Examination of Witnesses (Questions 68
TUESDAY 12 DECEMBER 2006
Q68 Chairman: Welcome. Thank you
very much for coming. I am sorry that we kept you waiting a few
minutes, but we are trying to pack in quite a lot. I do not think
we need to squeeze your evidence to accommodate the slight overrun.
Thank you for your very good written evidence which I know the
Committee very much appreciates. I ask you to introduce yourselves.
Ms O'Grady: My name is Frances
O'Grady and I am Deputy General Secretary of the TUC. My colleague
Adam Lent heads our economic and social affairs department. Tim
Page is one of our senior policy officers concerned with economics
Q69 Chairman: I begin by asking the
same philosophical question that I put to the previous witnesses.
I should like to know whether you have a different understanding.
What is manufacturing industry in the UK?
Ms O'Grady: What we are interested
in is the way it has changed and modernised. We believe that it
has an important future in the UK economy. I hope that we have
moved on from the days when manufacturing was seen as old industry.
It is now recognised that it is increasingly a sophisticated industry
and its future depends on moving up the value chain, involving
as it does much more complex functions including greater emphasis
on design, technology and service and providing more niche markets.
I know that you want to get into the meat of this quickly, but
I should like to thank you for the opportunity to submit evidence.
Manufacturing is very important to the TUC as a crucial source
of what we hope will be an increasing number of quality jobs.
Certainly, it is important for the economic prosperity of the
country, but we believe that it is essential for a greener future
for the UK. There is huge potential including export and production,
not just technology, in green manufacturing industries. We also
make no apologies for saying, particularly in light of events
in some northern towns, that we also regard it as very important
for social cohesion. There is also a social dimension to this
Q70 Chairman: I wonder to what extent
you think that perceptions of manufacturing as being about assembly
and screwing things together are still valid. Many of the companies
that your member unions have relationships with do relatively
little manufacturing now in the UK. They do a lot of it overseas
but they are still very much British companies, for example in
the pharmaceutical sector.
Ms O'Grady: It is certainly a
more complex picture. In some instances there is still a future
for relatively low value manufacturing, not least because of the
proximity of markets and so on. I think that it would be extreme
to talk only about the high value future. But we hope that in
our contribution today we will be able to challenge what we see
as a false polarisation between manufacturing and the new knowledge
economy when clearly there is a massive overlap between the two,
not least because manufacturing provides three-quarters of all
research and development in this country. Following on from the
tail end of your previous discussion, we would challenge what
we see as a false choice between free and open markets on the
one hand and a Stalinist central planning approach on the other.
There are a few choices in between. As mentioned by one Member
of the Committee, the issue is not whether we intervene but whether
we are getting full bang for our buck in terms of the effectiveness
of our intervention and how we define what the benefits of that
intervention should be and what the future is.
Q71 Rob Marris: Your submission talks
about the "post-voluntary skills policy framework" to
break the "low skills equilibrium". Does that mean up-skilling
by compulsory training?
Ms O'Grady: Certainly, the TUC's
position has been very clear not just in recent years but over
a number of decades. Clearly, the purely voluntary approach has
failed, and that was confirmed by the interim and final report
of Leitch. Currently, our skills provision fails to meet the ambition
that would allow us to become genuinely competitive in the world
economy. What we argue is that there is still scope for improvement
on the supply side, but sometimes the focus on that side has been
displacement activity and a ratcheting up of demand. Clearly,
how one does that is a big debate. In this country one in three
employers, despite the fact that they have a fair bit put on a
plate for them, for example by Train to Gain, still do not participate
in the training of their workforces. Too many workers never get
trained at all. On the other hand, we have not fully harnessed
the demands of the workforce, which are great. We know from our
own union activity that once people get the learning bug, as we
describe it, they are caught for life. We believe that rights
to train would help boost demand. As a basic first step we have
argued that workers should have the right to train up to level
2. We are pleased that the Leitch report has said that if sufficient
progress towards ambitious targets is not made by 2010 consideration
should be given to introducing a right to workplace training.
Q72 Rob Marris: You are talking about
compulsion on employers. What about the anecdotal evidence, which
is widespread in the Black Country and West Midlands where I come
from, that there are training opportunities available to employees
who do not take them up? How do we encourage workers to become
enthusiastic about training?
