Competence-based assessment is the cornerstone of the UK Government's reforms of vocational training and of non-academic full-time education post-16. Australia has adopted similar policies, and there is considerable interest in the notion of 'competence' in both Europe and North America. Alison Wolf describes the main characteristics of the competence-based approach as it has emerged in the UK, and traces its origins in American experimental programmes of the 1970s. The arguments for the approach are discussed in detail. Many of these arguments derive from the demonstrable limitations of more conventional assessment, especially in predicting work performance. She then analyses the theoretical assumptions which competence-based assessment shares with the criterion-referenced movement as a whole, distinguishing clearly between those claims which can be sustained and those which cannot. She also synthesizes the growing body of evidence on implementation. Many lessons have now been learned about whether and how one can establish a workable, robust and reliable competence-based system. It has become evident both that the preconditions for success are often missing, and that, if they are ignored, competence-based 'reforms' may have largely negative consequences. The final chapter reviews the prospects for competence-based awards, and offers some conclusions on what is essential to a competence-based approach.