Enterprise and Lifelong Learning Committee, 07 Feb 2001

Meeting date: Wednesday, February 7, 2001

Official Report 228KB pdf

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Duffner Report

We now move to the Duffner report on the careers service review. I invite you to make a quick introduction, minister.

I suggest that I forgo any introduction, as everybody is familiar with the issue. In view of the time that is available, I shall simply invite questions from members.

I welcome the key principles of the Duffner report and the coherence and synergy that will be gained as a result. A knowledge guidance service makes a lot of sense for the public and I believe that that is the way forward. We have been working in reporter groups and taking evidence on the Duffner report as part of our inquiry.

I would like to ask you about three of the issues that have been raised. First, people are keen to see standards and targets set at national level. That is welcomed, but there is a call for flexibility at local level to allow good past practice to continue to operate. What is your view on that?

My second question is about impartiality. If there is an alignment with the Scottish Enterprise network, how will you ensure that careers Scotland is impartial? If, for example, Scottish Enterprise has targets to meet on its skillseekers programme or on modern apprenticeships, how can we be sure that no influence will be brought to bear on the careers service to channel people into those programmes?

Thirdly, some careers companies raise funding themselves by looking at partnership contracts, such as new deal contracts. If they are not legal entities, how will they be able to continue to work in that way?

On balancing national standards and flexibility, we are trying to have the best of both worlds. At the moment, there are no national standards and no national service guarantees. A head teacher in any Scottish school therefore has no idea of what they can expect from the careers officer in their school. That is the case for national standards. On the other hand, because there is a need for flexibility, we have said that there should be a local careers Scotland board in every area to provide the function that you have described to augment the service. A baseline national standard will be set by the national board, but a local board can act flexibly.

Impartiality is very important. Duffner has endorsed the principle of impartiality and we have committed ourselves wholeheartedly to that. At the moment, it is 50:50 LECs and local authorities, so it is 50:50 employers and school education interests. We hope that, by changing the composition of the careers Scotland boards to a third schools, a third the learning industry and a third employers, we will be able to tilt the balance so that the employability of the individual, rather than job placement, is at the centre. Equipping the individual for tomorrow's labour market should predominate, rather than the question, "Which job are we going to put you in?"

You asked whether the LEC people could work in training and whether they might overly influence the people in careers Scotland. Of course there must be dialogue about the needs of the local labour market, but we have not given the LEC a hierarchical relationship over careers Scotland. It is a completely parallel relationship, with the accountability of the careers Scotland staff being to their local board and ultimately to the national standards that have been set at the centre, rather than a horizontal responsibility to the local LEC.

We must ensure that the vehicles are capable of attracting private sector funding, as they do at the moment. Whatever the nature of the financial vehicles that are necessary to make that possible, we will try to achieve that. If we waited to do that with legislation, we could be waiting for years. Intensive discussion is going on with the lawyers about the corporate structure of careers Scotland at local level. The LECs are wholly owned subsidiaries, but there will be a lengthy discussion about the precise corporate structure of the local organisations, so that we are not required to amend the Enterprise and New Towns (Scotland) Act 1990, which created Scottish Enterprise. To avoid going down the legislative route, we must devise a corporate structure that the lawyers say does not require legislation. However, should they be able to continue to attract funding from the private sector, there should be partnership and corporate structures to facilitate that.

After 8 March, what steps are being taken at national and local level to push that forward? In some areas, four organisations will be coming together. If there is any change, it must be handled sensitively and quickly. That is what the staff want. What has been done so far to develop those plans at national and local levels?

As soon as we respond to the consultation that is going on at the moment, which we hope to do by the end of March so that people have 12 months' planning time, we will immediately put in place three structures. The first will be the joint venture board in shadow form, which will begin to think through issues such as how to allocate money at national level, how to set standards and what the benchmarks should be. We will also have a joint working group, which would be chaired by the Executive, as ministers will remain accountable for the delivery of the service. We will also immediately set up implementation teams in Scottish Enterprise and Highlands and Islands Enterprise, hopefully with a number of secondments from all the organisations affected. Those teams will be at the heart of the 12-month planning phase, with a vesting date in April 2002.

I understand that the local career boards will be parallel institutions that have a horizontal relationship with the LECs. Will the central directorate or executive of careers Scotland be subservient to Scottish Enterprise and Highlands and Islands Enterprise, or will it be a parallel institution? I understand from the structure plans that you have shown us that everyone has to be an employee of Scottish Enterprise and Highlands and Islands Enterprise. Who would control the budget for careers Scotland? Would the money come to Scottish Enterprise, which would take a decision about how much to give to careers Scotland? Would it go straight to careers Scotland? Would it go to Scottish Enterprise as ring-fenced income?

