TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1667-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

education and skills committee

 

 

skills in london

 

 

Monday 23 October 2006

MR KEN LIVINGSTONE, MR CHRIS BANKS CBE and MR DAVID HUGHES

Evidence heard in Public Questions 1 - 88

 

 

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Oral Evidence

Taken before the Education and Skills Committee

on Monday 23 October 2006

Members present

Mr Barry Sheerman, in the Chair

Mr Douglas Carswell

Mr David Chaytor

Paul Holmes

Helen Jones

Fiona Mactaggart

Mr Gordon Marsden

Stephen Williams

Mr Rob Wilson

________________

Witnesses: Mr Ken Livingstone, Mayor of London, Greater London Authority, Mr Chris Banks CBE, Chairman, and Mr David Hughes, Regional Director, London, Learning and Skills Council; gave evidence.

Q1 Chairman: Can I welcome Chris Banks, David Hughes and Ken Livingstone, the Mayor of London, to our proceedings and say we are grateful to them for giving their time. We are just about launching this major inquiry into skills, which is very important to this Committee. We do not have to remind ourselves that we scrutinise the Department for Education and Skills; skills are very important to our nation and, we believe, too long underrated, so it is a pleasure to have people who have had long experience of skills in front of the Committee. I was going to suggest that if anyone wanted to speak for two or three minutes on where we are in skills, particularly in London, I would welcome that, and who would like to start: Ken?

Mr Livingstone: Thanks very much, Barry. When the Prime Minister talked about a new package of powers for the office of Mayor, I came up with things which I thought were not working terribly well in London, and over the years I had picked up a lot of complaints from the business community about the Learning and Skills Councils. I got involved in a fairly lengthy debate with Ruth Kelly and others about what should be the structure and, for this sort of thing, I think that you can see real improvements. I think there was a very rocky start, but the changes made at the top mid-way through are now beginning to come through. There are real improvements, but that does not do away with the need for a specific London dimension because the nature of the London economy is just completely out of all proportion to anything else in the UK. We have gone from a finance and business services sector of about 18 per cent of employment to 38 per cent; we are most probably on our way to well into the forties. If we look at the growth of jobs in London, we anticipate over 600,000 new jobs in London in the next decade; 80 per cent will be in finance and business services. This has huge implications for London because already we have a middle range of jobs which has been squeezed out, and you have a large number of poorly-paid, low-skilled workers at the bottom and then this massively-growing business services sector. When they also project forward population changes, already a third of Londoners were born abroad and this is a process that is going to continue to grow. We anticipate that 80 per cent of the people coming into the workforce in the next decade will be black or Asian. These are dimensions which bear really no relation to anything else, not just in Britain but anywhere in Europe, and therefore, clearly, the skills offer has got to have a specific dimension which targets this. We are heading towards a position where by the time the Olympics come to this city the majority of the jobs will require level 4, a degree. That is not really the work of the Learning and Skills Councils, I think under one per cent of their money goes in that direction, and there will be huge pressures driving that anyhow. What we have got also in this city is the best part of a third of a million people who have virtually never worked and another third of a million who have been in and out of very low-skill and often illegal employment. This is a pool of people, if we could reach them and give them a second chance, who could come into permanent and rewarding work; and we have seen many experiences up and down this country and abroad where that has been the case. The trouble is that all the people whom it is easy to get back into work we would have reached with the Government's programmes over the last decade. What we are looking at now really are people who are not going to be easy to get back into work. It is almost as though they need one point of contact with the state; the person handling their benefits should be the person crafting a programme to get them back into work. That would be breaking down an awful lot of silos. Over the next 18 months or so, the London Board we have established will draw up a skills strategy, and this is not looking for a gimmick, within 18 months or so, over the next five or six years which can start to break the back of this long-term problem. At the same time, to make sure that our schools and our colleges are equipping the students going through with the skills they are going to need for the jobs that are coming, rather than a notional set of jobs which have left London and will never come back. We can have a great, positive working relationship, and I am very optimistic that we will be able to do this and drive this agenda forward. I do not doubt that it may have some implications for other areas, particularly if either the regional or the 'super mayor' agenda is revived, but certainly we want to try to get a model in London which works.

Q2 Chairman: Thank you for that. Chris?

Mr Banks: Thanks, Chairman. It is about a year since I was last here, actually, and it is good to be back, in a situation where we are able to report on quite a lot of progress, and some of that Ken has referred to. It is worth remembering that we do have a system now that is much more capable of meeting the needs of employers, individuals and communities than we had before, which is why we have got more young people staying on, more young people and adults achieving their learning outcomes, more apprentices than ever, higher success rates than ever, more adults being given the basic skills that they need in order to be part of a community and the economy as well. There is lots of progress. If you have not seen it, I would draw your attention to a progress report which the LSC produced on behalf of a sector, if you like, which says just Stocktake, there has been actually quite a bit of progress in some of these key measures. In a way, that is why there is quite a good feeling more generally within the FE world these days, or the post-16 world, if I can put it like that, of making more progress, clarity of purpose, if you like, which is going to be required because there is still a huge amount to do. It is no coincidence that the sister document to the progress report that we have just published is a thing called our Annual Statement of Priorities, the title to which is Raising Our Game, because we know that if we are to respond to the changes, not just in London but across the country overall, we will have to find a better way of making the market between what individuals, employers and communities need and what the providers of learning, education and training make available. That is increasingly the way the LSC is seeing its role, as making that market somewhat between the needs, on the one hand, and the supply, on the other. You will see evidence also, within these documents, of us moving towards a lighter touch and much better engagement with the key partners that we need, not just on schools but on employment and skills as well. That is why London, of course, is unique, it has its own unique set of challenges and priorities and opportunities, one of which is the creation of this new Board, which we are absolutely confident will harness more of the expression of the demand that really is in London, so we can answer that question "Why aren't you giving employers and people what they need?" This will help us significantly to do that, I think, by getting clarity of what London needs, which will come from the Board, and then the flexibility within the LSC to be able to respond to that, as we operate increasingly in small groups at a very local level to deliver what communities need in a way to make sense for London, for learners, employers and communities. It is a good time, in many ways, to be having this discussion and I do share the optimism that the Mayor has just expressed.

Q3 Chairman: Thank you for that. To come straight to the Mayor, and I will call you Ken, as I have known you for such a long time, you have been around for a long time in politics and your stay as Mayor of London certainly has been longer than that of any Secretary of State for Education and Skills. Some of the questions we will ask, we hope you do not mind, will be about skills, full stop, not just about London. On that note, I wonder what you think that the real problem has been, in terms of getting the right sets of skills in our country; are the challenges, as a nation, different than just London, is there some common thread that goes right through, in terms of where we are and are not performing at the moment?

Mr Livingstone: I think there is a problem which comes from the post-war consensus, where the great divisions of class were seen as spilling over into education. I think, on our side of the political divide, we mixed up breaking the class issues with what should have been much more focused on education. The drive that the vast majority of people should get, effectively, a university education most probably was a mistake, I think, if you look at, say, the pattern in West Germany after the war, the much better-structured apprenticeship scheme, much better vocational training, recognising an academic education. I went to one of the first comprehensive schools, where, having taken all these working-class boys from Brixton, they assumed that if they pummelled them enough they would end up adopting an academic approach to life, and it was never going to happen. I think we neglected, in a way that the Germans did not, the vocational training, the apprenticeship scheme, recognising that you can be a very productive member of society, you do not have to have had an education which might fall just short of a degree, or halfway towards a degree. That was reflected in hanging on, as we still do, to the A levels, and so on, rather than looking for a better mix. I think that is the problem in London. We had this long-term pattern in London that working-class men, irrespective of race, sold their physical strength, and as those jobs collapsed, with the docks closing, the Arsenal being wound down, in the sixties, there was not the second chance programme. Many other societies would have said, "Now, we're going to target these people," and so on, "and give them a different set of skills, a new set of skills;" and they just went for casual work, in and out of work, low-skill work, and their children grew up seeing that as the environment and now we are on the third generation growing up with that. I know there have been some people complaining that there is really a relentless focus on vocational skills by Learning and Skills Councils. I think that is absolutely right. We have got to make certain we fit the education package we offer to the particular needs of the individual concerned.

Q4 Chairman: Have you got any concerns about that? You talked about a third of a million and a third of a million, and this Committee has looked at a number of societies which try to deal with the lowest-achieving members of a society. As you have looked at other experiences and other capital cities, have you seen they have reached that particular group better than we have?

Mr Livingstone: I think this is a field that I am just coming to. I was struck by the fact, one of the things I noticed when I went to Beijing was that the people working in restaurants, in hotels, the police officers, the bus drivers, are all being taught a foreign language so that when people come to Beijing they will feel at home. I came back saying there are soon going to be 100 million Chinese people, by the middle of the next decade, with enough money to come to London; how many of our kids are being taught Mandarin? It is not just Mandarin for the financial sector but it is a conversational grasp of Mandarin which will make this an attractive city for people to come to, and so we are exploring with Lord Adonis at the moment looking at bringing Mandarin into primary schools, which is much the easiest place to get that grasp. Last week, we had the Mayor of Chicago come, Mayor Daley, and I discovered he has already started this; 7,000 children in their schools are learning Mandarin now, because of the awareness of that. We are beginning to wake up to this, that, the service sector, and the hotel and catering trade, we have allowed it just to run on its own, we have not really focused on that. In many other countries, like the United States of America, that is a much more rewarding job, a much better social status than it is here, and I think we need to look at that very seriously, because there will be a huge growth of jobs there. This is not the world I would have created. I would have loved to get that middle range of jobs for lower middle-class and certain working-class people, but they have gone and now we have got to deal with this completely sort of egg-timer-shaped economy.

Q5 Chairman: Would it not give London a breathing space though if the emphasis were on migration policy, where skilled migrant workers were welcome and unskilled migrants were less welcome; does this country need a migration of unskilled people with no language and no qualifications?

Mr Livingstone: The London economy is the only place in Europe which matches American levels of productivity and competitiveness and most probably it is about the most open. As I said, a third of our workforce was born abroad; only 38 per cent of the people in London were born and brought up here. It is the openness that has made this so dynamic. The case we make to Government is investment in infrastructure and then we will get the Treasury a better rate of return. I would hope not to do anything that made it more difficult for people to come here. Of 25 British people in this city, 15 were born abroad, came here, created enterprises that worked, found jobs for other Londoners and created wealth that we use. I think, if suddenly you were facing an absolute deluge you could not cope with it, but we have managed, through the Accession States coming. I think, in my six years as Mayor, I have been served coffee in a coffee shop once by someone who was English, I mean ethnically English and having an English accent, and I have noticed increasingly I am being served by people from Poland and Eastern Europe, and so on; but that is everything about London. If we started to raise barriers, it would undermine our economic strength. We have got to be better at managing assimilation; everyone who comes here must be encouraged to speak English, have the training there that gets someone a very good level of English, but it is what makes London an attractive place to be.

