Examination of Witnesses (Questions 60-79)
3 FEBRUARY 2004
MR NICK
MACPHERSON,
MR ROB
SMITH, MR
PHILIP COX,
MR MARK
GIBSON AND
MS ROS
DUNN
Q60 Norman Lamb: When I talked to the
Learning and Skills Council in Norfolk and I asked them how much
discretion they have over the money they get through, out of their
annual budget £95 million or something they tell me they
have discretion over about one million. In other words, again
it looks to me that it is absolutely centrally directed,
micromanaged from the centre. Mr MacPherson, you indicated earlier
that there was a recognition that you were going to loosen the
controls and allow more discretion. In Norfolk there is a massive
problem about low aspiration in rural areas. They cannot really
do anything about it because they are directed on everything they
do from the centre.
Mr MacPherson: There is this pilot
going on between two RDAs and the local Learning and Skills Councils
and I think we will want to learn from that experience and see
what needs to be done.
Q61 Norman Lamb: Does this experiment
give them this discretion?
Mr MacPherson: It gives them more
discretion, yes.
Q62 John Mann: We are now moving to entrepreneurship.
A little song comes to mind here which I will not sing, but it
starts: "The wheels on the bus go round and round".
Unfortunately the wheels on the bus on the A1 do not go round
and round all the time because there are six roundabouts. There
is a four year project to get rid of the roundabouts whereas in
other countries I suspect they would go in a year. Who is responsible
in terms of regional economic strategy for ensuring that those
roundabouts on the A1 actually go and they are replaced by flyovers
in less than four years?
Mr MacPherson: I am not an expert
on the A1 but this sounds to me like a serious trunk road and
the Highways Agency is responsible.
Q63 John Mann: The Highways Agency is
responsible, absolutely, and they are not here. I am interested
in regional economic development and productivity because the
estimated increase in profits in my constituency alone from removing
these roundabouts would be £10 million a year. The average
turn-round of a lorry travelling from my constituency to London
will reduce a round journey by an average of 30 minutes. They
are key indicators of productivity, both for the companies concerned
but also for the regional economy. The roundabouts cover three
regions. My question is, in the context of regional economic strategy,
who is responsible for kicking the Highways Agency who are spending
four years going through all sorts of convoluted planning processes
to ensure that we actually increase productivity?
Mr Gibson: In the past the straight
answer is no-one because transport expenditure—like much
of the rest of Whitehall's expenditure—has been centrally
driven and centrally determined. In the future and currently the
RDAs play an important role in having a dialogue with the Department
of Transport. The Department of Transport will welcome the RDAs
assessing for each region what their transport priorities are.
The RDA must come to a judgment as to whether, in your particular
region, the A1 is more important or another road. Then, in the
future, the Department for Transport will be quite happy to have
its decisions influenced by those reasoned priorities which the
RDAs express a view on. That is what the regional economic strategy
is about.
Q64 John Mann: In theory that is nice,
but in the real world the situation is that it is in everyone's
policies but no-one is actually doing anything about it. It strikes
me that it is rather esoteric to have regional economic strategies
that do not then deliver in terms of government agencies pressing
each other to make sure that objectives are met. Let me put it
in a different context. Who is responsible for ensuring that my
constituency and the whole of the north Midlands is Broadband
enabled?
Mr Gibson: The answer on Broadband
is that there is a market place operating. BT are committed to
offering Broadband basically to the whole of the country and that
is a significant move forward. Broadband is actually an incredible
success story in the UK. The numbers on Broadband are now well
over three million. There is an issue around rural areas and those
sorts of areas where there is less market demand are a classic
case for public intervention and the RDAs are using public money
actively to intervene in those areas. The straight answer to your
question is the market place, BT and the RDAs combined.
Q65 John Mann: Large parts of my area
are not Broadband enabled and if I was wanting to increase productivity
or innovation or entrepreneurship then I think I would be rather
keen on both of those. Moving on to further education. Mr Cox,
when was the last time you attended a training course at further
education college?
Mr Cox: Quite some time ago I
would say.
Q66 John Mann: Only 5% of further education
income comes from industry; less than 5%. The Learning and Skills
Councils have £8 billion and you, Mr Gibson, mentioned food
processing. My constituency happens to be the centre of food processing
so I will use that as an example. It is a very important industry.
There is no indication of the about five thousand to six thousand
people in my constituency working in industry going into further
education to enhance their skill levels on courses provided by
a further education college funded by the Learning and Skills
Councils. In terms of increasing the skills base and potential
increase in productivity, who is responsible for ensuring that
those people working in food processing are actually enticed into
enhancing their skills?
Mr Gibson: The food processing
cluster in the east Midlands is extremely important and this is
a classic area for regional and local intervention. It is identified
as an important cluster in the east Midlands' regional economic
strategy. It is up to them to think hard about how that cluster
can be maintained and to intervene actively with other regional
bodies—the local Learning and Skills Councils which are
now going to have a regional arm (some would say they should have
had a regional arm in the past)—so you can have a real concentration
on regional issues to try to maintain important economic clusters.
Q67 Norman Lamb: If they are created
from the centre it is not up to them to intervene in a meaningful
way, is it?
Mr Gibson: It is genuinely hard;
we have acknowledged that point and we have accepted that there
should be more discretion.
Q68 John Mann: I am not bothered about
where the money comes from; I am bothered about the action on
the ground. Can someone give me a definition of an entrepreneur?
Ms Dunn: Can I attempt to answer
your question about further education that you asked a moment
ago? I think I would want to refer to Employer Training Pilots
which are now being tested in a quarter of the country. The point
about that is that that is a relationship with further education
but it is not businesses going into further education, it is further
education going into businesses to provide education and training.
