Philip Lloyd describes his first day as finance director of the Learning and Skills Council (LSC) as 'surreal'. It was 2 October 2000 and, as one of the first four executives to be appointed to the new body, he arrived early at the LSC's north Coventry HQ to find deserted glass offices with tables and chairs still in their wrappings and computers that had not yet been plugged in. The entire staff consisted of two temporary secretaries.

'It was quite unlike anything I had experienced before,' says Lloyd.

The Council had been set up by the government to take over from the 72 discredited Training and Enterprise Councils (TECs) and the Further Education Funding Council (FEFC), which had worked side-by-side throughout the 1990s, but had been subjected to heavy criticism because of their dramatic under-performance and disparate ways of doing things.

The LSC would be responsible for skills development for over 16s in England, with a wide remit including further education, work-based training, adult and community learning and education business links.

With an initial budget of 5.5bn, the Council would operate through 47 local offices as well as the national office in Coventry. Its 12 members, chaired by Bryan Sanderson, former group managing director of BP Amoco, would be made up of representatives of employers, trades unions, learning providers and community groups.

The handover from the TECs and FEFC was scheduled to take six months.

In that time, Lloyd's priority was to get systems up and running to manage the transitional budget, and from there to be in a position to start bringing in staff and begin paying the providers.

'It was November by the time I got the transitional budget agreed,' he recalls. 'The figure was 17m for the four months to March.'

One of the first issues Lloyd had to tackle was the Department of Education's view on how the finance function would operate. 'The department had assumed that we would have just one central finance department at central office, so when they worked out how many people it would take to run this organisation they assumed no finance people in the local offices. I said I strongly disagreed with that model, and that I viewed the local offices as independent companies and argued there should be finance people in those councils.'

An accountant by accident

Lloyd saw the model working much like the conglomerates in which he had gained much of his early experience. An accountant more by accident than design, the Bristol economics graduate had actively resisted accountancy, the profession followed by his father, choosing instead to enter the commercial world as a management trainee with British American Tobacco.

But when faced with the choice of working on the factory floor or in the finance department, he chose the latter, still assured that he was not taking on an accounting role. He then decided to take the pragmatic approach: an accountancy qualification would be a good way to progress his career in general management, he reasoned, and help him achieve his goal of becoming managing director of a manufacturing company.

Half-way through his CIMA studies, he moved into the insurance sector, and from there went to work for the chairman and chief executive of conglomerate Evered plc, now part of Aggregate Industries.

'They were Saudi brothers,' he recalls, 'and had worked their way up building a company from nothing, buying and selling companies, so it was incredibly interesting working for them.' But when the company split in two through management buyouts and mergers, Lloyd moved on once more, this time into management consultancy.

It was here that he got his first taste of working in the public sector.

He became involved in negotiating a 12bn 30-year contract on behalf of British Nuclear Fuels and later was offered the secondment role as the deputy director of finance for the South East Thames Regional Health Authority. The NHS was, at that time, undergoing a significant reorganisation and Lloyd then took on the role of finance director of Bromley Health Authority, where he remained for seven years, the last of which as acting chief executive.

What, then, does he see as the main differences between working in the private and public sectors? 'The private sector is all about sales and profitability, and about how you grow the company, how you protect the company, particularly in the plc situation. I quite enjoyed the adrenalin you get in terms of the constant push forward, but the two sectors offer different challenges. In the public sector, there is a social or economic benefit that has to be taken into account when you are making decisions.

You get debates about priorities, about equity, diversity and so on, but you don't tackle those sorts of issues in the private sector.'

The LSC job was advertised just as Lloyd was looking for another move, and so it was that he found himself in that empty office on an autumn day four years ago. Six months later, the transformation into Britain's largest quango went without a hitch.

'I kept on hearing people saying how many things could go wrong,' Lloyd remembers. 'There were about 10,000-12,000 transactions going through and it would have been disastrous if any of those payments had failed or been delayed. But I had never assumed there was going to be a problem and there wasn't. I'm particularly proud of that.'