Q6 Chairman: Are you satisfied with the quality of the induction into English language of people either who have come here or came here with their parents relatively recently?

Mr Livingstone: No. I think this is one of the areas which came up in the consultation the Government had about new powers and devolution. I remember Margaret Hodge, at one of the meetings, perhaps being more critical than I was, in terms of the proportion of 'English as a second language' courses which was underperforming. It is certainly one of the areas I want to look at good and early.

Q7 Chairman: Ken, the whole thrust of government policy and the Learning and Skills focus for the moment is concentrated on basic skills for younger people, and most of the analysis would suggest that London is going to be very short of skills, with the demographic changes to our country, even with migration, if we do not do something pretty fast about reskilling older workers, and we said that is something we have neglected in the past. Even though you are going to get more of a say and more opportunity to make your mark on skills, are you happy with the present concentration on that particular age group, when many of us think that those over 25 are getting less of a good deal?

Mr Livingstone: I agree with you. This is the generation that we have left behind. I am sure you will remember, as I do, in the late eighties, when Government had a real desire to reduce the unemployment figures, and people were encouraging them, people turned up to register unemployed, they would end up being encouraged to go sick. Even if they went sick when they were not sick, 20 years of daytime television has given them real problems now and they have lost that ability to work. I talked about a second chance programme, it is there not just for the over-25s but for the over-50s. There is a huge amount of skill out there that people have neglected, that they have not used for long enough, that we can reach and actually refashion and retool and they can come back into the workforce. Someone who is now 55 could do another 15 years in employment. I would be keen to make sure that those are the sorts of patterns we are establishing, that we reach that group; it is concentrated largely in the boroughs around the Olympics, and on the back of the Olympics we have many chances to develop new ways of getting people back into work.

Q8 Chairman: Thank you for that, Ken. Chris Banks, you have heard what the Mayor has said and he is pretty ambitious about the impact he can make on skills in London. Is that going to leave a real role for the LSC at all?

Mr Banks: Do you mean in London?

Q9 Chairman: In London, or nationally; let us stay with London?

Mr Banks: Yes, absolutely; this is what we wanted, is it not, which was to avoid - - -

Q10 Chairman: No. People came to me from the LSC when originally the Mayor was after a taking-over role in skills to say, "If this happens it will be the end of the LSC nationally," so it was not entirely what you wanted?

Mr Banks: We said what we wanted to try to avoid was major structural upheaval in the delivery of part of the system.

Q11 Chairman: Not only have you got this one, Chris, everybody knows that in the Queen's Speech there is going to be a total upheaval, surely; everybody knows, it is the word on the street, that in the Queen's Speech there will be another Bill about the Learning and Skills Council?

Mr Banks: It will be a Bill about FE, I think.

Q12 Chairman: There will be an upheaval, will there not?

Mr Banks: I will come back to that point specifically, Barry, but on the point around London what we wanted to try to find was a way of avoiding the performance issues that we get through major structural change, while, at the same time, making sure that we deliver what London employers and learners and communities want. I think that this new arrangement, which brings the Skills and Employment Board together, and it is important it is both employment and skills, gives us that better articulation of the need, and the focus, if you like, which goes with that, without disrupting the delivery system. I just want to be very, very clear that the executive responsibility for the management of those funds, the day-to-day responsibility for managing the business, if you like, rests with the executive team of the Learning and Skills Council, in exactly the way that it did before. What is different is that the Board can prioritise and direct how that activity better meets the needs of individuals or employers. The reason for saying that is, I would not want you to get the impression that the London Skills and Employment Board is going to be involved directly in the day-to-day management of the delivery, because that is what the LSC does. What it will do, very clearly, is set the strategy and the priorities and hold the LSC executive team to account for delivering against that.

Q13 Chairman: Chris, we are going to drill down on that in a minute, but you and I know - and we both have known Ken Livingstone, the Mayor of London, for quite a long time - that originally he went for skills and employment, full stop; that is what he went for and he is a very adept politician. That is what he is still after, is it not, do you not think?

Mr Banks: I do not know. It would be great for the news, and he is here so you can ask him. What I think I can say, and I tried to allude to this in my opening comments, is that the LSC is changing, it is changing in its role, and we see our role much more about making the market work between what people need and want and in London the adult skills agenda being articulated by the Skills and Employment Board. Then us working with the providers of learning and training, intervening where we need to, investing public money where we can and where we need to, in order to make that bridge between what is provided and what the market needs. I see that as an entirely positive thing.

Q14 Chairman: I am hearing what you say and I am not disagreeing. It is my job here to push you on this. One last thing, before my team goes into utter revolt; one last thing. Tell me, you talked about joining up education and skills and employment, but, in a sense, the Government has absolutely rejected that, has it not? You are not going to get a real opportunity to join up in London because the DWP are a very different employment service. How can you have it joined up, because you have got a rejection on that?

Mr Banks: I think Sandy Leach's report, which showed us the size of the challenge for 2020, clearly demonstrated the need for joining up, not just the skills part of the system, to make it work better, but the employment and skills part as well, and you know he has got a brief to look more specifically at which other changes are required to make that work. As far as we are concerned, where we have seen the system work best is where the key players around the table include the Learning and Skills Council, Jobcentre Plus, the RDAs, local government and others to create the sorts of partnerships that we need to make the system work. I think we are able to make the progress, you know this as well as I do, within the constraints of policies, we are able to make this work, and that is what the London Board will do.

Q15 Chairman: Are you hinting that something out of the final Leach will influence the Queen's speech even more dramatically than we think?

Mr Banks: I do not know about that. Again, I am sure you will want to talk to Sandy Leach at some stage. What I do know is that where the system works is where we are able to pay attention to the needs of learners, adults, whether they are in work or not, today, because we are going to need them properly skilled and equipped for the workforce of the future as well.

Chairman: Thank you for that.

Q16 Mr Wilson: Can I start with David, if I might. Has the Learning and Skills Council ever been totally dysfunctional?

Mr Hughes: No.

Q17 Mr Wilson: Never?

Mr Hughes: No.

Q18 Mr Wilson: Why do you think the Mayor said that then?

Mr Hughes: I think he was wrong.

Mr Livingstone: I would never claim not to have used hyperbole in public life.

Q19 Mr Wilson: Let us switch to the Mayor then, in that case. Why did you say that it was totally dysfunctional?

Mr Livingstone: I picked up tremendous criticism from the business community all over London and that was broadly their line; they were very scathing. That was why I started out saying to Government "Give me the whole thing, I'll do what I did at the Underground," where only about three per cent of the senior executives remain in office, you go through like a scythe. Then I met the individuals concerned and I recognised that, in its inception, I think the Learning and Skills Council had taken a traditional, rather stodgy, local government approach to processing grants, and so on. I recognised, with the new Chair and Chief Executive, there had been a more dynamic approach to that, not so hide-bound and it was beginning to lead to improvements. That was why when Ruth Kelly said, "Look, will you accept this, which falls short of your total administrative control?" I said, "Yes, I'm prepared to try and make this work," and I detect in the present leadership of learning and skills, in London and nationally, a real desire to make that arrangement work. I am a trusting soul.

Q20 Mr Wilson: Just to clarify that, when you asked to have complete control over post-16 funding and planning of skills in London, in that respect you got it wrong?

Mr Livingstone: No. Nothing short of a full, independent city state is ever going to satisfy me, but I will work as best I can with whatever I have. I am just starting to take over the first rail franchise. I am not complaining I have not got all 11, I am starting with one. If Government sees I work it better than the present idiots I might get the others.

Q21 Mr Wilson: This is the first stage in a process that you hope will lead to you taking full control in the future; so you still have that ambition?

Mr Livingstone: No. If this arrangement did not work I would go back to the Government and say "It hasn't worked; we need to change it." I could not have resisted a government policy more than I did the PPP on the Underground but, once it had become the law and all the other options were exhausted, I did my best to make it work. I will do my best to make this work; if it does not, I am sure we will all come back to Government and say "It hasn't worked; we need to look at something else," and I will move on to the other things in London that are not working, like recycling.

Q22 Mr Wilson: David, what is wrong with the Mayor taking over, lock, stock and barrel?

Mr Hughes: We have said all along, there is nothing wrong with Government making that decision. What we said though was that we thought we could make this work with the sort of arrangement we had got. Why would we not want an elected Mayor, with the profile of Ken, promoting and championing skills in London? It is a fantastic opportunity for us. We have to change attitudes, we have to get employers on board and we have to get those who work with people in East London to think about skills for the first time for their future. With Ken with us, with the Olympics, with the work that we launched last week on the Employer Accord, all of that profile which Ken can bring to the table, it is just fantastic for us, so we can really accelerate the change.

Q23 Chairman: I hope you are going to mention that World Skills are coming here in 2011?

Mr Hughes: Absolutely; we are, and we are working with London First on a strategy to maximise the impact of that in London, with the Mayor's office, to make sure that we change people's attitudes to vocational skills, to practical skills. What we know is, and Ken alluded to it, there still is what I call a social justice gap in our system. Young people going through the system from higher classes are likely to succeed and do well; those from lower classes are likely not to succeed, and what we have got to do is change the system for 14-19 and adult to address that social justice gap.

Q24 Mr Wilson: Ken, if you had got your hands on the Learning and Skills Council earlier, how do you think it would differ now? What would it be doing that it was not doing?

Mr Livingstone: Whilst I am quite happy to indulge in hyperbole, I have always thought trying to create some ideas about what would have been is a great exercise. How would the world have been different if I had been elected President rather than George Bush? I am sure the world would be a better place; and I am sure Learning and Skills would be the envy of the whole nation if I had been running it for longer, but it is not, and who cares? We will deal with the reality of what we have got before us.

Q25 Mr Wilson: I hesitate to ask my next question now because it is about the future. Now we have got this new arrangement, how will the experience differ for an adult looking for training in a year's time, or so, than it is currently?

