Examination of Witnesses (Questions 189
- 199)
TUESDAY 16 JANUARY 2007
AMICUS
Q187 Chairman: Gentlemen, thank you
very much for coming. We are running about 10 minutes late but
that is not bad for the volume of information that we have to
get through. We are very grateful to you for your written evidence
to us. As I always do, can I ask you to begin by identifying yourselves.
Mr Simpson: I am Derek Simpson,
General Secretary of Amicus, and on my right is Roger Jeary, our
Director of Research.
Chairman: Thank you. We are going to
try, in accordance with your wishes as well, to concentrate most
of our time on skills, quite a lot on public procurement and perhaps
we might briefly have a relatively economical use of time on the
UKTI section of our inquiry, that is probably how it will work
in practice.
Q188 Anne Moffat: I have read your
recommendations about skills and your report, the report is very
well written and easy to read. I have also read the press release
that you sent out, the part where you said taxpayers were being
mugged on skills. I want to know what you mean by that or have
you covered that by giving us the recommendations in terms of
what we should be doing about skills. The concern that I have
got is that if we are being mugged on skills and you have got
some very good ideas about where we go, you are also saying that
the skills industry is being given greater priority than the manufacturing
industry. Does that not mean that there is a conflict there? I
do not quite grasp that.
Mr Simpson: The language is interesting
and I think there is a conflict. I think I have to start the answer
by suggesting that our concern is that manufacturing has been
given a lower priority in the skills industry, the education industry,
compared to, say, the arts less than the manufacturing subjects.
I think that follows from the fact that our impression is that
somewhere along the line the UK Government or governments, not
just the current one, has given up on manufacturing because of
the belief that we cannot compete on manufacturing and price.
We have just heard Ian McCafferty say that quality and price are
amongst things that can be mutually exclusive. By the way, "you
get what you pay for" is another good point. If price is
important then none of our industries will be in existence shortly
with local manufacturers in charge because we cannot compete on
price. How does that link to this comment about being mugged down
in skills? The answer we are told, and not least of all by my
very good friend, Gordon Brown, who regularly tells me this, is
that we need a high-skilled workforce so that we can concentrate
on the new creation of manufacturing and production skills, science
and so on. Why we say "mugged" is because none of the
programmes that are in place can possibly achieve that. The best
are aimed at NVQ level two. Most of industry would tell you that
they want at least NVQ level three as almost a starting point
and some of that was reflected in what Ian was saying earlier,
that it is what comes to industry, but, of course, that is education
rather than what happens in training. What happens in training
is that it is not the aim to achieve the kind of levels of skill
that will be needed to compete in the event of a complete collapse
of our manufacturing industry, which is what is actually happening
and has been happening for some time except people do not want
to own up to it.
Q189 Anne Moffat: If we got it right
and we focused more on higher education rather than further education,
just on the points that you made about the highest level of qualification
in terms of the skill base, then would that sort out the problem
of manufacturing or at least one of the problems that we have
with manufacturing?
Mr Simpson: It would certainly
help. I am not overly an expert in this. I used to be a governor
of a local college in Sheffield, I know what the dynamics are,
it is cheaper and easier and more attractive to train hairdressers
than to train engineering craftsmen. It takes less resources
to put in and you can turn them around quicker, bums on seats,
the funding regime meant that was what the academics looked at
and you got the results. It is much more difficult to get the
results in the more science-based subjects so teachers are under
pressure to produce good results, increased A-level results but,
of course, it is easier to do that in soft subjects, it is harder
to do it in maths, science and technology. The whole system is
driven to lean away from manufacturing and against the background
that people are not going to demand manufacturing training because
the manufacturing industry to the average person in the street
is rapidly disappearing down the plughole so why would they want
to be trained for an industry in which they may have no future
prospects of employment. The whole thing fits together nicely
and China happens to be very conveniently coming along and doing
it all much cheaper, so why bother. That is what the fundamental
problem is.
