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05 December 2006

Lord Leitch publishes review of long term skills needs

Lord Leitch today published his final report, 'Prosperity for all in the Global Economy: World Class Skills', which examines the UK's long-term skills needs. It sets out ambitious goals for 2020 which, if achieved, would make the UK a world leader in skills. The report recommends and sets out a far-reaching reform agenda.

Publishing the report, Lord Leitch said:

"In the 19th Century, the UK had the natural resources, the labour force and the inspiration to lead the world into the Industrial Revolution. Today, we are witnessing a different type of revolution. For developed countries that cannot compete on natural resources and low labour costs, success demands a more service-led economy and high value-added industry.

"In the 21st Century, our natural resource is our people - and their potential is both untapped and vast. Skills are the key to unlocking that potential. The prize for our country will be enormous - higher productivity, the creation of wealth and social justice.

"Without increased skills, we would condemn ourselves to a lingering decline in competitiveness, diminishing economic growth and a bleaker future for all. The case for action is compelling and urgent. Becoming a world leader on skills will enable the UK to compete with the best in the world. I am optimistic."

The report is set against a background of economic strength and stability in the UK, with 14 years of unbroken growth and one of the highest employment rates in the developed world. The UK has significantly improved the skills base with rising school and college standards and strong growth in graduate numbers.

However, the report makes clear that in a rapidly changing global economy, with emerging economies such as India and China growing dramatically, the UK cannot afford to stand still. Despite having made good progress over the last decade, aspects of the UK's skills base remain weaker than those in other developed economies, for example:

Low skills levels can hold back productivity and growth and, if not addressed, will result in increasing inequality and the marginalisation of some groups within the labour market. The report projects that, even if current targets are met, by 2020 the UK's skills base will be inferior to that of many other developed nations. A radical step-change is necessary.

The report recommends that the UK commits to a compelling new vision - to become a world leader in skills by 2020. This means increasing skills attainment at all levels by 2020 so that:

'Economically valuable skills' must be delivered through a demand-led approach, facilitated by a new culture of learning, and an appetite for improved skills amongst individuals and employers.

To attain these goals, the system must become more efficient, responding to market needs, and Government, employers and individuals must all engage and invest more in skills development. The report identifies necessary institutional reforms and simplification.

Lord Leitch recommends radical change across the whole skills spectrum by:

The prize for achieving this new ambition is huge - a more prosperous and productive society, with higher rates of employment, and lower levels of poverty and inequality. The report estimates a potential net benefit of at least £80 billion over 30 years, equivalent to an annual boost of £2.5 billion.

Lord Leitch concludes:

"Skills were once a key lever for prosperity and fairness. Skills are now increasingly the key lever."

Notes for editors

1. In 2004, the Chancellor of the Exchequer and the Secretary of State for Education and Skills commissioned Lord Sandy Leitch to lead an independent review to consider the skills base that the UK should aim to achieve in 2020 to maximise growth, productivity and social justice and to consider the policy implications of achieving the level of change required.

2. In the 2006 Budget, Lord Leitch was asked to consider an additional area of work: how skills and employment services could be further integrated in order to increase sustainable employment.

3. Lord Leitch has consulted extensively in preparing his interim report, Skills in the UK: The long-term challenge. Copies can be obtained from the Review website at:

4. Skills policy in the UK is devolved. The Review has worked closely with the Devolved Administrations in Scotland, Wales and Northern Ireland. Its analysis has implications for infrastructure, policies and targets in each country.

5. World class skills are defined by the UK being in the upper quartile of OECD nations in any assessment of educational achievement.

6. Lord Leitch is Chairman of BUPA, Intrinsic and the National Employment Panel. He is a non executive director of Lloyds TSB, United Business Media and Paternoster. He was previously Chairman and Chief Executive of Zurich Financial Services (UK, Ireland, Southern Africa and Asia Pacific) and Chairman of the Association of British Insurers.

7. Media enquires, including media bids for Sandy Leitch, should be addressed to the Treasury press office on 020 7270 5238. Non-media enquiries should be addressed to via the Treasury Correspondence and Enquiry Unit on 020 7270 4558.

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