualifications will be to ensure that learners gain transferable and recognisable skills they can take to other employers and conditions.

Self regulation

A year ago Alan Johnson challenged you to develop self-regulation proposals. This has obviously been a major theme of your conference.

A mature sector could and should depend more on its strong, autonomous, confident institutions to govern their own affairs.

But the guiding principles for self-regulation and self-governance must be that learner and employer get an even better deal. That means continually improving performance and, where necessary, tackling underperformance. It means showing how we ensure that FE improves its work in the toughest, most demanding and deprived communities. I expect the sector to use the Framework for Excellence as the basis for this.

Both CEL and QIA have a record of success and achievement in their own fields, but now it's time for them to come together and I urge you to help shape their new organisation by responding to the forthcoming consultation prospectus.

You - the providers and institutions - must use and own this process and the organisation that emerges. It should not become another quango in an already crowded landscape - but rather an organisation of the sector that is valued and worthwhile.

You have heard a lot during this conference about the work of the self regulation group led by Sir George Sweeney, supported by John Taylor. I believe the work done to bring together the very many representative groups from across the sector has been a real achievement. I want to record my and Bill Rammell's thanks to all who have been involved.

We now need to take forward the work as part of the consultations that will follow the Machinery of Government changes. I am pleased the Group's work has been published. I now expect all of you to work closely with DIUS to make sure the proposals for self regulation are an intrinsic part of the consultation process.

Drawing the strands together

I've painted a picture of a rapidly changing landscape for adult skills, which you have to put together with further changes in 14-19 education.

In the immediate future, we will consult, with DCSF, in the New Year on the new funding arrangements. And I can assure that, while the issues are not simple, we are determined that they will work, for you.

More of your funding will rely on your success in meeting employer and individual needs where both have more choice about where training takes place.

You can look forward to greater autonomy and self-regulation, but will, nonetheless, have to meet clear social objectives and receive significant funds direct from the LSC.

You will be expected to deliver higher levels of specialisation to meet employer needs, yet offer a better, more personalised service, to those with limited skills and aptitude.

Many colleges are proposing mergers, though there is no evidence that larger colleges provide more effective education. Is this the way we should go, or should we be ensuring that there is real choice and competition between providers?

So it's not surprising that many people are asking what we expect the college of the future to look like. How these demands should be balanced.

Rather than try to answer these questions immediately, I'm proposing that with the AoC and representatives of other training providers and the LSC, we undertake a serious exercise in scenario planning.

Before Christmas we will bring a small group of providers together to identify the main drivers for change in the system and potential scenarios for change. And shortly after Christmas we will involve a much larger group in working through those scenarios and seeing how different colleges plan to respond. And, in the light of this, we can see whether we need to tweak the system or make more fundamental changes.

This is not what you are used to. You are probably more used to ministers who want to tell you in detail what the future will look like (at least until the next minister). But it is because I want to draw on your knowledge and your experience that I want to work in this way.

And I want to do this because further education is so fundamental to so many of the things this Government wishes to achieve.

We cannot have the society or the economy that we want without your help.

We cannot unlock all the talent or aspirations in this country today unless we can agree how.

I don't think we can achieve much as unless we actively share and develop the same vision and understanding.

There is a lot do. We cannot afford to waste this opportunity.

Too many people are depending on us.

Thank You.