He was well aware that working under the watchful eye of the National Audit Office would be tough, so he paved the way by setting up early meetings with them and finding out what their concerns were. 'The NAO doesn't have to worry about a client relationship, so it does a very hard audit, but I'm pleased to say the first year went by OK.'

Once the wheels of this gargantuan organisation were turning smoothly, the board could concentrate on how to improve the performance of further education programmes. Lloyd points out that when the LSC first came into being, he found a very different set of circumstances to that he had known in the health service. 'The health service doesn't get the resources required to meet demand and that's why you have waiting lists. The situation we inherited was the reverse of that: schemes were being started but the take-up wasn't what was hoped for, so there was an under-performance.

So in the first year we were underspending.

'Not to spend the cash that's been voted for is not a good position to be in, so we set about changing that and now the demand for our service is actually in excess of the money that we've got.' Considerably in excess.

Sixth forms alone are attracting 15,000 students more than the 350,000 target, which, at 2,700 a head, leaves a shortfall of more than 60m.

It's a similar story with apprenticeships. Here, the target has been exceeded by 14,000, leading to an overspend of almost 40m. And so it goes on.

Huge budget

Still, the budget - this year it stands at 8.7bn - is enormous by any standards. So where does all the money go? First, Lloyd stresses, very little goes on administration. 'To run the 47 local offices and the national office which, together employ about 4,200 staff, our budget is 218m.

That is between 2% and 2.5% of our total budget, which makes us very efficient. And from our projections for the future, we're looking at keeping our costs constant, so we're going to absorb inflation, and are looking at ways we can make further savings.'

Last year, just over 4bn was spent on young people between 16 and 18: 1.8bn of that financed further education and 1.4bn went on school sixth forms, for which the Council took over responsibility in April 2002. Adult education accounted for a further 2.4bn, with the lion's share (1.8bn) going towards further education and the remainder going on a range of schemes from apprenticeships to workforce development.

The LSC works closely with employers both large and small to create training schemes for employees to improve their skills and knowledge. Regional programmes are tailored according to local demographics and employment requirements to ensure that training genuinely improves people's employability.

Small firms are encouraged to participate through Employer Training Pilots, which give them access to a pot of money to help train their staff and provide compensation for the time their employees take off work to train.

A further major initiative was the launch in May this year of a new apprenticeship programme, targeting 16-24-year-olds, providing them with a mixture of on and off-the-job training while they are being paid.

These days, Lloyd's role is very much associated with the input of finance in strategic thinking and decision making. Over the last six months he has been preparing the build-up to the current spending review, meeting with ministers Charles Clark and Ivan Lewis, and doing everything possible to secure the extra funding needed to meet the increase in demand.

'There are a lot of competing demands in education and it's important that we get the message across that we're attracting people into our schemes and that there is a long-term benefit to people being well-trained.'

CV

Who: Philip Lloyd

When: 25 March 1962

Where: Orpington, Kent

Education: BSc (economics) University of Bristol; MSc (economics) London University.

Work: Management consultant, Binder Hamlyn; director of finance and then acting chief executive, Bromley Health Authority.

Life: Golf, opera.

LEARNING AND SKILLS COUNCIL FACTS

•   Almost 1.5m 16-to-18-year-olds took part in further education and training in 2002-2003, the highest number since the mid 1980s.

•   A total of around 6m people benefited from LSC-funded education in the year to 31 March 2003.

•   The LSC guarantees to fund every 16-to-18-year-old student who gains a place at college or training institution.

•   The new Apprenticeships programme has two levels: 'Apprenticeships' are equivalent to GCSE level and incorporate a National Vocational Qualification to level 2, key skills and, in some cases, a technical certificate; 'Advanced Apprenticeships', equivalent to A-levels, incorporate a National Vocational Qualifaction to level 3, key skills and a technical certificate.

•   A recently introduced scheme called Entry to Employment, aimed at the NEET group (those not in employment, education or training), is expected to attract 20% more than its target of 50,000 participants in the first year.

•   The LSC funds places for almost 3,000 people suffering from a range of learning difficulties or disabilities to study at specialist colleges.