Mr Livingstone: In a year or so, virtually nothing, because no change that is going to matter can be done like that; but over the period between now and the Olympics, I would hope, dramatically. What I want to see is a real reduction in the long-term underemployment levels that we have got in the East End, and the Accord that was launched last week at Number 11, where businesses are coming along, opening up jobs to new entrants, that local government are involved in, getting better skills, that is the way to go with this. One of the things which were attractive, I think, to Government was the strong indications from business in London that a Skills and Employment Board, chaired by the Mayor, could be something into which they might be prepared to put more of their own resources. That is exactly what has worked in so much of the other policies I have carried forward, a good close working relationship with business in London, and so I have been looking for a lot more schemes getting off the ground, with private sector involvement supplementing what the state is putting in.

Q26 Mr Wilson: Can I clarify something you said in reply to the Chairman earlier, and it was about skilled and unskilled people coming to London. Is it right that you prefer a system that is completely open, absolutely no barriers to entry at all, or do you see that there should be some levels of restriction?

Mr Livingstone: Nowhere in the world since 1914 has such a system existed; before that there were no passports, people moved around the world as they wanted. Clearly, one nation on its own having no barriers might suffer very severe problems. I would hope that, globally, we could work towards a world in which movement of labour - it never will be as free as the movement of capital - is not as restrictive as it is currently. I think we have got it largely about right in Britain. I think there is an awful lot of nonsense in the media that makes it look much worse than it is, but I think, in terms of openness, broadly we are about right.

Q27 Chairman: Chris and David, a very quick one here. What is going to happen to the London Skills Commission?

Mr Hughes: The proposal that is going to the first Board meeting is that we use that as a kind of sounding-board for the new Skills and Employment Board in a consultation group. Because of its inclusive nature, it involves all sorts of organisations which need to be heard and need to have their say so that the new Board has the right strategy. That is the proposal which is going to the first Board meeting and we expect that to go through. That seems a sensible arrangement.

Q28 Chairman: We are quite keen, in both the London area and in other regions, to look at a sort of organogram of who does what in skills. It is very, very complex, as you know; there are an awful lot of players. It would be quite helpful if your organisation could help us with London actually to map just how many organisations are players, not just Learning and Skills Council players but Sector Skills Council and many others, and of course the complexity of the Guilds in London which have a purchase on this too. If you can help us with that, can we come back to you on that?

Mr Hughes: I think we can do better than just help with a picture. I think we have to streamline, do we not; we have to try to make sure that the authority of this Board actually oversees all of those other bits. We need some streamlining; we need to make sure that there is some clarity for improving learners and for providers, so I think we would be seeing, over time, a settling down of a system that is much clearer and much easier and much simpler.

Q29 Chairman: If we are looking at another region, what would you say, Chris, to other regions which look at the new arrangements with London and say, "I think that would suit us;" would you be happy to see a sort of London system develop in Yorkshire and Humber, in the North West, the North East?

Mr Banks: There is only one place at the moment with an elected Mayor, is there not, so the position in relation to London - - -

Q30 Chairman: There is more than one place with an elected Mayor?

Mr Banks: Sorry; in the same way. The arrangements would be different, I guess. If you are asking is the LSC interested in opening itself up, if you like, to the influence of other key employment and skills boards, the answer to that is, absolutely, we are. The LSC is changing and I have referred a couple of times to this notion of making the market better between the needs and the supply side, so the customers of the system and the supply side. We would be very keen, in other parts of the country as well, to find the right way of engaging with stakeholders, which takes the best of what we can learn from London and the best from other places as well. There was a brief, you will know, in the last White Paper which was a task given to me to try to find ways of streamlining the way that the LSC operates while, at the same time, increasing its ability to engage with other stakeholders. To your point, Chairman, when the LSC was first created, a lot of the organisations which exist now were not there, so there were no Sector Skills Councils, there were no Regional Skills Partnerships, there were no Core Cities, Fair Cities, City Regions, City Employment and Skills Boards; they are all there now, to differing degrees, emerging in some places, operating in others. I think the time is right for the LSC to be saying "How can we best, on the one hand, streamline our own activities, to have a simpler and more streamlined structure within the LSC, and, secondly, on the other, make it easier for us to take into account what the likes of employment and skills boards and other stakeholders really want, so there is a direct link between Local Area Agreements, what employment and skills boards need and what the LSC actually does?" We are moving away from planning as the frame of reference to being demand-led, if that is the right word, or the wrong word, to being much more responsive to what the market needs, with the declared intention, you will know, I hope, of, for now, 40 per cent by 2010 of adult funding being directly in response to the demand, as opposed to plan-led, which is really where we have come from. The whole relationship between LSC and its customers, on the one hand, and suppliers, on the other, is changing and we see the opportunity to build stronger partnerships with these other bodies and boards, a big opportunity for making that market work better.

Q31 Mr Chaytor: On that point, Chris's point about the move to a demand-led system, what I would like to hear you talk about is, and this is to Ken, and maybe all three of you really, why you think, each of you, that the vocational training area in Britain has been so badly served by the various structures we have had? Over 20 years we have had the Manpower Services Commission, we have had the Training Services Agency, we have had the LSC and three years after the LSC was set up it is in the process of a big reorganisation, some people say it should be abolished. We have got a major part of the country now, the LSC's functions are being taken over by the Mayor's office; what is the problem with the training structures we have had? They do not seem to have this difficulty in other areas of public policy. In many respects, over 20 years, we have still got this huge legacy of a large proportion of unskilled school-leavers and a large proportion of adults. My question is, if you are arguing for a more demand-led system, is it not, in this case, in this proposal, that actually you are leaning back towards a command economy and demand is at the top of the command economy? How do you reconcile those two?

Mr Livingstone: Can I say, I think fundamentally you are wrong to say that this is a unique problem for this area of policy; look at transport, look at housing. Because everything in Britain is run from the centre, and ministers change every two or three years, at just about the time ministers are getting on top of their job and starting to make some changes then they are moved on. When I was elected Mayor, we had a single health authority for London; then a reform created five regions, now a new reform has gone back to a single one. I cannot think of any area of government policy where you do not get all that endless change and I think that is simply because, if you compare us with most of Europe or America, much of government is devolved to cities and to regions and people just are not fiddling and meddling in the way they do here.

Q32 Mr Chaytor: You are saying then the issue is one of centralisation, or decentralisation, rather than a demand-led system or supply-driven system?

Mr Livingstone: I think there is that factor. I think there is another factor. I have certainly met a government minister every week in the six and a half years I have been Mayor, and the general pattern has been every two or three years they change. You spend the first 18 months trying to explain what needs to be done in the area of policy for London and you get to a point where they are making decisions, then they are gone and you start again. I can think of a lot of societies where, in government, people will see five to ten years in a department as being not unusual, and I think they do very much better than we do.

Q33 Mr Chaytor: If we want to move to a more demand-led system, is not the issue not exactly the delivery structures that will be needed but the financial incentives for the employer and the individual; is not that the heart of the problem? If the employer has got the right incentive to train the people he, or she, needs, if the individual has got the right incentive to get the skills they need to improve their job prospects, is not that what it boils down to?

Mr Livingstone: Here in this country there was no incentive to train your workforce; the incentive was to steal them from somebody else, and this was a merry-go-round. I do not know whether Germany has got a regulatory framework about training, and it may well have, which perhaps has got a different attitude. I started out in 1971, when you had direct labour departments, training, many of the big building firms running proper apprenticeship schemes, and I have watched all that go away. They pay often quite amazing sums for a skilled worker on a building site because people are just on a merry-go-round from employer to employer.

Q34 Mr Chaytor: My question really was, are we not getting side-tracked, and have we not been side-tracked, by the structural issues as a means almost of avoiding the fundamental question of how we get the right financial incentive mechanism? If the financial incentives were there for employer and employee then really does it matter whether it is the Secretary of State who is in charge, the Mayor who is in charge, or the local director of one of the 47 local Learning and Skills Councils?

Mr Banks: One of the things which occur to me on that is the old adage about the price of everything and the value of nothing. One of the points made earlier, which I think is fundamental to this, is what I think is called 'parity of the scheme', but I am not an education specialist, as you know. What I think that means is that vocational skills and qualifications should be valued as highly as academic ones, and clearly there is something fundamentally wrong in that, when you have to explain what a vocational qualification is worth by its reference to something else, the equivalent of five good GCSEs or above is a really good example of that. I think we will drive up demand for learning among adults when they understand better the value to them of acquiring the skills that they need in order to participate in the world of work and get on in it. Again, as Ken was saying earlier, we are going to need more people moving up to level 4 than currently we have got at level 3, so there is a big shift there, and the promotion, if you like, of the value of these qualifications, which very often are not academic, will be key. The second point I would make is around agreement over really what we are seeking to achieve here, and I do think often there are some false dichotomies set up, like is it basic skills or is it higher-level skills, and all the rest of it. In reality, people have got to be able to get on to the ladder and then to develop as far as possible, and I think we do get distracted sometimes by that sort of silo, and helpful silo, mentality, because actually we need people to be developing. I would say that there is increasing evidence that demand-led as an approach does work. If you look at Train to Gain, which is the name that we have given to the national roll-out of the employer training pilots, some of which have been happening in London but around the country, the success rates, in terms of enabling employers who so far have not been involved in training their staff to see the benefit of learning and then to carry on themselves to invest in their people, equally the take-up among staff of high-quality learning and training that meets their needs as well, have been really, really high. That brokering role, in the middle, has been incredibly successful in persuading employers and their staff, albeit on a micro level, of the value to them and their organisation of learning.

Q35 Mr Chaytor: That rather demonstrates my point. Why do we need a further structure of organisation when all we need to do is get the right mechanism and the right incentive? Does it matter whether Train to Gain is run by the Secretary of State, by regional government, by the Mayor, by the local council, by the LSC; it is the Train to Gain concept and it is the incentive for the employer that has got people back into training?

Mr Banks: Again, it may come down to the fundamental difference, I think, in view here. I think you opened up by saying that, essentially, the Board in London has taken over the role of the LSC, or something to that effect. It has not; that is not how I see it. I see the creation of the Board to be to bring real focus to the work of the LSC, but this is not about big structural upheaval in the way that skills are delivered, it is about making sure we have got the focus on the right skills in the right areas, which really is what Ken was talking about. It may be that there is a difference of understanding of what is going on here.

Chairman: If this were a higher education session, you would see behind you a lot of journalists. How many journalists are here today; could you raise your hand, if a journalist? Yes; three. That is what happens, I am afraid, as soon as you talk about skills, the great national press is not interested. Fiona, you are the nearest thing we have got to a London MP. I am embarrassed that we have not got one, but you are the nearest we have got and would you like to ask your question?

