Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 159-179)




  159. May I reconvene the Committee and apologise profusely to our next series of guests. The session has run substantially over time and I apologise for that. Your trade union perspective and some of the work you have been doing in the Luton Vauxhall Partnership is an important part of the Committee's work. Earlier this morning we were looking at collaborations and partnerships, new ways of working. We should really like a perspective from the TUC about some of the strategic policy issues and whether you think the Government is on the right track and whether it can be improved. We are also very keen to try to capture what can be done in terms of creating a situation where there is a big labour market collapse, a big lay-off and redundancies and whether the systems we have in place are adequate to tackle those needs at the moment. Would you like to introduce the team and say a few short words about what you think the situation is from the TUC point of view?

  (Mr Allen) I am Keith Allen. I am a regional economic adviser at the East of England Development Agency (EEDA) and I project-managed the training and re-skilling project at Luton Vauxhall. Luton Vauxhall announced in December 2000 that it was going to close this March and we had 15 months lead-in to that process. On my right is Neville Reyner, who is Deputy Chairman of EEDA[62], but who also chaired the Luton Vauxhall Partnership. The Luton Vauxhall Partnership is a partnership of the public and private sector encompassing the Vauxhall Company, the trade unions, the Employment Service, regional supply network and the local authorities.

  (Mr Heselden) My name is Laurie Heselden. I am the Regional Policy and Campaigns Officer, Southern and Eastern Region of the TUC. I am the only TUC member here today. My region contains the GM Vauxhall Luton plant.

  (Mr Hart) I am Steve Hart. I am a senior regional industrial organiser for the Transport and General Workers' Union with responsibility for manufacturing. I am also the Joint Chair of the Vauxhall negotiating committee at national level. For my sins, I was also very much involved in issues around Dagenham, so I have had a little experience in these matters unfortunately.

  160. From a TUC point of view, the memorandum was suggesting that the road signs the Government had put in place since they came to power in 1997 were roughly right. Are there any major areas where you think they are lagging behind that you can immediately identify for us briefly?
  (Mr Heselden) A broad view as regards employment strategy. The TUC is very pleased with most of Government policy. We are very pleased about the economy being stable, very pleased about the increased number of jobs being created. The TUC is a big supporter of the variety of New Deal programmes, not without some constructive criticism. We should like to see them develop and evolve. The two key issues we are here to talk about today are the labour market, the employment situation which is generally quite good and a specific problem which relates to the manufacturing industry where 400,000 jobs have been lost in the last four years and that job loss is projected to continue. Second, evolving Government policy and regional partnership around how we can deal much better with major redundancy situations when they occur in communities.

  Chairman: We share that concern. Let us immediately go to some questions in those areas.

Mrs Humble

  161. I want to address some of the issues arising out of the New Deal which you have raised. Before I do, I suppose I should place on the record that I am a member of the Transport and General Workers' Union, since we have a representative here. You submitted a very interesting paper to us. Whilst welcoming a lot of the New Deal initiatives, you do highlight some concerns specifically about New Deal for Young People. Do you have any further comments that you want to make about why you think so many people who graduate through the New Deal for Young People actually leave their jobs before three months?
  (Mr Heselden) A very general point. I think it is about quality of job opportunity. If the New Deal options are quality options and a young person has found a quality job opportunity or quality training opportunity then they are likely to stay. The nature of the labour market with people going in at the bottom of the labour market is that they pick up new skills and they naturally move on to a better opportunity or a different opportunity, so it is a stepping stone. That is partly what the New Deal programme is meant to be. The guidance for giving evidence today did say that if questions were difficult and we had something to say, we should raise it. Richard Excel who wrote a large part of the memorandum we have submitted to this Committee would be pleased to give very detailed evidence if you require that, but the indication we were given was that today was more to do with the redundancy situation in Vauxhall. It is not that I will not answer your questions but if you want an expert opinion, then Richard would be the person to invite.

