Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 68 - 79)



  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 and industry.

  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 discussion.

  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 training levy?

  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 amongst themselves.

  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 voluntary basis.

  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 perfect—not least because it is still under-funded in our view—in 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 see happen.

  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 promotional side!

  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.

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