Q69 John Mann: Would that that was happening
in a coherent and widespread way. The fact is that it is not happening
in a widespread and coherent way and never has done. The fact
there is more money being thrown at it, if anything it is shifting
the balance in the other direction. It may be doing more in absolute
terms, but proportionately they are putting on loads of courses
and there are loads of people at work. These people do not have
the requisite skills for 10 or 15 years' time, which is why they
are low paid and why there is low productivity. The two are not
being matched and balanced together and in a regional economic
strategy, there is plenty of policy but when it comes to delivery,
I do not care whether it comes regionally or nationally I just
care that it happens.
Mr Cox: I think we would accept
that that is one of the key challenges, about how we raise skills
in the regions. It is about encouraging people, getting them to
have the aspiration to get higher levels of skills.
Q70 Angela Eagle: Is there not evidence
that employers in some of the lagging regions are less likely
to allow their employers to access this opportunity?
Mr Smith: There are three dimensions
to this and I think it is the mission of this PSA that all three
of those should be tackled together. So there is making sure the
employers are prepared to release the staff; that the FE provision
is for people when it is convenient to them, not when it is convenient
to the providers; then there is the aspiration for people to feel
that if they undertake these courses they will be able to use
their enhanced skills. The idea is that we get those three operating
successfully together. If the LSC is saying, "We would love
to do that but we are not allowed to", that is exactly the
sort of thing we have to take to ministers and say that this is
a real problem.
Q71 John Mann: Neither Mr Cox nor myself
have availed ourselves in recent times of further education courses.
Mr MacPherson, you used the word "radical", there is
an area for your group to look at in terms of radicalism. Linking
that to entrepreneurship, what is an entrepreneur?
Mr MacPherson: That is an interesting
question.
Q72 John Mann: You have defined it in
terms of the Treasury Submission on Regional Productivity, RP12.
You talk about entrepreneurial characteristics as being rather
fundamental, so I am asking you what an entrepreneur is.
Mr Gibson: I would define it as
someone who, out of their own initiative, creates wealth; sets
up a business and creates wealth for the country, in the interests
of the country.
Q73 John Mann: There are a lot of different
initiatives to assist in the creation of entrepreneurs and the
facilitation of entrepreneurs getting to market or surviving.
How well are we doing in co-ordinating these different initiatives?
Mr Gibson: There are a lot of
initiatives; there is no doubt about it. Our view in the DTI is
that there are too many, including too many that we have been
responsible for in the past and we are making a major effort to
try to slim down the number. From next April there will basically
be nine DTI interventions designed to help businesses covering
things like best practice, R&D support and innovation. There
is a long tail of existing schemes which will have a run-off period,
but over the next few years we will get down the number of DTI
business support schemes to less than 10.
Q74 Norman Lamb: How many are there at
the moment?
Mr Gibson: Several hundred across
government and they are now, for the first time ever, listed on
a government website. A common complaint of businesses in the
past was that there were a lot of great small schemes but no-one
can find out about them, so we are trying to do two things. One
is to get them all publicly available on a website called www.businesslink.gov.uk
so that they are all publicly available. At the same time we are
doing something else which is that we are trying to slim down
the number. We are trying to both reduce the complexity and make
it easier for companies but, at the same time, acknowledge that
you need to make them all publicly available.
Q75 John Mann: And when we have Broadband
we will be able to access them more easily. On this question of
enterprise, who takes the lead in this? Is it Treasury or is it
DTI?
Mr Gibson: It is joint between
the two departments. In terms of the actual interventions, the
DTI leads on them and delivers them. In terms of the policy making,
the Chancellor and Patricia Hewitt work closely on it.
Q76 John Mann: Who co-ordinates?
Mr MacPherson: We have regular
discussions.
Q77 John Mann: So nobody co-ordinates.
What about in the informal economy and business formation in the
informal economy? What has been done on that in terms of creating
enterprise and entrepreneurs?
Mr Gibson: There have been quite
a few interventions. One example is the Phoenix Fund which is
a £30 million scheme which the DTI runs—the Small Business
Service runs—which is all about trying to specifically help
entrepreneurship in the more deprived areas.
Q78 Mr Beard: What exactly is the role
of the Small Business Service in encouraging entrepreneurship,
given that entrepreneurship has an element of risk-taking about
it?
Mr Gibson: The Small Business
Service does basically two things. It manages the contracts with
the business links which are the one-stop shops. Across the country
there are about 40 business links and they provide a range of
support to companies. Actually, the funding formula for business
links is regionally skewed so that more money does go to the poorer
regions quite deliberately. That is a change over the last two
years. That is the delivery end of the Small Business Service.
In terms of the policy end, it intervenes actively with other
government departments and tries to influence government policy
to try to make it more favourable to small firms.
Q79 John Mann: Is it not fair to say
that the Small Business Service is riding on the back of the success
of the Treasury in managing the economy and so it can create statistics.
I can give you an example from Nottingham which is quite a good
one. Over the last two and half years my constituency has had
the biggest increase in employment and the greatest fall in unemployment
of anywhere in Britain. Yet, we have only had 7% of all the Small
Business Service interventions, whereas Nottingham city has had
34%. Is it not merely assisting those who are doing all right
rather than getting to the heart of where there needs to be a
new enterprise entrepreneurial culture in the future.
Mr Gibson: As I said, the funding
formula was changed about two to three years ago for Business
Links. By and large the previous model was pretty much that every
Business Link got the same sort of money irrespective. It has
changed quite distinctly so that the Business Link in a poor area
in the North East will get more money relative to Hertfordshire,
for example. I think that is right.
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