Q36 Fiona Mactaggart: Having been given that introduction, I feel as though I should talk about the impact beyond London. Before I get to that, can I ask just one question about what we have been talking about. Chris, your constant description of your role as making the market work, it seems to me that a classic thesis about making the market work does not require as many kinds of agent as I have a sense we have on the ground here: Sector Skills Councils, the Mayor, what you do. There seems to be an awful lot of people who say sort of "This stuff is my work." I am wondering, when you talk about streamlining, and things like that, and what I am interested in is, what the opportunities are for getting rid of some of the people who say "This is my work" so that we can focus down on Board leadership and the general direction and funding which means that the employers, the skills providers and the students all feel that there is something in it for them, so that there are fewer people making work out of it and more deliver it. Is that achievable; is this something we could say in our report that we could actually make something like that work? I would be interested in Ken's and your view on that?

Mr Banks: Personally, I am all in favour of simplification and streamlining. We can do it within our own organisation and that is what we are doing, and - I have used the phrase before as well - we want to open ourselves up to the influence of these other groups. At the moment, and again you may have been briefed on this, the DfES, in response to its Capability Review, is bringing together a group called, I think, the DfES Group, or something like that. It is designed to bring together the leadership of some of these organisations that you have just referred to so that we can get a much more co-ordinated response within the existing structures. You will not find me arguing against streamlining the landscape generally and I spend my time trying to explain to people how simple it is; we are trying to make it more simple, if you see what I mean. I was with a large employer recently, who drew the map that Barry was referring to earlier, as to what the Learning and Skills sector looked like to them, and, you are right, there are lots of different players involved. Our job, I am absolutely clear on this, is to take the inputs that we can, in terms of what customers need, and for us learners and employers, and then make sure that the part of the system with which we work closely delivers that. That has to be our priority. The simpler the articulation of need the easier the job is to respond to it; so I would be all in favour of simplification of that.

Mr Livingstone: We have got the two City Strategy pilots working, one in west London, one round the five Olympic boroughs, which are bringing together Learning and Skills, Jobcentre Plus, the London Development Agency, the GLA and the boroughs, and we will see what they produce in April next year. These seem to be going very well indeed in both instances, and that is part of what you are doing, partly to answer your question. The other one is about the role of the Mayoral office. I was on the Bill Committee that went through, and Nick Raynsford kept saying, relentlessly, and I never believed it, that the prestige of the office of the Mayor would cause things to happen, by bringing people together, where the Mayor did not have real powers, and so on. I thought this was a load of old waffle. I have to say, I have been wildly wrong on that. When we say we want to do something about climate change, I find EDF Energy turns up and commits £25 million of their own money to starting these projects. There is something about that one, particularly when you are dealing with foreign firms, American or European ones, who will orientate to the office of Mayor and will come up with their own money. One of the real drivers behind this new structure for London was what we would lever in from the private sector which would not come in otherwise, because it was seen just as government bureaucracy but would come in when it had the prestige of the office of the Mayor there. I think it is absolutely bizarre. I am just a working-class oik who is living above his natural status in life, but it seems to work.

Q37 Chairman: We will take that with a pinch of salt, Ken. David, do you want to answer Fiona?

Mr Hughes: Yes; just a couple of things. You have to separate out what it looks like to learners and employers from what it looks like to colleges, schools and training providers, because I think, for learners, it is not that complex. Learners have a relationship with their local college or with their school and that is what we have to concentrate on getting to the best quality. For employers, we have set up a new programme called Train to Gain, as Chris said, where we are providing one broker and that helps them navigate their way through the system. What is really important though is that we use this Board to look at the employment and skills issues from a range of agencies, because to be able to hit Londoners' needs around this we need to make sure that our way of thinking at LSC is joined up with Jobcentre Plus, because they are working with the workless. We have got to join up the ODA, which Ken oversees anyway, to make sure that it has a strategic intervention where we cannot intervene, but we need to look also at HEFCE. If you look at the skills needs in London, we have got round about 31 per cent of Londoners with higher-level skills, degree and above; the need is round about 50 per cent over the next ten years. We are not going to bridge that by young people coming through at 18-25. We have got to get some of the HEFCE money and in the workplace at level 4. There is a lot of joining-up to be done of the public sector and the interventions that we make, and helping businesses navigate through with a single broker has to be our aim.

Q38 Fiona Mactaggart: Barry referred to me being the closest thing we have got to a London MP here and Ken will not be surprised that I am interested in the impact of what you are doing, in London, on the periphery around London. Your employment market, most of the people working in London, a third of them might have been born overseas, an equivalent number are commuting into London from the periphery of London and there are quite substantial, I think, overspill issues in relation to skills. How are you planning to deal with that, in areas like the South East, the East, and so on?

Mr Livingstone: At the moment, we have quite a good working relationship with the two other Regional Development Agencies and the LDA. We have a relationship also at the planning level between the GLA and the two other South East regions. Clearly, we will look at this. I do not have a plan, off the top of my head. It always did strike me that actually Slough should have been included in the Greater London Assembly.

Q39 Fiona Mactaggart: I told Barry you would say that.

Mr Livingstone: There would be huge benefits, if you wanted to petition to come in. Clearly, all around London, about halfway between London and the South Coast, if you take a ring round like that, they are all really one integrated economy, and you could have drawn the political boundary anywhere, and certainly it is the transfer boundary. I am certain that whatever we are doing is going to have a huge impact on these, at the outside. We will not be saying though "You can't access this because you're on the other side of the border."

Mr Hughes: I know Caroline and Henry, the Regional Directors in those two regions, quite well. I see them regularly, so our joined-upness is going to be staying the same across those regions. It is just worth noting that the London FE college adult budget is about 25 per cent of the national budget and we have got only about 15 per cent of the adult population. In part, that reflects that inward migration of up to about 30 per cent of the workforce in London lives outside. We have some great institutions in the centre of London which play to that market, the City Lit. and some of the other institutions like that which provide evening classes for some of the workers who have to go home in the evening. I think we have a system which delivers to meet that need and recognises it and that will not change; we can improve on it, we can make it better.

Q40 Fiona Mactaggart: Do you think, therefore, that other regions should follow the London lead about some kind of regional leadership focus, or do you think it requires the office of the Mayor and the kind of fluence that Ken said he was surprised to find it had?

Mr Hughes: I think they are, I think all of my colleagues are working strenuously with their counterparts particularly in Jobcentre Plus and local government and the RDAs to make these sorts of arrangements work around the country; so lots and lots of effort. Perhaps the clarity of having an elected Mayor overseeing that is absent, but there are enormous strides being made in Birmingham and the North East, where a really joined-up system of employment and skills is being developed. In the City Strategy pilots as well we are doing it, but we want to make that happen across the whole of London.

Fiona Mactaggart: I think you are right, that the clarity is lacking elsewhere.

Mr Marsden: I wonder if I can pursue that point about potential implications outside of London with you, Chris, because you said earlier on, when you were giving us a view of the newer, leaner, hopefully not meaner, LSC, that one of the things you were really keen to respond to was on-demand, and you put a 40 per cent figure on that. Which begs the question, looking at my region, the North West, why should that not be, particularly in adult skills, if we make the comparison with the Mayor, in London, a function of the Regional Development Agency; why do we need you?

Q41 Chairman: Neither organisation would have anyone elected?

Mr Banks: That is right. The partnership with the RDA is an increasingly vital one to us. You will remember, when the LSC was set up, it was set up nationally and then the 47 local groups. It was not until a couple of years ago that we established on the executive side of the organisation regional directors, of which David is one for London, and, at that stage, introduced the notion of a regional council, a regional board, if you like, of the non-executive part of the organisation. I think the time is right to strengthen that role within the LSC at the regional level to make that a key decision-making part of the group, and then to work really closely with the RDAs, as we are doing, and indeed as part of the Skills Partnerships particularly, to join up what we are doing in schools with the economic context and priorities.

Q42 Mr Marsden: I accept the ambition and also the rhetoric, but the question is about the delivery. One of the other changes, incidentally, you talk rightly about the changes there have been since the LSC was set up, obviously was Sector Skills Councils. In my conversations with Sector Skills Councils, the majority of which, I think, are now very aware, if only because if they are not their potential membership will come back and bite them, of the need for a much more demand-led pose but they feel frustrated because they do not feel that is being picked up on the ground by the LSCs. You may say there is a historic pang there, as it were, but if you want to retain control, for instance, on adult skills, just how are you going to make that demand-led feed-through from employers a reality over the next couple of years?

Mr Banks: I think, at the regional level, Train to Gain is the best example of that, which is being extended now nationally with very ambitious targets for the number of employers and the number of their staff who are going to be participating in learning and training under that guise. Train to Gain is a service to employers, it is not training, it is a service to employers which brings together what they need with the supply of it from the public sector, and indeed from the private sector. I think that will be a key part of it.

Q43 Mr Marsden: I would like to bring in Ken as well on this final point, the issue of demand from SMEs. Again, I have been talking to a Sector Skills Council and 80 per cent of their membership is SMEs. Key aspects of that membership are very high-skill SMEs in London, in the fashion area. Historically, there has been a very poor engagement between SMEs and the schools agenda; it is not a question of saying who is right and who is wrong, who is to blame, or whatever, it is simply a fact. Can I ask you, Chris, first of all, what is in the structure, that you are hoping is going to emerge, which is going to make that better, in connection with the ideas? Then, Ken, perhaps I could ask you if you have any thoughts as to how, within your new role, SMEs, I am sure you will agree, are as critical and crucial to the future prosperity of Londoners, some of the big projects? How are you going to make that demand-led, that feeling, more of a reality? Chris, do you want to come back on that first?

Mr Banks: The key role here is the broker, is it not, which is the link between employers and the system, which can look very complicated, does look very complicated, to them and it is difficult to navigate their way around. The brokerage for small businesses, very often, is, of course, the Business Link organisation, which is under the leadership of the RDAs. We have found, and this is worth bearing in mind, that the vast majority of the businesses which benefit from Train to Gain are smaller businesses, exactly the ones which you have been talking about, and the single biggest thing that makes a difference to them is the broker. If I told you that on the five-point scale, where five is the top box, "Extremely pleased with the service," over 75 per cent of employers who are participating in Train to Gain tick that box in relation to the brokerage service, because it is not selling them anything but it is making it clear to them and making those links. I think that is a very good, powerful, practical example that is happening now. Of course, there are hundreds of thousands, in fact, if you take very small, micro businesses, millions, of businesses, and we have a very long haul in front of us in making sure that more of those businesses know both about the value of learning and investing in their people and, most importantly, how to access it through the Train to Gain programme.