We have said that, for the foreseeable future, we will ring-fence the money for careers Scotland; therefore, the 25 per cent increase in the budget over the next three years is guaranteed to careers Scotland. One of the first tasks of the shadow advisory joint venture board will be to consider how the money should be distributed. Although careers Scotland has guaranteed funding streams, some of the other initiatives such as local learning partnerships and education business partnerships have insecure funding streams.

One of the first challenges will be to think through how, in the most general terms, funding should be allocated to the new combined body. We must consider the extent to which that should relate to the population, the needs of the area, the number of people who are unemployed and those who come under the recommendation of the Beattie report. The general direction of how resources are allocated in the context of a substantially growing cake is something that the board will consider. The process concerned is important in order to preserve the integrity of the audit function of Scottish Enterprise. The joint venture board would give general direction about the extent to which the allocation is needs or population based, but the distribution of the money within the ring-fenced total envelope is an operational decision for the central unit of careers Scotland, which will be located in the enterprise network.

At the moment, there are two budgets—the £25 million that it currently costs to run the careers service in Scotland and the £24 million of new money over three years, which is ring-fenced primarily for social inclusion and the all-age service. However, we are creating two national bodies that will require funding. As well as the issues of distribution to the local bodies, where do you envisage the funding of the central organisations coming from? Presumably they will be involved in development work and there is a danger that a lot of money will end up in the head office. There is no clear indication where the funding for the two head offices—one for the Highlands and Islands and one for the rest of Scotland—will come from.

There are two issues. At the moment, there are about 80 organisations that have contracts that run through to April 2002. One of the decisions that we need to consider in the next year—it will be considered by the joint venture group—is what security of funding people need beyond April 2002 and how that can be achieved without locking the new structure into historic funding arrangements. The amount of money that organisations will get is guaranteed until 2002, but there will be discussions over the next year about how much further forward guarantees need to be given to allow programme delivery to continue without undermining the scope of the new organisation.

Some of the funding for that transition will be taken up by the Executive. We resource the joint venture group, which we chair. However, the implementation teams will be located in Scottish Enterprise and Highlands and Islands Enterprise and certain funding will be a matter for them. If the committee requires further details, we will address that as far as possible in our response that will come out at the beginning of April. However, I am anxious not to fetter the hands of the new joint venture board before it comes into existence and we get the stakeholders round the table.

How do we keep the process fresh? I accept that there is a laudable intention to take all the bits and pieces, shake them out and give them a more defined shape with clearer targets, consistency of provision and quality of service. How can that be kept fresh? The bilious amongst us in Scotland would say if that function is given to the enterprise network, it would simply become an add-on bureaucracy. How do you counter that criticism?

That is at the heart of deciding whether that is just the right thing to do or a real win-win. What inspired me to think about the matter was seeing what Grampian Careers had done. It put its entire service on the web and opened up shop-front premises on Union Street, opposite Marks and Spencer. Anyone can walk in off the street or log on to the web to ask for advice. That has transformed what that organisation is about. It is no longer made up of people who perform a librarian-type role but of people who have a different skills set, centred around personal mentoring. They take pride in staying with a client from 14 to 25 and beyond, helping them make those transitions, doing personal Myers-Briggs personality tests with them and not saying that the height of their aspiration for them is to figure out how to get funding for their nursery nurse course.

I hope that we can capture the spirit that is emerging in one or two areas of Scotland. We are not simply bringing four organisations into one; we are transforming what those organisations do to help all of us understand the jobs of the future. I grew up wanting to be a doctor and Annabel Goldie no doubt grew up wanting to be a lawyer.

Only because I had not the brains to be a doctor, minister.

I suspect that we both changed our minds umpteen times along the way. Tonight I am going to Deloitte & Touche's awards ceremony for the 50 fastest-growing companies in Scotland. I suspect that if I asked the families of the award winners what the award winner did, they would be unable to say.

We need the new organisation to allow us to get to the heart of describing the work that we are going to do in the future. We do not want people to say that they want to be a doctor, a lawyer or a train driver; we want them to be comfortable with the sort of jobs that the people who are winning the fastest 50 awards are doing. The win in this comes not only from putting four organisations together but from transforming what they do. We hope that the enterprise network has the management capability to help deliver that scale of transition in what people do daily in the organisation.

The national centre: education for work and enterprise at Strathclyde University has a significant influence. How can we ensure that organisations such as that will not be squeezed out because they do not fit into the neat shape of the new structure?

We believe that the education for work agenda is too significant to be simply an add-on to Duffner, which is what it became. We need to think again about what we do to kids in Scotland between the ages of 14 and 16 that squeezes the enthusiasm and creativity out of the ones whom the school service does not suit. The national centre: education for work and enterprise profoundly tackles that challenge, but its work is not mainstreamed across the curriculum.