Ms O'Grady: All the evidence nationally,
including in the Midlands with which I am pretty familiar, is
that there is an enormous appetite amongst the workforce. Clearly,
we have a big job to do to build people's confidence and their
ability to take opportunities to train. Again, our experience
through our 15,000 elected union learning representatives around
the country is that it is very simple: if you provide training
in paid working time, ideally where people are working, you will
get not just high take-up but high completion. I think that through
our union efforts we have one of the best completion rates because
we tend to know our own members and what suits them. When one
organises training around shifts, for example, and people's caring
responsibilities in a way that suits them and builds their confidence
and does not put them down, especially if they did not have a
brilliant experience at school, it can be incredibly successful.
What we still have difficulties with is engaging employers. In
manufacturing as much as in the rest of the economy there is an
hourglass picture on skills. We do well when it comes to highly
educated numbers at the top. We have very large numbers of low-skilled
and under-qualified people at the bottom and a shrinking number
of technical skills which are crucial to the future of manufacturing
in the middle. We have to tackle that. The TUC argues that just
doing more of what we have done in the past, asking people nicely
and saying it is good for them, in itself does not seem to work.
We will have to do more. Certainly, we believe in individual rights
and in collective bargaining and doing more in terms of getting
employers to invest and put their hands in their own pockets,
not just the public purse, must be part of the answer.
Q73 Rob Marris: Do you support a
Ms O'Grady: A number of employers
voluntarily do. As you will be aware, two of the first sector
skills agreements in construction and broadcast and entertainment
employ that. Why do they do that? They want a level playing field
Q74 Rob Marris: I appreciate that,
but do you think it should be mandatory in other sectors?
Ms O'Grady: The good employers
are pretty fed up with being undercut by poor employers and they
want a level playing field, too.
Q75 Rob Marris: Does the TUC support
compulsory training levies in other sectors where they do not
have those voluntary agreements such as you have delineated in
those two sectors?
Ms O'Grady: We are not hooked
on one solution. We know that we have to get more employer contribution,
in the same way we are very pleased that there has been a significant
increase in government investment, but we want employers to put
more in, too. We know that individuals already contribute a lot.
Many of the collective agreements that we have are about people
training in their own time. The first principle is that everybody
has to put in. How we do it is something that we are very willing
to discuss further. If there are better ways of doing it we want
to hear them, but it simply will not happen if it is left on a
Q76 Mr Binley: I am chairman of a
company. I welcome much of what you said. I think it is some of
the most commonsense stuff I have heard today and in terms of
training you have cut through to where the real issues lie. In
many respects it comes down to the workplace. I was delighted
to hear that. Do you believe that artificially encouraging formal
training will lead to the "tick box" culture? I believe
that we have too much of that already and it is holding back good
training in this country. Do you believe that to be the case?
Ms O'Grady: Certainly, we have
no interest in a "tick box" approach either. We have
heard concerns from a number of employers we work with about the
need for more flexibility and so on. From our point of view, representing
as we do working people, in an increasingly globalised economy
where people have fingers wagged at them and are told that they
will not have a job for life and must expect to have many more
jobs, and perhaps different skills, and upskill continually for
life, it is important for them to have qualifications because
that is their passport from one company to another. It cannot
just be training for the task. Therefore, in relation to apprenticeships,
which are very close to my heart and the TUC's more generally,
we have collaborated constructively with employers through sector
skills councils and the LSC to look at cutting some red tape,
making it more flexible and so on, but there are certain minimum
quality standards that we want to see in all apprenticeships.
Perhaps I may be cheeky and get in the point that we would also
like to see a better balance in terms of gender take-up particularly
in manufacturing and some of the traditionally male-dominated
areas so that manufacturing companies are not left to fight with
half their armies and do not use the full pool of talent out there,
including a lot of young women who with a bit more encouragement,
information and support would certainly be keener to take up the
better wages associated with engineering than they might get from
childcare, for example.
Q77 Mr Binley: To pursue this a little
further, you represent many industries that in terms of number
of employees are in sizeable decline. Many of those are localised
craft industries. I represent one of them: the shoe industry in
Northamptonshire. The numbers have reduced dramatically. There
is a smaller skills board and training in-house is really the
only way to deal with it. We no longer have technical colleges
doing it. How do we properly get down to training in-house in
terms of financing it and the responsibility of both the employee
and employer in a way that can really make it work and not have
the sort of bureaucratic nonsense in training that we have had
so often in the past that really does not get through to the real
core of the matter?
