Education and Employment Secretary David Blunkett today unveiled plans for new loans to beat skills shortages in a challenge to industry and employers. The loans would be transferable between employers if the employee changed jobs. They would require employers in different industries to work together for their mutual benefit while stimulating the expansion of training.

Speaking to business leaders at the launch of the 3rd report of the Skills Task Force in London, Mr Blunkett said:

"In the week that the Bank of England’s Monetary Policy Committee makes its decision on interest rate changes, it is crucial that business and Government come together to head off skills shortages and the pressures they create.

"The Government is committed to working with industry to bridge the skills gap. Employers are often reluctant to invest in training because they fear trained employees would be poached by competitors. That is why, in responding to the recommendations of the task force, I am keen to work with industry to explore new innovative loan schemes for training. Under one model, employers would only repay for employees who stayed with them. If the employee moved on, the new employer would pick up the loan repayments - and the industry as a whole would cover any risk of default. Each employer would gain the full benefit of investment, paying for it over an extended period. "

"In this way the Government together with employers can tackle underachievement in key sectors. We will help industries, backed by banks, to set up loans in which individuals and Government will also have a stake.The Government will contribute, via its support for the infrastructure of national training organisations. Employers will need to act co-operatively to make schemes effective.

"For example, in the gas industry there is a serious shortage of qualified fitters. Last year only 128 new fitters joined the council for registered gas installers (CORGI) register, far below replacement needs for this workforce of nearly 100,000 fitters. I welcome new proposals, currently being developed in partnership with the gas industry. Many more young people from diverse backgrounds would have the opportunity of entering this profitable industry, in which I myself started out in my own working life.

"Working with employers, trade unions, training providers and banks, we and the National Training Organisation expect to bring forward further details of this pilot scheme next month. If the proposals work well in the gas industry, other sectors could also benefit including: Information Technology, engineering, machine tools, transport, film and broadcasting; catering; construction; and a wide range of public sector employees.

"I intend that, with business and the national training organisations, we should begin to pilot these new transferable training loans as quickly as possible. Taken together with the new individual learning accounts, these loans will enable employers and the workforce to take a stake in the future of their enterprise. They will help stimulate an expansion of adult training and re-training."
Mr Blunkett also responded to the proposal by the Skills Task Force for income-contingent loans to be provided to individuals:

"I see an argument for providing loans to individuals repayable as and when they can afford it. I would like to see first how the new loans to employers work. If they prove successful, that will strengthen the case for income-contingent loans to individuals too. I see the potential to meet the challenge through the further development of individual learning accounts and re-assessing career development loans, and making fuller use of the tax incentives which have already been provided.

"The message from this report is one of partnership, which I wholeheartedly endorse. Employers themselves have a critical role in investing in the skills of their workforce, and encouraging those who doubt their own abilities to take advantage of the opportunities open to them. One of the key recommendations in the report , a statement of principles on workforce development, agreed between employer organisations and trade unions, would clearly be a major step forward."