As we recognise the significance of that area, Jackie Baillie and I have decided that we need to take a fresh look at enterprise in the classroom and ways in which it can be placed in the heart of the curriculum. We have asked Nicol Stephen, a deputy minister who used to be in my department and is now in Jack McConnell's, to lead the work over the next 12 months towards thinking about the place of enterprise education in the classroom. I am sure that the Enterprise and Lifelong Learning Committee and the Education, Culture and Sport Committee will want to be involved in that. We have indicated that we will set up a committee to examine the area by April 2001 and ask it to come to its conclusions before April next year.

Given what you have said about the labour market and the action that you have initiated on labour information in relation to skills shortage, how do you think that that information will interact with the careers service? What input will there be? Will the careers service be given a remit to deal with current or forthcoming skills shortages, and will it be a proactive service as a result?

We have an opportunity to bring the three parts of the skills market under the umbrella of Scottish Enterprise. Careers Scotland will help people think about what they want to do, learndirect Scotland will help people to acquire the skills they need and the future skills unit—which is what we used to call the Scottish labour market information unit—will try to identify the needs of employers. On the question that you pose about how to direct people to where the jobs are, I think that the problem is largely one of information. For example, eight out of 10 trainees on the new deal with the Wise group opt to have information communications technology or call centre training, as that is where they know that the jobs will be.

I want to avoid compelling people into sectors of the economy that are growing, but I want to give people information about where they can expect to find job security if they move into those areas. That information has been lacking hitherto, because too much of our labour market information has been retrospective rather than forward facing. Once the future skills unit is up and running and has much better information at its disposal about the nature of the 100,000 vacancies in Scotland, that is when—perhaps in a year or two—this committee may want to take a view on how the future skills unit relates to careers Scotland—how directive the relationship should be—and consider the unit's link to the education sector.

I have to say how pleased I was to hear you say that you would try to ensure that, whatever model is put in place, it will continue to allow careers Scotland to innovate in the way that Grampian Careers has been able to do. I know that the ability to work in joint ventures, put together consortiums, lead bids and win funding from many different sources—not to mention generating income from the private sector—is very important to Grampian Careers and it wants to be able to continue to do that.

Have you had any feedback on the relationship between careers Scotland and the Employment Service? Has anyone suggested that there is a need to develop a national service level agreement with the Employment Service? One issue that is beginning to emerge from the presence of the Grampian Careers website is the balance between the vacancy handling service and job placement and which organisation should deal with which part of that. Grampian Careers gets a lot of job adverts from employers that have no relationship with the Employment Service.

The nature of the relationship with the Employment Service is critical. As Elaine Thomson will know, the Employment Service is due to disappear in June, along with the Department of Social Security. That will happen if we do not have an election and if we have an election it will depend on who wins it. The plan is to create a new agency that combines the DSS and the Employment Service. I think that, as soon as it is established, it would be appropriate to produce a memorandum of understanding between it and careers Scotland, but the writing of that should await the establishment of the new organisation.

The second critical issue is whether the new deal ceases to focus on only certain groups of the unemployed and becomes the central programme that typifies the way in which we interface with most of the unemployed; that is, whether it encroaches on the client groups that are currently covered by training for work.

The third critical issue is what the future role of careers Scotland should be in handling vacancies. As I said, that is the one aspect of the Duffner report that has proved to be controversial—there are different views within the careers service about whether the vacancy-handling role should remain with it or not. Duffner strongly recommended that that role should be moved away from the careers service and we have endorsed that recommendation. However, I would welcome the committee's view on that, because it is the one issue that has caused significant controversy. The matter obviously involves discussion with Westminster, but whether it is the right thing to do is an issue of principle; the committee's views would be welcome.

We have asked the Education, Culture and Sport Committee to appoint to this committee a reporter on Duffner, because it must have input on your response to Duffner. That committee has not yet appointed a reporter, but it will. When we are discussing our report, we will get some input from that reporter, so that the Executive gets one response from the two committees.

Inviting Nicol Stephen to examine education for work takes the matter a little bit out of our territory and back towards education. Therefore, in its response, the committee might want to flag up the significance of work and enterprise interests being part of the review of education for work. There must be collaborative effort. That would be a marker for how the committee approaches the issue over the next year; it is the one unfinished bit of business.

That brings us to the end of a marathon session. I thank the minister and her officials, both for the papers that they submitted and for their attendance for the previous two hours, which I think all members will have found illuminating. We look forward to Ms Alexander's next visit, which I hope will take place fairly soon—before the general election.

Six months hence.