  162. It might be quite useful if you could submit some additional information to us[63]. To what do you ascribe the differences in success of the different options available in New Deal for Young People? I do not want to put you on the spot today, but you might want to take that away.

  (Mr Heselden) I am sure Richard would be very pleased to help.

  163. Looking at your memorandum, why do you think these subsidised employment options are much less popular than expected? Is that again a question you would rather take away?
  (Mr Heselden) Richard could give you a far better answer than I could.

  164. It is always useful having somebody in the background you can then pass these question on to. I am sure then that you would want to pass on to him another one. I read your memorandum on the train coming down and I could not make sense of the statistics in paragraph 21. Even with my rudimentary maths they did not add up. Thirty-one per cent of participants had left before the 26 weeks' subsidy was up. Of this group, 40 per cent resigned, 30 per cent were dismissed, 21 per cent were made redundant and two per cent left for health reasons. That seems to add up to 93 per cent. Then later on it says, of those who were dismissed 60 per cent were dismissed for poor attendance, 36 per cent for insufficient quantity of work, 17 per cent for disobedience, 11 per cent for dishonesty, 19 per cent for some other reason. That is 143 per cent. When you write back to us, could you just re-examine those statistics? [64]The other statistics you give are actually very useful.

  (Mr Heselden) Thank you for those comments. I shall pass them on.

  Mrs Humble: In your memorandum you conclude that New Deal recruits are not yet job ready. If that is correct, what more could be done and what could be done to improve the failure rate. You mentioned earlier that the success with the New Deal seemed to depend upon the quality of the work which was being offered and we must also look at whether or not the New Deal recruits are actually job ready and what more can be done.


  165. It is now quite clear to me that the constructive way for us to proceed is to formulate some written questions. We have some more important aspects where we think the TUC may have some detailed comments on the technical outcomes and some of the processes in New Deal but clearly the best thing for us to do is to drop a note capturing some of the areas[65]. If you would kindly take the message back that if in due time some of your operational experts could provide the technical background, that would be very helpful to us.

  (Mr Heselden) If you wish to invite Richard formally to give evidence on the New Deal in open dialogue—

  Chairman: The honest truth is that we might not have time to do that. If it could be done by a written exchange, that would be extremely helpful. Can we turn straight to the matter in hand which is about some of the specific employment initiatives which we should be looking at in terms of our work and similar industrial situations.

Andrew Selous

  166. I should like to start with questions to Steve Hart who has general experience of car workers in the South East, Dagenham as well as the Luton car plant. In your experience what has been the effectiveness of Jobcentre Plus and the Rapid Response Service in helping to place redundant workers from car plants?
  (Mr Hart) The first thing which has to be recognised is that there have been many voluntary redundancies over the years in the car industry without such things and my impression—and this is an impressionistic point—is that many people have left and have gone into a black hole. Many of them will have remained redundant. They will have received redundancy packages which are by no means the worst around. They will have lived off them for a period and in many cases they will not have found their way into well paid jobs for a very long time. That is part of the problem of manufacturing decline. What you have in both Dagenham and more to the point Luton, is that there has been a great deal of assistance. It has transformed the atmosphere. You would have found that both factories, Dagenham and Luton, looked more like an educational institution towards the end with a buzz. People feeling that in spite of this terrible blow of the closure of the factory which they had maybe worked in 15, 20 or 30 years or more, which is really demoralising to people and they feel like the end has hit them, instead they begin to look beyond that and a buzz develops and people are looking for jobs and hearing about jobs and word passes around about some good opportunities there, some training opportunities and so on. It is an incalculable improvement with the various specific measures that there have been in both Luton and Dagenham to a more optimistic way forward in what at the best of times is going to be a very difficult situation. There is also some detailed, specific evidence of qualifications and job fairs with people being put in touch directly with job opportunities and achieving jobs in many cases. There will be a lot more after a few months who will find jobs and have results which does not necessarily show up statistically or will not be picked up statistically. I am sure Keith has some precise figures that will tally with this.