Q44 Mr Marsden: How are you going to factor in the SME demand in your London Skills Strategy?

Mr Livingstone: London has two organisations, one the regional CBI and London First, which largely represents large firms, and then the London Chamber of Commerce and industry. I have argued for some time that it does seem as though we have three probably rival business organisations, but every attempt at a merger has failed and I think the interests of both groups are why they cannot ever bring themselves into a merger. It is relatively easy with the resources of the large corporations within London that they can, as EDF Energy has just announced there is £25 million, but clearly that is not within the scope of small and medium enterprises. I think a way to go on this is the Accord I mentioned earlier, where the London Employment and Skills Task Force, which is overseeing how we maximise the benefit of the Olympics, has launched this scheme to bring more people into training, and local authorities, to make sure that people have got the skills that are required, employers actually to be responsive to that. One of the things we have recognised is that in London now the purchasing power of the GLA family of organisations, with a budget of £10 billion a year, is in several billion pounds. We want to try to package that so that small and medium enterprises can get together, and we are some way down the field of working with that. The Mayor of Atlanta is coming to London and will be doing a seminar for small and medium enterprises, because in Atlanta the deal was, "Yes, we will have the Olympics but we want to use it as a chance really to increase the capacity of small and medium enterprises," and they got about 20 per cent of the work. Something like that in London would be absolutely transformational for our small and medium enterprises and, clearly, bringing them into a much bigger role in terms of training and skills is going to be very important because there are just so many jobs out there. We are doing that, and really it is part of something we had started to do before I reached this agreement with the Government about the London Skills and Employment Board, which is that the LDA, when I inherited it, the London Development Agency, broadly was a regeneration agency, building, remediating, and so on. Clearly, there is a lot of that to do with the Olympics still to come, but the task I have set them is to see themselves shifting much more to business services and skills, because effectively the value of land in London means usually you can strike a Section 106 deal which means the purchaser will do much more of that remediation. I want to see each year a slow shift of LDA resources over to business and skills and that has got to be much more focused on the small and medium enterprises. It is much more labour intensive but, I have to say, dealing with simply the relocation of the existing 300 or 400 firms that we had down on the Olympic site is giving the LDA real skills of working with small businesses.

Q45 Chairman: This is on a factual point, for David and Ken. What is the situation? We were given evidence last week by Chris Humphries, who is pretty knowledgeable about these things, that three per cent of companies employ 75 per cent of the workforce. To me, that was quite astounding; three per cent employ 75 per cent of people in our country. Is that reflected in London pretty accurately, or are there more SMEs in London?

Mr Livingstone: I have not got that figure, off the top of my head, but certainly it is the case that I can remember, even when I was at the GLC, the economic advice was, "Don't waste too much time with small and medium enterprises; it's the big firms that totally predominate in this economy." That may be the reality of what we have got. If you look at the structure of the economy I was outlining earlier, it is one very vulnerable indeed; so much of it is tied to finance and business services, you hit a very difficult international period, we would suffer much more dramatically in London than in the rest of the UK. Therefore, whilst it is easier to deal with these huge firms that control so much of employment, they will be the ones that will be downsizing quite dramatically in a severe international downturn. Therefore, growing much more of the small and medium enterprises you have got in London, many of which would also be hitting a recession, but are based here, dependent upon the London economy, this is something we really want to nurture, the more vulnerable we become by this sort of egg-timer-type economy we have.

Q46 Chairman: David, do you want to make a comment on that? Do you think we reflect in London that three per cent employ 75 per cent of the workforce?

Mr Hughes: I have not got the figures with me at the moment, I am afraid. I will go back and check on it. I wanted to talk about the Sector Skills Councils for a moment, actually, but Gordon has gone, which is a shame.

Chairman: While you are waiting for Gordon, Paul will ask a question and I will bring you back in when our erstwhile friend returns.

Q47 Paul Holmes: I have one very specific question for David, actually, and we skirted around bits of this earlier. Five years ago, when I was a newly-elected MP in Chesterfield, you were helping with a fairly new LSC in the East Midlands. Now that you are Regional Director of the LSC in London, are there any messages from the East Midlands, where you would say to the London LSC, "This is how you should do it," or do you ring back to the East Midlands and say, "No, no, no, this is how you should do it. I've seen it in London; this is the way it should be"?

Mr Livingstone: Nobody is ever allowed to say "This is how we do it in London."

Mr Hughes: I think the big lesson of working in London is just do not go to your colleagues and say it is different in London, because they will just get fed-up with it. I think there is good practice in both. We have got some of the best-performing colleges in London, Beacon colleges, some excellent inspections. We have got no failing colleges; that was not the case in the East Midlands. On the other hand, apprenticeships in the East Midlands, with the likes of Rolls-Royce, are just so much easier to sell to parents and learners and teachers and employers. I think it is very different and that is why we need a different regional approach in each region really, because there is a regional identity, or certainly regional difference, that is stark. The main difference for me is that London has so much opportunity to address these enormous problems. We have hardly mentioned the Olympics and the word 'skills' but the symbolism of that, in terms of changing people's attitudes, we would not have got the Employer Accord signed in Number 11, I do not think, with the range of ministers that we got and the range of employers, if it had not been for the Olympics. On the back of that we can change attitudes, and with not too much about the attitudes of employers in this. We do have to get into employers and start to help them think differently about the way they recruit, the way they promote and the way they train in the workplace. We have got a massive problem in London around women. Luckily, we have managed, on the back of the Women into Work report, to get a women's level 3 pilot in London, where we are trying to help women in the workplace get to level 3, because the numbers are shocking. They do not get support in the workplace, they do not get promotion, they do not get trained; so there is fantastic opportunity in London, and I think probably that is the biggest difference.

Q48 Paul Holmes: Ken talked about whether the idea of mayors and city regions will spread across the country. Could you have a city region and a mayor based in Sheffield and one in Nottingham that effectively would be able to run the bits of the East Midlands that fall between those two, like Derbyshire? Is that something you can transfer?

Mr Hughes: I think one of the powerful things in London under the Mayor, and perhaps this Mayor, is the cohesiveness that it brings and the fact that Ken speaks for London. I am not sure that would happen with a city region in Nottingham. You go outside Nottingham City and it starts to unravel, and the same with Sheffield. I do not think there is the same identity in other parts of the country as there is in London.

Q49 Chairman: I am not sure what is unravelling here, David. What unravels outside Sheffield?

Mr Hughes: The ability to bring people together, to work together, and the ability of people to identify with something.

Q50 Chairman: I was at the Labour Party Conference recently; it seemed to be working quite well in Manchester?

Mr Hughes: Possibly. We were talking about the East Midlands, I thought.

Paul Holmes: There are a lot more rural areas in the East Midlands than in Manchester.

Q51 Chairman: We are treading on some sensitive territory.

Mr Hughes: If you live in Chesterfield you do not go to Derby, you go to Sheffield, so how on earth are you going to have any cohesiveness around people's identity with the East Midlands? It is very different in London.

Mr Livingstone: I must say, it is only different after 40 years. This boundary was created, the initial idea was 1962, and for the first 25 years of my active political life in London most of what had been dragged into London was kicking and screaming and asking to leave. I suspect there may be a bit of Havering which still regrets coming in, but it has taken almost half a century to bed down. I think the tragedy is that back in 1969 Derek Senior's minority report on the structures of local government was not adopted, because that envisaged proper English regions, but below that unitary authorities bringing in the city with the surrounding rural area; a tragic lost opportunity.

Q52 Chairman: David, you wanted to come back briefly to Gordon's point?

Mr Hughes: Yes, just about the SMEs. It seems to me that we have got to think about the role of SSCs (Sector Skills Councils) very carefully, in this, and some of the Sector Skills Councils we are working with most effectively really are concentrating on thinking about the qualifications reform that needs to go on, to be able to help SMEs understand what is right for them and what is right for their employees. It feels to me that the more we can get them to help and navigate through what is tens of thousands of qualifications the more SMEs will start to be able to understand what is possible.

Q53 Mr Marsden: It is always dangerous when you come back because you provoke another question, but it is a very brief one, Chairman, I hasten to add. I take that point entirely but, and maybe this is one which Chris will want to respond to as well, should you not be doing more than just helping them navigate through the thousands, or hundreds, or whatever it is, qualifications; should you not actually be taking an active part in reducing them?

Mr Hughes: That was my point. I think the Sector Skills Councils are trying to get to a small set of qualifications that work in their sectors and be able to promote those to employers and employees, to simplify them: a really, really powerful role, I think.

Q54 Chairman: I want to move on now to Operations, but, in passing, I have to say, as someone who has to live in London quite a bit, in this job, what always astounds me in the comparison between the part of the country I represent, Ken, and London is that when I pick up London papers they never, ever, seem to celebrate any achievement in education and skills, it is always a negative story. Whereas, I have to say, in Yorkshire, the Yorkshire Post and the Huddersfield Daily Examiner, if something happens in education we celebrate it. You pick up London papers constantly, even, I think, this diversity of papers you get thrust into your hand now as you walk along with umbrellas, and why is it that no-one in London ever seems to celebrate? This Committee knows that educational standards in London have been improving steadily; you would never get an idea of that from the Evening Standard, would you?

Mr Livingstone: Can I say that it is not just in this sphere, it is in every sphere. It took 18 months for papers to start reporting that the bus service was improving. I think there is a lack of pride in the media about London; there is an embarrassment that they are based in London so the national media often will not report London stories. That was why I had to produce my own London paper, The Londoner, which goes to three million homes ten times a year, and actually to tell people the good things that are happening in London. I took such criticism for spending money on that one.

Chairman: We will not dwell on that. Let us continue on Operations, and, David, you are going to talk us through this.

Q55 Mr Chaytor: My question is, does the Mayor's newspaper criticise the fact that London has 25 per cent of the budget for adult training but only 15 per cent of the population? It is a big disproportion, is it not? Is it justified?

Mr Livingstone: In a sense, if you go back to the old days of GLC, ILEA, the spending of the ILEA in this area was beyond anything in any other region, because it was also dealing with the people that came in after work, stayed to take a course, and so on. I doubt if it is dramatically different from what it was 40 years ago. You need to think actually what is the travel to work figure.

