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In the UK 2001 Pre-Budget Report, pilot schemes to test new approaches to workforce development were announced. This report provides details of these Employer Training Pilots, analysing the importance of skills in increasing UK productivity and exploring the potential role of Government intervention in workforce development. In comparison to other European countries, the UK has a much larger proportion of workers who are unskilled or who have very few qualifications. Although the skills of the workforce are improving, current rates will not close the skills gaps. While the Employer Training Pilots are a crucial step in achieving change in UK skills, the supply of training is also essential if real change is to be achieved and the further education (FE) sector has a crucial role to play. A strategic framework for delivering improved FE performance is included in this report. The chapters are: Context for the pilots: productivity and the UK's skill base; Background to the pilots: the Government's role; Proposals: piloting a new approach; The challenge to the supply side; Conclusions.