  167. What did you feel was the quality of the response from the public agencies in London and the Eastern region and the South East to these major redundancies which you have been involved in?
  (Mr Hart) It has been pretty good; that would be my feeling.

  168. That is co-ordination with central government.
  (Mr Hart) Both Ford and Vauxhall got rapid Government intervention, meeting with Ministers; we met Tessa Jowell very early on in the process and she committed to get things moving and indeed the partnership was one of the outcomes of that. Similarly at Dagenham it was very rapid. The LDA[66] set up a group which was a strategic partnership to make sure that things happened and things did happen. It is always very difficult, even for employers like Ford and Vauxhall, never mind the trade unions, to find their way round the alphabet soup of initiatives which are around and try to pull it together to make it happen. My impression is that things did pull together reasonably, but with the big difficulty, in terms of rapid response, that we got into a Catch-22 situation at Vauxhall. Vauxhall did not want to issue compulsory redundancy notices, final notices. We had agreed at European level and with the company that they were going to do everything possible to avoid compulsory redundancies; whether by redundancy terms, movement to a plant next door or volunteers, they wanted to avoid any person being made compulsorily redundant, so they did not want to issue compulsory redundancy notices, plus there were issues of time off looking for jobs and so on. That meant that the monies could not be triggered because they required a redundancy notice. So Vauxhall was doing the good thing and this was causing problems in getting a lot of the things off the ground. That stand-off lasted for some time and it really does seem absolutely daft that that happened. If there is one thing you ought to have a good look at, it is whether there are ways of short-circuiting that. A factory was closing, there was no two ways about it, it was going to close and it had been announced. That apparently was not good enough to trigger the money from the Rapid Response Service.

  (Mr Allen) By July of last year we had gone through a skills audit, we had given careers advice and we had trainers set up to provide training.


  169. When you say "we" do you mean the trade unions?
  (Mr Allen) The partnership. We were all ready to go. We built in an expectation at the works that training was going to start and then in July we were told we could not access the response fund because no formal redundancy notices had been issued and the company would not issue the notices, so we had to go looking for alternative sources of funding. We ended up looking at the European Social Fund. That ended up with a bidding process and we did not actually get the money out of that until October. We had that hiatus from July to October where the workers were starting to get edgy and all the good work we had done through the advice and the guidance almost disappeared.

Andrew Selous

  170. I shall come back to some specific questions for the Luton Vauxhall Partnership later on but may I just go back to Mr Hart? You mentioned some training at the different plants and I have seen the quality of that at the Luton plant myself. What specific measures would you say from your recent experience have proved really effective in helping redundant employees get back into work quickly?
  (Mr Hart) One of the areas which was developed at Luton and was a very useful measure was accreditation of prior learning, which was not the first response. As I understand it, since the concept of accreditation of prior learning first came along, it has been somewhat bureaucratised and it has become extremely complex to deliver. What you have in manufacturing, aside from the skilled workers, is that the bulk of employees will have received all sorts of training over the years and will have experience that is second to none in terms of manufacturing: tin work, all the various soft skills in very high productivity work places. They are very skilled in manufacturing yet they have absolutely nothing to show for it. Big companies often do not do NVQs[67] because they internalise the training. In some cases it is very soft skills which have just developed over the years. Accreditation of prior learning and improvement of that and recognition of that would be important. Another feature that is difficult is developing greater linkages with other manufacturing companies in particular. There are tremendous skills there which can be used elsewhere in manufacturing. Some areas in the South East in manufacturing currently say they have skills shortages or shortages of good people to come into manufacturing. So stronger links. I know the Employment Service and others tried hard, but not always getting the widest links into the rest of manufacturing. In some cases it was possible to take 30 people en bloc into another manufacturing site. On the one hand you hear they cannot get anybody and on the other hand you know that all these people are there. Improvements in those linkages would be important. Another point which should be made is that we are talking Luton Vauxhall and Ford, big lumps of people, thousands. The comparison needs to be made as well between those and the weekly 20s and 30s who get no access to that, although there are one or two opportunities around.

