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One of the most contentious aspects of UK vocational education and training (VET) policy in recent years has been the increased focus on the N/SVQ (National and Scottish Vocational Qualifications) system of competence-based vocational qualifications which are based on the assessment of an individual's performance in the workplace. In this chapter, the authors provide an account of the origins and emergence of N/SVQ policy and discuss some of the concerns and criticisms that the policy has attracted. There has been concern about the narrowness of the occupational standards on which N/SVQs are based in many cases, the reluctance of employers to make use of them and the failure to bring about a coherent and integrated system of vocational qualifications. The research in this chapter is drawn from contemporary documentation and secondary sources, as well as interviews with policy makers and other professionals. The authors discuss the new vocationalism, the changing nature of work and employment and the need to enhance quality in youth training. The authors argue that the emergence of competency-based qualifications policy in the UK in the 1980s can be ascribed to four factors: the growth of a new vocationalism in education; the perceived change in the nature of the economy and employment; the concern to remove artificial barriers to economic modernisation; and the imperative to manage unprecedented levels of youth unemployment.