The TES recorded a hearty and apparently universal welcome for the 21st Century Skills - Realising Our Potential White Paper. Are these initial reactions justified?

The paper was produced following three market failures: two long-standing and inherited by the Government, one much more immediate and produced by it.

Employers - driven by market pressures - invest an estimated pound;23 billion per year on training their employees. However their yield from this investment is a mere 75,000 vocational qualifications a year. They still complain of major skills shortages, objectively evident in the figures in the White Paper.

FE colleges have been driven strongly by market pressures at least since 1993. Their students gain a creditable 700,000 vocational qualifications a year. Colleges raise only a small proportion of the pound;2.5 billion they spend annually on adult learning from the employer market. They are criticised by employers for failing to provide what they want.

Another failure has its origin in the Government’s 1997 manifesto. This committed ministers to introducing a market-led approach - individual learning accounts to “give individuals the power to invest in training” to gain the skills they want. The ILA failure has clearly left its scars on the drafters of the Skills White Paper.

If the paper contains a big idea, it is to replace market failure with a collaborative planning approach. How this solution became the one chosen by Whitehall is an interesting question, which I shall address.

This week I address a more fundamental question: will collaboration work where market solutions have not?

There are some reasons for optimism. The widespread welcome given to the White Paper suggests a consensus that “employability for life” is a matter for “every employer, every employee and every citizen”. If this can be translated into effective collaboration at national, regional and local level, then employers should feel able to drive the agenda, colleges should become much more responsive to employers’ demands (and earn more from them), and individuals will have enhanced and better focused learning choices.

Further, the funding priorities in the White Paper more clearly match the Government’s targets and analysis of rates of return people can expect from different levels of qualification. And one can only welcome the paper’s promises of simplified funding for providers against approved plans and an employer-led national qualifications system based on units of learning.

But there are also grounds for scepticism. To the individual learner, the level 2 learning entitlement is not much of an advance: FE colleges grant this generally already, at little if any charge. In this case, the principal impact of the new commitment might be to increase the unit costs paid to them by the Learning and Skills Council.

As a price for this modest addition (estimated cost about pound;80 million or 1 per cent of the LSC’s budget per year), colleges will be restricted in the range of level 3 courses they can offer, and have to charge level 3 students more.

It is not evident how this squares with meeting the - critical - level 3 intermediate skills challenge identified in the White Paper. The Government’s hope is that the business partners in the Skills Alliance will fill the fees gap. Will they? Many are small firms.

But the Employer Training Pilots seem to suggest that these need not be just course fees, but even foregone production costs paid for them to enrol their staff on such courses.

There seems to be an unwillingness to say that pound;23 billion is a modest sum for employers to spend on training: it represents only 0.5 per cent of the nation’s wages and salary bill - well under half of what is spent by at least some of our major European competitors.

There is the possibility of virtually endless debate, paperwork, audit trails, confusion and disagreement between the myriad players now to be co-owners of the skills agenda.

If that enables us nationally “to realise our potential”, it will be a price worth paying. But it might just replace market failure with planning blight.

The author was director for Further Education and Youth Training in the then Department for Education and Employment from 1995-2001. He is now an independent consultant and college governor. He writes in a personal capacity Next week: The politics of the White Paper