  171. If I may say so, that is a subject very close to my own heart, but probably also shared by colleagues. The neighbouring town of Dunstable lost more jobs than went at Luton over a year because there were four or five employers together. It is probably an experience shared by many colleagues. Maybe something hits the national headlines but when there are groups of smaller employers they do not get the assistance. Is that something you would echo?
  (Mr Hart) Absolutely. There is another area I am involved in, the upper Lea Valley, where there is something called the Delta Project, which was developed for a closure at Delta Metals for 200 people four or five years ago. That is now like an itinerant project and is called upon in the North London area when there are redundancies, quite small ones, and they carry out very similar purposes for small groups. In most areas there is no access to the kind of services that we were able to produce.

  172. What is your overall feeling about the prospects for manufacturing in London and the South East specifically? Do you see continued decline? You mentioned that 400,000 jobs had gone in manufacturing over the last four years. Do you see that trend continuing or are there bright spots we can look forward to?
  (Mr Hart) It is a very mixed picture. Some firms are announcing closures. On the other hand the Eastern Region has more manufacturing jobs than Scotland and more manufacturing jobs than Wales. The South East as a whole is the strongest area for manufacturing in the United Kingdom. Something which is often not recognised. There are large numbers of companies which are expanding in a small way. As we come out of recession, a number may appear to do a bit better. The big blows in the motor industry will continue to affect us for many years to come as component manufacturers face up to how they are going to cope with things. It is going to be very difficult in manufacturing in the next period.
  (Mr Reyner) I am familiar with the point you made about Dunstable and Luton itself; Electrolux also made redundancies. There are other large name companies as well as Vauxhall and you see some 2,500 losses at Vauxhall but that is not the end of the story at all, there are supply chains to those. The study we carried out showed that a lot of those companies simply will not survive. They are just not competitive enough. That is another key area. It may not be appropriate right now, but I have to say that we have to find a way to make those smaller companies more innovative for them to survive. That will also add to a lot of the people in companies like Vauxhall who have those skills being taken on in the supply chain if they innovate and take on those new skills which are required.

  173. Could you just tell us about the Luton Vauxhall Partnership, why it was established and whether it has achieved its goals?
  (Mr Allen) It was established the day after Vauxhall announced that it was going to close in 15 months' time in March 2002. It brought together all the key agencies. It was led by ourselves. It involved the Employment Service, the local authority, regional supply network. We had four main aims. First was to look at re-training and re-skilling the Vauxhall workers. Second, to look at the effect on the supply chain and local businesses. The third aim was to create new job opportunities to replace those lost at Vauxhall in the supply chain. The fourth was to get external funding to do it. We have come almost to the end of the re-training and re-skilling. We were hoping to finish by the end of March, but because we had this hiatus in funding from the rapid response fund, the training will not now be completed until July. We do not have an indication at the moment of how successful we have been at getting people back into jobs. We have a lot of anecdotal evidence that it is working, but we need to see the unemployment figures. It will be interesting to see the May figure. On the supply network, the effect at Vauxhall was the end of a period; the supply chain had been really affected by Ford, Rover and Nissan. The number affected at Luton was about 600. Those were not all local companies, they were spread right across the region and outside the region. About another 400 local jobs went with local companies which serviced Vauxhall. We were looking at a total redundancy situation of around about 3,000. We have done work with the supply chain to try to make them more effective. We have put some EEDA[68] funding in to encourage companies to take on a business excellence model and improve their competitiveness. On the creation of new jobs, we put in a bid to the Government for something like £50 million and we have been awarded the first phase of that funding this year. We have been awarded £4 million, which has to be matched by EEDA's own funding. That will enable us to make a start on an innovation centre at the top end of Luton and a technology village. The fourth area was this access to extra funding. I have certainly had difficulty about accessing rapid response funds. We made a bid to the European Social Fund (ESF). It was facilitated by the Government Office. When in July they said we could not get access to rapid response funds they told us there was an underspend on the ESF. We bid into that and we were successful with it, which enabled us to start the funding, but there was not enough funding in the surplus funds to do the whole package. We had to bid for a second time to ESF in October and we did not get the results of that until December. That is why we have this delay. The message we want to bring to you is that needs a more flexible funding situation. A company has declared a closure. Do we really need them to issue redundancy notices to start to have the funding advanced?

