If industry is steering, who buys the petrol?
Is business the new consumer of vocat-ional education? Employers' organisations are increasingly calling for education and training to be driven by their demands. When the Learning and Skills Council was launched in December, the Confederation of British Industry said it was pleased to see the government taking a "business led and bottom up approach to post-16 education and training".
Having employers leading demand in the learning and skills market raises the temperature of many in education. It was one of the hottest debates at recent Institute of Public Policy Research and Further Education Development Agency seminars.
Andy Westwood, of the Employment Policy Institute, said: "Employers' organisations are clear about the priorities for delivery of skills - both for education and employers. Their highly developed under-standing of generic and key skills suggests that the language barriers between education and employment may be exaggerated."
Increasingly, businesses consider themselves to be one of FE's main customers. But customers usually pay for what they receive.
In the third National Skills Task Force report, many of the recommendations suggest ways of encouraging employees to take part in education and training. The task force suggests that major employee representatives produce a "joint statement of workforce development". But it doesn't reach a conclusion on who should pay for education and training. Any debate about this begs the question of who is driving demand and who benefits most.
Vocational education has three separate but connected markets: the learner, or "immediate market"; the employer (intermediate); and the State and the economy (ultimate).
For learners, eduction and training can make the difference between continual employment and long-term unemployment. Until now, colleges have responded to learners' needs by putting on the courses they demanded. However, many in most need of training cannot afford to pay for a course and rely on State support.
The State, which pays for the bulk of provision, is one of the main beneficiaries. As manager of the economy, the government recognises that vocational education can improve the nation's competitiveness and raise growth. It has been keenly driving this message home.
When the Education Secretary first published details of the Learning and Skills Council, he said: "Business and government must work together to raise skills levels. The UK performs badly in comparison with the rest of Europe on the proportion of the workforce skilled at critical intermediate levels. Our vocational skills system has been historically poor."
Vocational education builds human capital, which helps businesses to remain competitive, people to fulfil their potential and the State to ensure economic growth.
There's no simple answer to who should pay. But with employers demanding so much influence over post-16 education and training, we must ask what their funding responsibility should be.
We need a three-way solution that includes learners, the State and business, yet we shy away from talking to employers about payment. But as we become more sensitive to the economy's needs, surely business and colleges should work together, directly.
If employers were sure of the bottom line effect of vocational education, they would perhaps engage on a more commercial basis. Employers need to be persuaded that vocational education is not free.
Chris Hughes is chief executive of the Further Education Development Agency