Q56 Mr Chaytor: Yes, sure, but my point is, even allowing for the travel to work figure, the Greater London travel to work area does not have 25 per cent of the population, does it? In terms of national policy on training, and particularly looking at those parts of the country where unemployment is higher and traditional industries have collapsed very quickly, the balance of distribution between the funds in London and the funds in the North East, the North West and parts of the Midlands is an issue that I think you have caught and it is something that we might want to explore further?

Mr Hughes: Certainly I think that the distribution of funds across the country is an issue, is it not, and it will be very interesting. I am sure you will have enjoyed looking at the figures. I think it is justified.

Q57 Mr Chaytor: Did you think it was justified when you were in the East Midlands?

Mr Hughes: I did, yes, because what we do is look at need, we look at demand, we look at the deprivation and the disengagement. If you think about the employment figure, the employment rate in London is lower than the rest of the country. If we were at the same level as the rest of the country, 270,000 more people would be in work in London. We have got a job, to get those people into work, and imagine the impact on the economy if we could get to the same employment rate as the rest of the country. Look at the worklessness figures in the Olympic boroughs, in Newham, Tower Hamlets, Hackney; you are getting on for half the population in those boroughs are workless. To be able to get to those people, we need that budget, we need to spend it better, we need to join it up with Jobcentre Plus, we need to get colleges thinking about employment outcomes as well as qualification outcomes, and we need Jobcentre Plus to think about sustainable jobs with training and with skills as well as getting people into jobs.

Mr Livingstone: The travel to work figure does not answer all of it. If you add in also the higher cost base, whether you are providing policing or housing, nursery care, or whatever, it is always high, I would not mind betting that once you have added in both those factors it is not out of line.

Q58 Mr Chaytor: Can we move on. On the assumption that there will be a Further Education Bill in the new Queen's Speech, and I think perhaps this question is to David also, what should be in that Bill which would help the cause of improving training in London?

Mr Hughes: I do not know what is going to be in that Bill.

Q59 Mr Chaytor: What would you like to see in it?

Mr Hughes: I do not think we need any major changes. Chris has talked about the streamlining, and in the letter from Alan Johnson to Ken about establishing this new Board it hinted at one of those changes, which was about reducing from five local LSCs to one. If that is in there I think that will be helpful. I think some of the problems that have been alluded to in the initial set-up of the LSC were that there was a fragmented approach in London; that has changed but it takes time to move on. We want to streamline Government's arrangements in line with the new Board; so if that is in there I think that will be helpful. It is not my place really to hypothesise about what is going to be in the Bill.

Q60 Mr Chaytor: This question is to Ken. In terms of the impact on the individual citizen, how are the establishment of the London Skills and Employment Board and the shift of the strategic responsibility to your office going to change things on the ground?

Mr Livingstone: There will be two things. One is that in everything else that I have been given we have been able to find economies and savings which then have been redirected into improving front-line services. This will not be an adversarial thing, but the people who have done that for me in other areas I will want to bring their talents to bear on where we can do this better, get more for it; no-one is going to resist that. Then there is the second issue, which I think is much more significant, what we can lever in from the private sector, if they see this starting to work; they all know that if they can make a contribution to this there is huge kudos that comes with it. We are in this quite unique position that London is the only major city in the western world which is growing strongly. Some are stable, some have small growth; we are growing in population at the same rate as at the height of the Victorian Empire. That is because people really want to come here; it is not just the low-paid worker from Rumania, it is actually across a whole range. More young people will choose to come to live and work in London this year than in any other city in the western world, and it has got a buzz about it at the moment and on the back of this we can do an incredible amount. If you ask me where we might be in five or six years' time, what I would judge our success, it is actually having borne down on that core of people, and we have got about, once you exclude full-time students, just over a million people not in work in London. Some of them will never come back into work, some of them have health problems, but for an awful lot of women, and particularly single parents, but even where you have got two parents, it just is not worthwhile financially coming back, given the cost of childcare and the differential of housing. We have got a scheme we are running at the moment, jointly between myself and the Government, to subsidise childcare provision, and it is coming down from about £250 a week to £60 or £70; that makes the difference, it starts to get people back in. Then there is the impact in terms of what we can do in providing a package which is tailored specifically to the individuals. When I said, I think it was to Rob Wilson, that nothing is going to turn around in a year, it would be only a gimmick, it is a question of fashioning something which deals with the individual problem. As I said, many of these people, 365,000 have no qualifications and we have got 347,000 who have never had a job. Those are not going to be easy people to get back in, or to get in for the first time; it will take time, and I am certain that, particularly if we can lever in the private sector, we can do that. On the back of the Olympics you have 70,000 volunteers and these are not volunteers who will be just standing around in the Olympic Village pointing at the toilets, they are going to have to be given training in health and safety, training in languages, and so on, customs skills, all of which could benefit them before the Olympics and certainly should benefit them after the Olympics.

Q61 Mr Chaytor: Thank you for that. Just to give us the structure, the LSC will keep responsibility for the funding of training but both the LSC and the new Board will have responsibility for planning. How are you going to mesh the fact that both organisations have got a planning responsibility, and what will happen if the Board's plan specifically for London is in conflict with some of the central government-directed targets that the LSC is obliged to deliver?

Mr Livingstone: I would pick up the 'phone to the Secretary of State and say there is a problem there. If they are constrained by rules laid down by Government that are working against what is good for London, it is no good me berating them, I will have to go and talk to Government on that. I have to say that across a whole range of other areas this has not been a problem, whether it has been in transport, or whatever. I have found it can take some time, but once you have made the case to Government, that if the argument stands up, they are open to change, not quickly, but they are.

Q62 Mr Chaytor: What is the point of the LSC having a planning function?

Mr Livingstone: We are starting from scratch. I assume we will learn a lot from them, there will be a lot of ideas that I and particularly the business people on the Board will have which we will be surprised if the Government have not already looked at, and so on. It will be a dialogue and a debate. I do not see it as two rival organisations. I think they will be looking for the extra input and value that we can bring, with that London dimension. When I became Mayor, the thing that amazed me the most was the discovery that nowhere in London was there an organisation abstracting economic data for London; all that happened was broadly they took the national data and then made a finger in the wind on that, "What do we think that is in London?" In GLA economics, actually we created, I think, the most detailed economic data you have got about the economy in this city; that will be a valuable resource feeding into this, serving both of us.

Q63 Mr Marsden: Ken, I would like to come back to something that you have just been saying, and you painted, and reasonably so, a very dynamic view of the London economy, you talked about the people wanting to come here, and all the rest of it. What you are also very conscious of, as you said earlier, is the need to bring back people for five, ten or 15 years, older people, you talked eloquently, and I absolutely agree with you about the need to reskill 40 and 50 year olds. There is a problem here though, is there not, and it is the problem of how you factor the time and the balance between those demands. If you take something very specific, like the Olympics, like the needs of the construction industry, perhaps ideally we should be putting much more focus on getting older workers back in there, but the fact of the matter is, in the short term, they are going to go to migrant workers, are they not, they are going to go to skilled Poles, skilled Czechs, and all the rest of it? That is just one example. Is not that going to be a real challenge for you, as you take on these new responsibilities, how you balance out the strategic need to reskill older workers with the instant need to respond to demand in the sorts of ways that I have described?

Mr Livingstone: The RDA is working already with colleges and the Learning and Skills Councils to increase the capacity of training in London so that, as far as possible, everybody that we can take out of long-term unemployment and give them the skills for the jobs that are coming we do that, and we have time. At the moment we are site-clearing and decontaminating; that is going to take us through to the end of 2008. The construction of the Olympic facilities will start, at the very earliest, in early 2008 and most probably early 2009; so you have got the gap between now and then to maximise the potential for Londoners to get those jobs which are coming. The point you make is an absolutely accurate one. We have been driven by tremendous dynamism, people coming here, but we have got these people, over half a million people, that we should be able to give better training to, to take jobs here in London. Each one of those that takes a job takes a job which otherwise would go to someone migrating in, and actually that is a benefit because most likely they have got a home here already, they are based in the city and it reduces the burden on social service spending, it is likely to have an impact on a whole range of other social problems in the area. Yes, it will substitute, but I think that is my job as Mayor, to keep this economy open to everybody who can come and add to it, but also to try really to get everybody who has been excluded and left behind into employment, even though I know most probably that will reduce the opportunities for people migrating in.

Mr Hughes: I think construction is an interesting one because there are some fantastic examples of where local people are getting the training they need. If you look at Battersea Power Station, as an example, they have got Lambeth College in there, they have got the LDA and the LSC funding training of local people who are unemployed, referred by Jobcentre Plus, and Bovis Lend Leases employing those people on the site to build. Construction, in a sense, is not the one that worries me most, it is other industries, where you have got enormous turnover, and if you look at hospitality retail, where actually the majority of that workforce will be migrants, and where there are opportunities at lower-skill levels, we have got to get into talking to the employers, I think, in a new way, to talk to them about how they employ, how they train people, how they retain people.

Q64 Chairman: Are you too obsessed with a kind of hierarchy of qualifications though, David? I do not know if Ken Livingstone knows of the East London Business Association that have piloted a system in Canary Wharf, where they reach out to the long-term unemployed and do quite simple things, give them some soft skills background, not a qualification but some training in soft skills, and they give them a mentor, and they find that a high number get jobs in the service sector around servicing the buildings, and so on, in Canary Wharf, which has been very successful. Perhaps Ken Livingstone can come back in; they are the very people you are talking about, who are very often left out?

Mr Livingstone: I agree. Perhaps it is inevitable, but I have watched, through my lifetime, the kids who left school with me, with three or four what were then GCEs and got jobs which today require a degree; there has been this ratcheting up, and I am not certain it is all absolutely necessary. I think perhaps a better-crafted set of vocational skills would have been more useful.

Q65 Mr Marsden: I want to come back, and actually again Ken has touched on the point, on this issue of demand and supply, and particularly in relationship to qualifications and apprenticeships. One of the things that this Committee has heard on other occasions, in other inquiries, has been concerns about completion rates on apprenticeships, and one of the problems, particularly in very dynamic economies, like London and the South East have been, is that Government and various organisations get people onto apprenticeship schemes, they go halfway down it and they get certain qualifications or they get certain experience and they are snapped up, or they feel up to going to work somewhere else. Therefore, the actual figures, in terms of apprenticeship completions, do not look very good; but, more important, we are putting money and we are putting effort into training people who are, as it were, snatched away from the completion. David, perhaps you would like to touch on some of the nuts and bolts. How do we change that situation so that actually we do have a framework of qualifications which will enable people to take advantage of economic opportunities while they are training in an apprenticeship, but, at the same time, not mean that we are going back to square one all the time?