  174. We have got that point. You mentioned 3,000 jobs going in total with suppliers.
  (Mr Allen) Yes.

  175. Can you actually give us any figures on what number of those workers have managed to find other jobs or is it too soon to do that?
  (Mr Allen) It is too soon. We have trained about 1,400. We set out with the intention of giving everybody who was declared redundant or under threat of redundancy, the opportunity to train for a NVQ, to train in basic skills, to have IT training and to write a CV. Fourteen hundred came forward.

  176. The other 1,600 have gone off.
  (Mr Allen) Six hundred. We could only do it for Vauxhall's. We could not do it for the supply chain or local businesses. There were about 600 people; some would retire, some would already be lined up with jobs, some would go elsewhere.
  (Mr Hart) A significant number also went to IBC which is the van plant next door.

  177. What part of this success you have told us about would you put down to the role of Jobcentre Plus?
  (Mr Allen) It was the Employment Service at the time and they led our training and re-skilling group. We worked closely with them. We had an office at the plant. The Employment Service set up a Jobcentre and an employees' help centre. Once we had the funding through, we set up an EEDA project office. They worked together. We were giving advice and guidance, arranging training courses, providing benefits advice. We tried to provide an holistic approach all over the plant. I think it worked.

  178. Are there any other improvements that you would like to see in the support given to redundant workers knowing what you know now? You mentioned about releasing the funding. We have taken that point on board, but as far as this support facility to redundant workers is concerned, is there anything extra that you would like to see being offered to them?
  (Mr Allen) We started from scratch. The people involved had never dealt with a really large-scale redundancy. We have built up a lot of knowledge and expertise. What we should like to do for future redundancies is to retain that. When we get a redundancy, whoever is going to deal with that can build on our best practice.
  (Mr Hart) When we talk about these closures, one of our main arguments was that it is quite cheap and easy to sack in this country versus the continent. One of the key aspects in Germany and France in a big redundancy that makes it more difficult is the necessity to develop a social plan that deals with the redundancies. At both Ford and Vauxhall—and I understand it is similar at Rover—in the motor industry we have cobbled together between Government, trade unions and the industry a kind of a social plan, the beginnings of a social plan, but it seems to me that it would be appropriate for companies of a certain size to have an obligation when they deal with redundancy to have a plan that covers exactly what is being done and maybe some more at the outset. More than that, one of the big problems that workers and unions, everybody, faces is what the menu is at the beginning. You hear of the closure. Once the closure becomes definite we oppose it and try to prevent it—I have gone through all the very good arguments about Luton being more productive than anywhere else and so on. When that argument is lost, the workers involved need to know the menu, what is there, what the possibilities are, rather than it gradually emerging. It did and that is not a criticism of Jobcentre Plus or the LSC[69] or any other agency, but they all have to get their act together. It seems to me that a menu early on, prior to these decisions, would be appropriate for workers to understand. It seems right for people who have worked for 20 or 30 years for a company that the company has that kind of responsibility to do the groundwork first so that there is life after closure.

  179. I take that point, though there are possibly difficulties with commercial confidentiality.
  (Mr Hart) Yes.

62   East of England Development Agency. Back

63   Please refer to the supplementary memorandum (ES 09A) submitted by the Trades Union Congress, Ev 98. Back

64   Please refer to the supplementary memorandum (ES 09A) submitted by the Trades Union Congress, Ev 98. Back

65   Please refer to the supplementary memorandum (ES 09A) submitted by the Trades Union Congress, Ev 98. Back

66   London Development Agency. Back

67   National Voluntary Qualifications. Back

68   East of England Development Agency. Back

69   Learning and Skills Council. Back

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