Is the Learning and Skills Council (LSC) creating radical and enduring change, as David Blunkett hoped? Is it part of the renaissance for a new Britain and helping to usher in The Learning Age, as the new Labour Government anticipated? The formation of a more unified Learning and Skills Sector (LSS), with the LSC as the central funding and planning body, undoubtedly marked a major development in post-compulsory education in England from 2001. Over the last three years the roles of the LSC have grown and the organisation has already undergone considerable restructuring. The reshaped LSC, working with partner organisations within the LSS, now faces a range of challenges if it is to be seen as an effective and credible organisation with the capacity to improve the performance of the sector and the quality of teaching and learning for all post-14 learners. This paper from an Economic and Social Research Council funded research project, The Impact of Policy on Learning and Inclusion in the New Learning and Skills Sector, explores the question of how the government in England steers policy within the LSS and how effective this is in producing a more inclusive and effective system for lifelong learning. In doing so it draws on data from over 60 interviews with key policy actors in the LSS at national, regional and local levels; data from local learning sites, together with a documentary analysis of a wide range of national, regional and local policy-related texts. The paper places the development of the new LSC and the formation of the LSS within the wider context of public service reform under New Labour. It discusses, therefore, concepts such as 'modernisation', 'marketisation', 'managerialism', forms of 'accountability' and the ways in which the current government uses 'arms-length' steering mechanisms (e.g. funding, inspection, targets and planning) to drive education policy. These are concepts relevant to wider European debates about the role of markets and the state in education policy and practice. In the final section of this paper we characterise the 'new learning and skills sector' as partially unified; largely centrally driven and subjected to a number of policy tensions driving it in different directions. Analysis of this current state of development will be used to discuss the policies and structures required to create a more 'inclusive and effective learning and skills system' in England.