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Can hybrids thrive in the new hothouse?

Ngaio Crequer charts the chequered history of training and enterprise councils as they jostle for a place in the Labour Government's strategy

Tony Blair can thank a training and enterprise council for his "education, education, education" soundbite. (North Yorkshire TEC conducted a poll and found that 43 per cent of people thought sex was the most enjoyable thing in life. The remaining 57 per cent thought it was education.) So what are training and enterprise councils? They are hybrid bodies - independent private sector companies with a public role, largely funded by central government. They are not-for-profit companies, limited by guarantee, created by the Tories to put private enterprise into the public sector.

The TECs were set up in 1990 to "work closely with individuals, businesses and organisations to help bring about a dynamic local economy and a more prosperous future." The last Government set them three key priorities: * "to create and maintain dynamic local economies with strategic partners, in particular with local authorities"; * "to support competitive business, through effective investment in innovation and the development and management of people, and increased use of business support services through the network of Business Links"; * "to build a world-class workforce and create a learning society with the skills essential to successful businesses and individuals."

There are 79 TECs in England and Wales, all with a designated geographical area, and 22 in Scotland where they are called local enterprise councils. They are run by boards of directors, at least two-thirds of whom have to be senior executives from private companies. The rest of the members come from local authorities, the voluntary sector and, in some cases, trade unions. They are unpaid volunteers.

TECs do not receive grants, but are given contracts to operate by the Government. The Government also negotiates targets with them and receive performance-related funding on achievement of targets negotiated with the Government. They can also bid for European Union funding.

Some 13 TECs have merged with chambers of commerce to become chambers of commerce, training and enterprise. The TEC National Council acts as a national lobbyist for the TECs. There is also a Consortium of Rural TECs, which helps to meet the training and enterprise needs of organisations in rural areas.

The TECs are responsible for managing many of the Government's training programmes. These include Training for Work, Youth Training, Modern Apprenticeships, Youth Credits, Skills for Small Businesses, and Investors in People. They are also responsible locally for setting and meeting the National Advisory Council for Education and Training Targets. A network of local training providers, such as colleges or private training organisations, work under contracts managed by the TEC.

More than 95 per cent of the TECs' income comes from Government sources. Currently they are contracted to run programmes and activities worth Pounds 1.4 billion.

Since their inception there has been considerable scepticism over their financial accountability and performance. Last year the all-party Commons select committee on employment concluded: "We believe that TECs have made a modest contribution to the improvement of the system of training for the unemployed, and to the promotion of economic regeneration and enterprise within the local economy. Their impact in terms of training has not been as dramatic as was hoped. As we have seen, their performance in placing people in work and gaining qualifications appears to reflect conditions, and not to overcome them."

The TECs effectively had a monopoly on Government contracts yet they were comparatively immune to the competitive discipline of the sector, the MPs said. In some cases they were slow to win the trust and confidence of local communities.

The TECs, however, would point to initiatives such as Modern Apprenticeships, which have been spectacularly successful, and the Youth Training programme in which one in 10 of those who complete YT move on to jobs or enter full-time education. They claim to have attracted Pounds 1.65 billion ofprivate-sector investment in training.

There have also been concerns about accountability. The TECs are audited by Government departments, the National Audit Office and the European Commission. In 1995, the NAO said that the TECs needed to give priority to their systems of financial control, although they had substantially improved. The TECs were criticised for "incorrect and uncertain" payments to training providers. In 1994 the South Thames TEC collapsed and went into receivership owing more than Pounds 22 million.

The Public Accounts Committee said earlier this year that it was concerned about overpayments made by the Department for Education and Employment to two TECs in respect of allegedly unjustified claims by two training providers. Separately, police are currently investigating 13 cases of alleged payment irregularities. TECs are required to publish business and corporate plans, an annual report and hold at least one public meeting.

One item of concern is output-related funding. Under this system, TECs are paid a proportion of their fee when an individual begins a training programme and the rest on completion. The TECs claim this has produced significant increases in the number of jobs and the qualifications achieved by trainees.

But there are those in the voluntary sector who are more critical. They say it encourages TECs to deliver the greatest number of targets and jobs, for the lowest price and the fastest possible time.

A 1995 Coopers Lybrand report on output-related funding found "a focus on short-term labour market needs at the expense of investing in skills to meet medium to longer-term needs ... a possible reduction in the range and breadth of training provision available to participants, both through the reduction (or even elimination) of courses in some occupations in some TEC areas, and also via a reduction in the training provider network ... and a possible recruitment bias in favour of those in the eligible client groups who are more 'job-ready' at the expense of those participants who benefit from a longer period of training."

The TECs, after an unsteady start, have now settled down and have quelled hostility from some sectors, such as the trade unions, with whom they now have a national accord.

They claim they have the expertise to be key players in Welfare to Work and the Labour Government is keener on partnership than on ostracising anyone. They still need to make themselves more visible outside the business community.

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