Mr Hughes: It is a big question, is it not, and in a sense it touches on everything that we want to talk about, and probably you want to talk about in your skills inquiry. If it touches on who determines what the qualification is and how much employers drive the qualifications really to appreciate what is needed in jobs, it questions the LSC and its role in funding and funding flexibly for providers to be able to follow people, if they do move jobs, and really to make sure that the quality of the delivery is right. It questions whether employers are taking seriously the skills levels in their businesses and thinking long term about it. There is no easy answer to that one. I think there is a big culture shift that is necessary. What I can tell you is, in London, the success rates, the achievement rates, in workplace learning in London have increased massively in the last 12 months, so we are getting part of it right, and part of that must be because the qualifications and the quality of the training are meeting the needs of the learners and employers better. It is a big question. We have only about seven and a half per cent of the adult apprenticeship spend in London and we have got 15 per cent of the population; we do not deliver apprenticeships to the same scale as, say, the East Midlands, so there is a big change that needs to happen.

Mr Banks: I want to come in on the point about apprenticeships, because it is such an important, big programme and I just wanted to correct a fact, the provider fact. The success rates in full completion of apprenticeships, when I first got involved in this, was 30-something, 31 or 32; now it is mid 50s and up and heading towards 60.

Q66 Mr Marsden: With respect, Chris, I am sorry to interrupt you; that may well be the picture nationally, it is not necessarily the picture in London and the South East, which is the area where I specifically raised the question?

Mr Banks: I am sorry. I did not hear you say particularly in relation to London. I do think the point about apprenticeships is that if the SSCs can define the qualification as tightly as they really need, because it links back to what David was saying earlier, SSCs are good at saying what the relevant qualification is, and then we allow a bite-size, is the jargon I think that is used, approach to it, which enables people to do little bits of learning that add up to a recognised qualification, that will make a big difference, in terms of demand-led. At the moment, as you will know, apprenticeship is one of the toughest measures, one of the few, because to get the full qualification you need to have got really good levels of numeracy and literacy as well, unlike many others.

Q67 Fiona Mactaggart: Are you changing the culture of businesses in London, who have got a tradition of being flexible, by buying workers who have been trained already and bidding against each other for them, rather than investing in them? It is one of the ways that London is quick on its feet. How can you change that?

Mr Livingstone: The business community is open to change. I was quite struck, in my role at the GLC, that the business community was broadly hostile to all that we were doing. Virtually the first people through the door when I was elected Mayor were the businessmen, saying "We need this, we want more investment," and I was struck because 25 years earlier I was being told that public sector investment crowds out private sector investment. It is not just the Labour Party that has changed, business has changed, we have worked out what does and does not work. It will be a slow process and there will be some firms that do not change their attitudes, but I think their involvement as a majority of the members of this new Board will mean they become advocates for business taking a longer-term view and being prepared to put more resources into training and apprenticeships as well. I cannot promise it, but I have been struck by the very positive attitude of a lot of business in the city.

Q68 Fiona Mactaggart: If the skills plan is not going according to plan, as it were, if you have developed this thing, everyone has bought into it, theoretically, and so on, if actually something completely different happens, enrolments are much higher in one area and much lower in another, in practice, what happens then; that is what I have not quite got?

Mr Livingstone: You are asking me what I do if I fail. There was no Plan B for the congestion charge either, we set out to make it work and we will set out to make this work. There will be some things that work better in some areas than others; it is a question of making sure that best practice spreads very rapidly through this whole sector. It is a frame of mind I do not actually have. I always assume I am going to win. I even thought we might win the 1983 election, so it can be overoptimistic at times.

Q69 Chairman: Can I push you just a bit on the apprenticeship, Ken. Here is a clear underachievement already in London, in terms of apprenticeship, and with the ability increasingly for older people to get into apprenticeship, surely that is a campaign worthy of not only your leadership but one of your advertising campaigns? It just seems to me, if all the figures that you put in for evidence when you gave us the skills, the high rate of households with no-one in employment, the lack of training, there is a real challenge here, in a complex society where people earn a King's fortune, it used to be called a King's fortune down in the City, and just down the road, just a couple of blocks away, there are people who have not worked, who are living on very low incomes. Surely, it is apprenticeships that would open up, for many of these people, a real life; is not that something which should be a priority?

Mr Livingstone: I could not agree more. I am struck by the contrast between Canary Wharf and just a mile down the road you have Brick Lane, a hive of entrepreneurial enthusiasm in the Bangladeshi community, and yet very, very few Bangladeshis are employed in all those great office blocks in the centre. The LDA is running a strategy to bring people into work from communities that have been excluded. I think there are added problems. Shell came to see me a few months ago about environmental and other matters, but at the end they touched on the fact of something they had established, which was a Muslim workers group, because a lot of firms had got their head round the fact, how do you reach out to women, how do you reach out to black and ethnic minorities. There is a particular dimension about religion, and in this city seven, eight per cent of the population are Muslim, they have particular views about, first, how you welcome them, then how you make provision for them to be able to practise their religion, and so on. Shell had come up with this Muslim workers group actually to analyse that, because they recognise, if they are going to do business in the city, you cannot really write off the best part of ten per cent of the population and their skills. I think that is important. Really it will come down to, as you were saying, advertising, cajoling, banging the drum for this; the alternative will be to go back to the old days. I recall, when I was a schoolboy, I read H G Wells's History of Mr Polly, who described his own apprenticeship where he had to sign a legally-binding agreement to complete the seven years, and during that period of time he would neither drink nor have sex. I do not have those powers. I am sure it would deliver a big increase in apprenticeships and a decline in population.

Q70 Chairman: You do have other powers, not those, but those of us who use London taxis, for example, would look at that, which is a wonderful apprenticeship really, although it is not a formal apprenticeship. As someone who has just been on a visit to look at environmental innovation near Paris and yet again seen the dreadful taxi system that Paris has compared with that of London, what would worry someone in London is that you see, I do not know if you have the figures, a very small number of ethnic minorities, or specific ethnic minorities, actually driving London taxis?

Mr Livingstone: We are very disturbed about that. The figures for ethnic minorities are pathetically small and yet, of course, the moment you get a minicab you will find that the balance is the other way around. I think there may have been, I cannot prove it, two Lodges operating in the old Public Carriage Office and there were ways things were done which would not conform to much of what we understand currently as acceptable practice. We have made substantial management changes; we have just brought in somebody else to turn this round, because we are not going to continue to accept it, and we have appointed a black woman to head the Public Carriage Office. I am sure this was well received by all my cab-driving friends, but we are going to have to change. We plan to have taxi schools in east London and we are going out to do that, because it is very odd, compared with, say, the situation in New York, where the Yellow Cabs are quite well reflective if not more of New York's ethnic minorities seem to be driving Yellow Cabs.

Q71 Chairman: I did not want to undermine the fact that most of us have got into New York cabs and Paris cabs with people who do not know where on earth you are asking to go to, and the training system of London is rather different.

Mr Livingstone: Occasionally, who do not speak English, which also causes a problem; English is their second language.

Q72 Stephen Williams: I assure you, Chairman, if you come to Bristol, that taxi-drivers are very likely to be of Somali and Bangladeshi origin, so do come to Bristol. A question for the Mayor on who has the final say on some issues. I am just trying to find out where the power actually lies under this new structure. We have heard some quite interesting statistics about the share of funding across England for LLFE, I think, if I heard correctly, a quarter of the funding is in London, despite the fact that the demographics do not suggest that. We also heard later that the apprentice share for London is actually quite low, when compared with the rest of England. In terms of where the funding goes, who makes the decision, is it the Mayor's office or is it the LSC?

Mr Livingstone: We will devise a strategy and the Learning and Skills Councils will then implement that strategy. If I had thought, when Ruth Kelly made this proposal, that this was simply a sop, I had some platform to drone on about skills whilst nothing changed, I would have said "No," but both in my dealings with her and with the two gentlemen to my right I do not have the slightest doubt that there is a desire to make this work without breaking apart the national structure. I can understand, it would have been very nice for me; if I am just given the whole thing, total administrative control, I love that, but then what about the rest of the country, would that have demoralised it, would it have started to fracture. Ruth Kelly had two priorities: one, to improve what we do in London, but not to do anything which damaged the national structure. We have agreed to make that work and if we do not make it work that will be shame on all of us.

Mr Banks: Just as a point of fact, as well, the grant method, now, going forward, identifies the money which is going to be spent in London separately from the rest of the country, so it is transparent and clear.

Q73 Stephen Williams: And that grant letter comes from?

Mr Banks: It comes from the Secretary of State for Education and Skills to the Chair of the Learning and Skills Commission.

Q74 Stephen Williams: The budget for London is fixed centrally and given to you and the Mayor then decides the strategy; is that right?

Mr Banks: That is right.

Mr Livingstone: Which is almost exactly the position we have now with the similar power I am being given in allocation of housing grant.

Mr Banks: If there are difficulties locally within London as to how that should be spent then the Skills and Employment Board and David Hughes, as the Regional Director for the LSC, will resolve those, just as we do resolving priorities elsewhere around the country. As Ken said, in the event that there is an irreconcilable difference in priorities then the LSC National Council will look at it, I guess, and ultimately Ken will go to the Secretary of State and it will be addressed in that way. The sense of partnership and willingness to make this work, I think, is something that we would want to communicate and force very much on the LSC side of the house as well as on the Mayor's and the GLA.

Q75 Chairman: I am really worried because, Ken, I have never seen you in such a harmonious relationship with anyone. I have never seen you nicer, with two people to your right.

Mr Livingstone: Let us just get it straight, I am in a different role. When I was a Member of Parliament I was fighting for a particular ideological position, which happened to be in the minority, so I was very difficult all round. Here, I have been given an administrative role in London and I have got to deliver things, and it is not particularly ideological.

Q76 Chairman: Ken, I realise that, and it was not a criticism. What I was going to say was, look, one of the things that could loom pretty fast is that you would put your priority for the older worker, getting older workers, the long-term unemployed, back into work, but they are absolutely stuck in a groove, saying, "We're going to put the money into younger people, and not people above 25." Indeed, they are taking money away from community education. There is a college, Morley College, one of your famous colleges, across there, being starved of resources because of this LSC determination to draw money away from community education and older workers and put it in a different direction. I can see you having a real fight, quite soon?

Mr Livingstone: These are issues of balance and debate. I suspect all of us will take the view that everybody you get into work is A+ and therefore whether it is an elderly person or a younger person they are both going to be my priorities. I cannot believe actually that anyone in the Learning and Skills Council will not share the enthusiasm I have for getting older people back into work as well. I say 'older', a lot of these people are only in their thirties but they have just never had a job.

