Why the state should get out of devising 'skills products'

Civil Servants like telling employers and learners what they can spend on workforce development, rather than empowering those affected to solve the issues themselves.

BBC Radio 4 presenter and economist Evan Davis opened his 1998 book, Public Spending, with quite a funny story. (And not something you’d expect to find in a serious read with such a title.)

He recounts going for a particular haircut as a young man, which in those days was called a ‘short-back-and-sides’. On coming out of the barbershop with the desired trim, a mischievous voice shouts: “Who cut your hair, the council?”

Of course, we laugh at such an idea. However, Davis uses the example to brilliant effect. He is forcing us to think about the services the state should provide directly instead of what we should leave to the open market.

Indeed, unless my weekly blog is being read in North Korea, it is probably reasonable to propose that the last thing the state would attempt to do is put hairdressers on the government payroll.

Notwithstanding a general concern in Britain about the number of barbershops springing up on our high streets (something to do with potential money laundering), most people would probably agree that hairstyles are something the state should refrain from legislating for.

Yet, when you think about it carefully, isn’t it perhaps just a little bit odd that Whitehall civil servants have spent millions over recent years designing and implementing a whole range of top-down ‘skills products’ that employers and learners have no other choice but to buy from them if they want to access taxpayer workforce development funds?

Here are just three examples of these government-owned products: T levels, Skills Bootcamps and Apprenticeship Standards.

Imagine the next time you need a haircut or the weekly shop. You’re told you must apply to a local provider, who checks with the government to see if you are eligible. And if you are, the state pays the hairdresser or the food store directly on your behalf.

In other words, purchasing power is given to bureaucrats to decide these things, not to you.

A bizarre kind of post-18 training market

In England, the Conservative government first proposed that Whitehall could distribute public funds for skills training and decide precisely what the money was spent on.

Officials refer to this approach as ‘skills products’. You don’t have to take my word for it. Giving evidence to a House of Lords committee last year, the former CEO of a government quango called IfATE told peers (since replaced by another quango called Skills England):

‘If you have a series of apprenticeship training products and qualifications’, she said, ‘whether you think the system works or not, you have a system’

In other words, the government’s logic of a ‘skills system’ is predicated on what ‘products’ the state says employers and learners can access.

It’s the equivalent of your local council deciding your haircut.

In a further twist of this warped market logic, the incoming Chair of Skills England, Phil Smith, told a specialist journalist that a key reason he believed there was a ‘broken’ and ‘fragmented’ skills system was that the government didn’t attach a proper marketing and communications function to the products it is trying to sell.

Here is a senior business figure who is not asking a more fundamental question: Why does Whitehall need to prescribe what ‘skills products’ firms and learners can access in such a complex economy? And why aren’t more employers, such as in the case of apprenticeships, buying into what the government has to offer?

In my forthcoming book on skills policy, I refer to this flawed public sector-led model as product-market centralisation, a sub-variant of bureaucratic market centralisation that has been the modus operandi of officialdom in the Department for Education since 1980.

This form of supply-side intervention in skills differs significantly from the demand-side approach of successive governments after the Second World War (See chart). It sounds hard to imagine, but until the OPEC oil shock of 1973, Whitehall took no interest in devising skills and employment products. Instead, workforce development was entrusted and decentralised to 23 employer-owned Industrial Training Boards (ITBs).

Only after Labour established the Manpower Services Commission (MSC) in 1974 did the centralisation of training policy and the imposition of a single national employment programme begin. In those days, policy was delivered via Area Manpower Boards and ‘managing agents’—the precursors of today’s Independent Training Providers (ITPs).

Source: Bewick, T. (2025). Skills Policy in Britain and The Future of Work. Bristol University Press.

Bureaucratic Market Centralisation is where Whitehall tightly controls the price, product type, and who can deliver these services in a multi-agency-regulated quasi-marketplace. Adding to the confusion, officials argue that thousands of employers have developed all these products when, in fact, they were devised by a handful of ‘experts’ via a technocratic committee.

Of course, no one is seriously advocating for a Wild West approach. All market participants face some restrictions. In many countries, even hairdressers must obtain a licence to practice.

The key issue is whether new flagship skills bodies, like Skills England, can ask more profound questions about why the UK workforce system has seemingly staggered from one skills crisis to another over the past 40 years.

If you scrutinise the historical workforce and economic data, one irony is that Britain was more productive and real wages grew faster before Whitehall took the lead on skills policy. The more centralised our publicly funded workforce system became, trying to engineer reforms on the supply side, the more data shows these top-down interventions have mainly been ineffective in improving productivity growth.

Even the great Albert Einstein encouraged people to think of insanity in public policy as the propensity to do the same thing repeatedly, expecting different results.

Yet Skills England came into being without publishing any critique as to why it can achieve something different from the five predecessor national skills bodies that it follows on from. To make meaningful change, you must first understand a theory of change.

How system failure became baked in

One aspect of the skills system in England that commentators often miss is that the underlying ideology of ‘Whitehall knows best’ has been the consistent common denominator since the New Training Initiative of 1981.

Since then, academics and think tanks have focused only on ‘policy churn’ as the key determinant of change. For example, the Institute for Government noted in 2017 that Whitehall had ‘the tendency to abolish and recreate organisations as a proxy for demonstrating progress’.

It is true that every incoming government, Conservative and Labour, since 1987, has abolished the skills quango of the day and called it something else. Of course, the political rhetoric around all these institutional changes suggests it will be different this time.

But what is often missed at these junctures is that on each occasion, the ratchet of bureaucratic centralisation is tightened that bit further. We see this, for example, in the legislation that abolished IfATE and paved the way for Skills England (see video). The existing model of product market centralisation was placed on steroids with this clause in the Act:

‘The Secretary of State may prepare an apprenticeship assessment plan if satisfied that it would be more appropriate for the plan to be prepared by the Secretary of State than by a group of persons’.

This means civil servants can now dispense with any pretence that the nation’s skills products are being developed with groups of employers. The law gives Whitehall undisputed power to define an apprenticeship standard and assessment plan as they see fit (albeit dressed up in a somewhat archaic convention that the Secretary of State is democratically making such changes).

Evan Davis and his view of public spending would argue that the proper domain for skills and workforce policy, including the administration of the employer skills Levy, should be independent of government. Not only does that mean that the post-18 tertiary system is not on the Treasury’s books, but it also echoes world-class skills development models elsewhere where industry is firmly in the lead.

It is economist-speak what is called moving from a supplier-driven skills intervention model to one that is genuinely demand-led.

[CLICK ON VIDEO] Former Secretary of State for Education, Damian Hinds MP, (Con), tells the House of Commons that the cross-party consensus on developing independent apprenticeship standards has been broken.

This is how it is done in world-leading apprenticeship systems. While the government may often assume the role of ‘strategic architect,’ departmental officials avoid devising the curricula and occupational standards. That’s why in Germany, for example, we see employer-owned bodies and sectoral associations take the lead in this area. Social partners in Sweden take on this role; ministers are deliberately excluded from the process.

In Britain, we appear to have reached the apogee of government-led skills policy. Skills England has no separate legal status from the Department for Education. Unwittingly, perhaps, the fine people who have just agreed to serve on the inaugural ‘board’ of the organisation have become state employees.

It will be interesting to see what happens if any of them should decide to speak out.