Ms O'Grady: I think credit should
be given because progress has been made in recent years. Whilst
the FE (further education) system is far from perfectnot
least because it is still under-funded in our viewin our
view there has been real progress in satisfaction levels and participation
by employers. That must be good news for everybody, but clearly
we are not where we want to be. Frankly, it is more expensive
to train people on site than it is to get bums on seats in big
numbers in colleges. Some of the economics of that need to be
worked through. We have a number of collective bargaining agreements
with employers, on which we base our experience, where we have
come to what we believe are commonsense arrangements that are
about everybody putting in some money. For example, in Cummins,
an engineering firm in the Midlands, we have recently established
a workplace learning centre on site. The union learning representatives
take an equal role with management in running that centre and
come up with a training plan. For the first time people do not
just get the technical skills they need, but a lot of people who
have kept hidden for a long time their literacy and numeracy skills
are coming out and getting those needs met. Sometimes, when we
talk in different boxes about team-working and communication skills,
if people do not feel confident about their literacy and numeracy,
that has a knock-on effect on everything else. We have some good
news stories where in time-honoured fashion workforce representatives
in the form of unions, employers and public sector providers get
round the table and hammer out a sensible approach to meeting
the needs of a particular company. But I think all of us acknowledge
that manufacturing needs to do more to be forward looking and
strategic. I recognise that a number of manufacturing companies
in particular operate on relatively slim profit margins. When
they are considering costs in terms of competition often the training
budget is the first to go. That is one area of intervention that
needs to be addressed and seen as legitimate. If one is to help
people break through some of those difficulties and move up the
value chain not just skills but R&D, product development,
relationships with HE, (higher education) and all parts of the
package need to be put in place at company and sectoral level.
That is the kind of hands-on practical thinking that we want to
Mr Binley: I did not quite get the answer
that I wanted in terms of how we provide money for this. Maybe
you will think about it and write to us. I would be really interested
in that matter.
Q78 Chairman: Your answers are passionate
and persuasive, and a little on the long side. We have a lot to
get through. I should say that a number of Members of the Committee
have relationships with trade unions of one kind or another. I
do not regard them as declarable interests because they are on
the record. It is just worth mentioning that to put other colleagues'
minds at rest.
Ms O'Grady: I can relax on the
Q79 Mrs Curtis-Thomas: One of the
factors highlighted in your submission is the "lack of a
robust social partnership approach to skills, something that underpins
arrangements in many European countries". Can you give me
examples of such a social partnership in another country? The
other question related to that is: would one define such a social
partnership in Europe as a company that has sustainability at
the heart of its business plan? Sustainability means not just
keeping the customer happy and products and services going but
also ensuring that we have employers who are knitted into the
process and use the environment from which they come to sustain
the business in the long term. I want to see whether there is
an analogy between those social partnerships in Europe and what
British companies are now beginning to talk about in terms of
the sustainability model for their business.
Ms O'Grady: First, there is evidence
if it is not cited in the report we will follow it up from the
World Bank, the OECD, the Work Foundation and a number of other
organisations that there is a clear link between high performance
workplaces, ie good productivity, and high performance work practices,
including recognition of trade unions. When one looks at skills,
nearly 20% of the productivity gap with Germany and France comes
down to skills. We see the logic of a social partnership on the
skills front as helping to close that gap. Clearly, in France
and Germany there are very different institutional arrangements,
including collective agreements at a sectoral level. I make no
apologies for thinking outside the box. In Germany employers are
part of their local chambers of commerce. Those bodies will levy
money and set out a skills plan for the sector which all employers
contribute to financially and practically and which are subject
to collective agreements with trade unions. I know that Germany
is criticised for being a little too rigid, but it may surprise
you to hear a trade unionist say that one of the problems in the
UK is lack of organisation among employers. We have the advantage
of one trade union centre in the UK, but there is difficulty in
making agreements that stick and can apply for the long term.
Therefore, we do see value in a social partnership on skills.
We would need to look closely at how better to organise employers.