Q77 Chairman: Is there going to be conflict, Chris?

Mr Banks: Inevitably, there are going to be differences of emphasis and different priorities, are there not, Chairman, and you would expect that; but I do think that the tools are there much more now to enable us to be more flexible. You will remember, there is a right for all adults to have first level 2, which is the equivalent, which is what we are aiming for.

Q78 Chairman: With the resources to accompany that pledge?

Mr Banks: That is a pledge which has been made and our job is to deliver against it.

Q79 Chairman: With the money?

Mr Banks: Our job is to deliver against it.

Q80 Chairman: I have not seen any statement from the Department for Education and Skills which says that pledge carries with it the wherewithal to deliver it. Have you seen that?

Mr Banks: In the grant letter, you will see the money that is being made available to enable us to deliver on that commitment. It does not mean 100 per cent of everybody who is entitled to it gets it the first year, does it, but it does mean that is a focus area for us. More of our resources are going into funding those priorities, which include Train to Gain and the first level 2 entitlement, which is all about the adult workforce. We do recognise, as has been said a couple of times already today, that about three-quarters of the workforce in 2020 is in the workforce already, or at least of working age, so of course we have to prioritise it.

Q81 Paul Holmes: I have a couple of questions, just following on from that. For example, Ken has often said there should be more money going into higher-level skills in London, he said it at the start of this meeting, but, of course, the Government and the LSC are saying it has all got to go into basic skills. How do you resolve that tension?

Mr Hughes: We are not saying that. I gave the example that we are putting £20 million into level 3, to help women in the workplace get to level 3 quickly; that is a pilot. If that is successful we will be going back to Government to ask for more. We are very keen to work with HEFCE to look at their spend, £1.3 billion in London, I think it is, to see how much of that can be getting people in the workplace, in particular, the skills they need to stay in the workplace and be effective. Yes, we are focused on basic skills and skill for life and level 2 because of the worklessness figures, we have been talking about that all afternoon, but the deprivation, the disengagement, the work we need to do to bring those people to get job-ready is enormous. That is what we are committed to, as well as getting people in the workplace up to very, very high-level skills.

Mr Banks: I would just add that this distinction between level 3 and level 4 is actually increasingly difficult, and in some cases irrelevant, I think, particularly if you are thinking about employers. The idea of having one brokerage service which will enable you to talk about all your workforce development needs but actually stop at one level, in terms of funding, is a difficulty, and we are very aware of that, and you have hit on, I think, a really important point. We are running two pilots, unfortunately my daughter lives in London and that is a shame, but where we are including level 4 in the Train to Gain pilot, working closely with the Higher Education Funding Council for England, so that we can see then how much of a difference we can make to employers and their staff by offering advice on the broad spectrum, from basic skills all the way up to higher-level skills. That takes quite a lot of ingenuity, at the moment, flexibility in the system, which is quite new for us, but we identify the issue and we are trying to find solutions to that.

Q82 Paul Holmes: Are you as optimistic, Ken, that it will be so easy?

Mr Livingstone: As I said, if I were an optimist I would not get out of bed in the morning, i.e., you have to live with the negativism of some of our media, the way I have. Clearly, there are going to be debates. There will be times when I get angry that I do not get my way, but I do not have the slightest doubt that this new structure will give us a greater return on the level of investment than we would get without it, and that is what we are aiming for, at the end of the day.

Q83 Paul Holmes: You said there should be more money going on higher skills, but you also said, in the bid that you put in when you said you were to take over the whole programme in London, at paragraph 3.3, that there is also a high demand for basic skills as well as flexible English for Speakers of Other Languages provision, to ensure that London's most disadvantaged communities are equipped to enter the labour market. As well as entering the labour market, there is the whole question, which we have heard about a lot in the last few weeks, of integration of communities, and if they cannot speak English very well they cannot integrate very well either, so there is the job side of it and there is the integration side. Only last week the Government announced radical changes to the funding of ESOL courses, which the colleges in London are up in arms about; no longer is it going to be offered to asylum-seekers, it will be free now only to people on benefits, where it was free to people above £15,000 a year previously as well. They are going to rewrite parts of the ESOL courses, which were rewritten only two years ago. As I say, the colleges are up in arms; they say this is going to go counter to what you have said in your bid, for example?

Mr Livingstone: I do not agree with the Government's decision on that, and I made that clear to the Government at the time. I think it is a mistake.

Mr Hughes: We have spoken to the principles of the 20 biggest providers of English for Speakers of Other Languages and we are in dialogue with them. We are meeting with them, there is a meeting this afternoon that I am missing because I am here, there is a meeting on 15 November, to be able to get into dialogue about those changes, because I do not think they are quite as severe as you make out. I think the asylum-seekers issue is a big issue that some will have problems with, but what we want to do is feed back to ministers what we think the impact will be in London and what we want to do to be able to manage the implications of those changes, because some of the changes are good. A lot of it is about making sure that people get recognised qualifications, of the quality that they need, that they are progressing through the system to higher-level skills so they can get into jobs. Some of it is about recognising that, for some people, actually they have got skills but they just need English for work, and charging for that, when employers are bringing over people to work in quite skilled jobs, we think is appropriate. I think you can blow this one up into a big one. I do not think it is quite as horrific as perhaps you suggest.

Q84 Paul Holmes: I met with three principles of London colleges last week, who were pretty cross, when this had just been announced, and they were not very happy about it. They pointed out that, for some of the colleges in London, a very large amount of their business, so to speak, is in this field and if there really was a big impact on this then some colleges are going to be in difficulty. It is also partly the speed at which the whole thing is done. As I say, they revamped all these courses in 2002-2004 and now some of them are revamped again. They have hit the targets, about getting external qualifications and targets, and everything, and then, just like that, they are told it is all going to change again, and how do you plan properly when it happens that quickly?

Mr Livingstone: I answered that question at great length earlier on.

Q85 Chairman: I have one last question, because I do not want to drag you back here again, because you have done a very good stint today and we are grateful for your time. Do you think that it is education and training which is the real route to making young people in this country good citizens?

Mr Livingstone: I do not have the slightest doubt about that. If you look at the pattern of how economies develop, virtually every year that passes those countries which rely on the sale of their raw materials, whether it is coal or gas or whatever, the balance shifts against them in favour of those that are developing the skills of their workforce, whether it is into finished manufactured goods or into business services, you may get a temporary blip with oil, and so on. I was very struck, compared with the attitude of business 25 years ago, when I became Mayor and UBS invited me over to speak to the lesbian and gay, bisexual, transgender group, and I thought there were not many banks in the City which had one of those back in the early eighties, and there was the Chief Executive, senior executives, the whole lot, all there at the meeting. At the end, they said, "Well, we realised that, if someone makes a homophobic or sexist or racist remark and someone in whom we have invested eight or nine years in training and developing walks out, this is a stupid mistake." It is. Everything about this city is going to be driving people's skills. That is why it has got to be used. A lot of jobs will require well beyond degree level, but there is always going to be a layer of people servicing that economy; we have to make sure they get a fair share of the rewards of doing that. In this city, very often, a company director in London will earn much more than a company director in most of the rest of the country. Someone stacking shelves in the supermarket very often is earning less than they are getting in Newcastle and also finding that money produces a much lower quality of life. That is why the focus is on, very importantly, getting everybody back into work.

Q86 Chairman: Can I push you on the next stage, just on that, because you know that, in parallel to this inquiry, we are looking at citizenship, and we are a bit puzzled. We had Trevor Phillips in here last week and Trevor and you seem to disagree on some central core aspect of citizenship. I asked Trevor what that was all about because, being slightly outside, knowing both of you, a lot of people are not quite sure where the disagreement is; could you tell us on what you disagree?

Mr Livingstone: I think Trevor judges his effectiveness on how much he is in the newspapers, and, as I have to confess, I have felt that way myself, occasionally, but I have the job of delivering real changes, and so does his organisation, I think they have lost sight of that. I have been struck particularly by the inaccuracy of some of what he said; when he talked about a country sleep-walking into segregation: not in London. The Census in 1991 and the Census in 2001 show that there is a move away from ethnic concentrations in wards, people are mixing more. I think there may very well be different positions and problems in other parts of the country, but in London one person in 20 is of mixed race. This is not a city which is dividing along ethnic lines. Racial incidents have declined in each year for the last six that we have been monitoring them, they are down 38 per cent; anti-Semitic attacks are down almost exactly the same. This is a city where people are comfortable with difference and I think the fact that some other parts of the country have not come as far, and certainly many parts of Europe have not, is not a reason to say, "Well, this has failed." I think London demonstrates that multiculturalism does work, and there are shared values; people might also go out and vote, they want their kids to get a decent education. There was great controversy when I invited Sheikh Al-Qaradawi to London, who was depicted as a fundamentalist monster. All four of his children, girls, came here and got degrees in science. I think that is the rant behind all the nonsense and the flim-flam in the paper. London works and its ethnic dimension is one of its greatest strengths.

Q87 Chairman: Why does it work so well?

Mr Livingstone: Many of the unpleasant rows which are happening in other parts of the country we went through in the seventies and eighties. If you think back, crudely characterised by the Daily Mail as 'black bin-liners', 'black coffee', all those arguments; at the core was a real issue, that councillors and faith leaders were going out and making the case for multiculturalism and that meant saying to councillors "You will house black and Asian Londoners in new council accommodation." Making sure, in that case, it was the public sector and now it is happening in the private sector, but the public sector will take a lead in employing black and Asian people. I suspect, in one or two parts of the country, councillors did not go out, did not make that case, and you have ended up with more strongly segregated communities and people not having a reasonable spread across the range of employment. To start to say, "Well, it hasn't worked overall," is too simplistic an attitude. It has worked very well in London, it has worked less well in some other areas, but perhaps other areas have not made the same effort we have. The idea that we focus on now, that Muslims are part of the problem and Muslims are living separate lives, well they are not; a lot of Muslims are out of work, they are two and a half times more likely to be out of work if they live in London than white people are, and that is not their fault, necessarily. They have been failed by an education system, or perhaps there is discrimination in employment. As well as the debate on the veil, if I could hear politicians making those points, I think we would be having a more balanced discussion.

Q88 Chairman: Thank you for helping us with our inquiry, Ken.

Mr Livingstone: I hope you will have me back again.

Chairman: We will. Thank you very much, Chris, David, Ken; it has been a very good session. Thank you very much for your help.