Ignore what employers say when you decide which skills people should train for, advises Peter Robinson. Look instead at which skills they reward.
One of the key questions behind the new framework for post-16 learning is: who should decide what courses and qualifications are delivered in further education and vocational training?
On the one hand, there is the desire to have an education market driven by learners' and employers' choices as the purchasers of training. On the other hand, a planned system could respond to the perceived strategic needs of businesses and the economy. The 47 new local learning and skills councils, with significant employer representation, appear to be at the heart of an attempt at planning.
The main criticism of the learning market from those who want a much greater role for planning is that some of the course choices made by learners appear not to match businesses' requirements. They argue that planning bodies will do a much better job of matching supply and demand.
In practice, people are very good at reading labour market signals about which qualifications it pays to have. There is also evidence that planners' understanding of what is going on is much less clear and that their priorities are influenced by anecdote and propaganda.
The one cast-iron law here is not to listen to what employers say but to look at what skills they reward. Employers who would like to participate on planning committees say there are insufficient people with intermediate vocational qualifications. But businesses pay people who have A-levels far more than people with notionally equivalent vocational qualifications.
Employers' representative bodies have for years claimed that the number of vocational qualifications on offer should be rationalised. However, the success of whole range of vocational qualifications, other than NVQs and GNVQs, is proof positive that employers welcome diversity.
Concern has been expressed about the large numbers of graduates from courses such as nursery nursing and leisure and tourism. The implication is that more should be taking modern apprenticeships in engineering instead.
Given that care occupations make up the fastest expanding sector in the lower half of the labour market, the popularity of nursery nursing courses does not seem misplaced. Moreover, the DFEE itself makes great play of the statistic that 1.75 million people are employed in tourism-related industries (though mainly in low-paid jobs in bars, cafes and hotels).
Meanwhile, the car industry's problems hardly suggest that young people are acting irrationally by shying away from engineering apprenticeships.
The point is that the information coming from agencies wishing to plan provision may be contributing to unwise course choices. Businesses best signal their demand for skills by paying people for having qualifications and by purchasing training. This buying power is far more influential and efficient than planning committee membership.
The local learning and skills councils' main role should be to stimulate demand from groups under-represented in FE and training, and tackle the barriers to learning such people may face. This is clearly distinct from a remit to stimulate demand for courses and qualifications that are seen to be in the national, regional or local strategic interest, based on some attempt to forecast what is going to happen in local labour markets. In a highly complex mature industrial economy, such an attempt at planning is doomed to fail.
Peter Robinson is senior economist with the Institute of Public Policy Research.