Q190 Miss Kirkbride: That follows
on to my question about the high value-added approach and what
we can do to get that more embedded in the system. Do you think
that the National Skills Council and the Leitch report, if it
is implemented, is going to make a difference to exactly the scenario
that you set out?
Mr Simpson: I have got déja"
vu of being sat watching Question Time looking at you
because I think I have seen you on that programme.
Mr Hoyle: She has her hair more done
up here!
Chairman: She was attacking hairdressers
earlier.
Q191 Mr Hoyle: She has some make-up
on.
Mr Simpson: I am not that conversant
with the Leitch report, but everybody quotes these things. I have
read a little of it and some of the highlights. What I think at
the moment is there is a lot of people involved in this exercise
of trying to answer the question about skills. There are many
quangos, I am told by my piece of paper that there are 17 quangos.
I heard someone say earlier on there were many more bodies looking
at skills. It seems to me that there is an argument to bring some
of this, for want of a better word, bureaucracy down. I would
be more concerned if they were addressing the real questions and
I do not think people are addressing the real questions. In fact,
the people who know what the real questions are are trying very
hard not to let the rest of us address them. What are we training
skills for? I remember, again from experience, the attempt to
increase the number of graduates and university places. That resulted
in the university graduates standing in dole queues because there
were no jobs for them. It is wonderful to talk about skills, training
and all the rest but, again, as I keep asking my very good friend
Gordon Brown when we have got all of these high skills which,
of course, the plan will not produce, where are we going to employ
them; because they might be tied together with the argument about
how do you tackle the problem of globalisation and its impact
on industries like manufacturing, which I believe is still key
to our economy, and what are we doing different from, say, for
example, France, Germany and Italy and these were matters that
you mentioned earlier. You need to ask why is the rate of decline
in manufacturing double in the UK that it is in France. When you
look at questions of procurement, you have got to ask yourself
the question, why is it that Germany, France and Italy are much
more focused on trying to maintain their industries in spite of
China. You have got to ask yourself the question why has the German
heavy manufacturing industry got a positive and growing positive
trade balance with China whereas we have not in that industry
because we lost that industry through the lack of the approach
that is needed. These are the questions that nobody is asking
because we are asking things that do not lead anywhere. Let us
get lots of skilled people through, where are we going to position
them? The answer is unless you have got the other side of the
equation in place, it is going to result in the same effect where
we are going to have highly qualified people and no jobs.
Q192 Miss Kirkbride: I would love
to go down all those roads but the Chairman will pull me to order
because I think my colleagues are going to ask about that. I thought
your first remark was quite fascinating about why we do want more
hairdressers. Given that there is manufacturing out there and
given that whenever you go to an employer they talk about skills
and all of this, why are the employers not demanding more engineering
skills and all of these things that actually count in industry
and what can we do to make the system deliver?
Mr Simpson: I think the first
thing that I would say to that is that manufacturing employers
are different from many other employers. Their real interest at
the end of the day is to produce a product for the shareholders;
and skills training, particularly in higher skills, is very expensive.
They are not prepared to do it. What they say is why do you not
provide it. The object is to increase taxation to pay for that.
At the end of the day the only system that will work is that the
State will provide education up to a certain level, people will
go into industry and then the training is possibly supported by
the State, but also by the employer. That will not happen unless
there is a statutory training limit, it did not happen in engineering
and as soon as the Engineering Industry Training Board system
was cancelled, training virtually collapsed in the engineering
industry. Employers are happy to let employees do the training
and then poach the result. It is classic, it is not a criticism,
it is what happens, and if I were in business I would probably
do exactly the same thing. It is not a political point it is just
a fact of life. If you want to produce a profit, let me say in
fairness, some more forward thinking employers will recognise
that a highly skilled workforce will produce profit so training
is in fact a good investment for them. Unfortunately, that is
only some and it is certainly not the majority.
Q193 Miss Kirkbride: Do we assume
from your previous answer that the Germans, the Italians and the
French have a compulsory training method and that is why it works
for them and not for us?
Mr Simpson: I am not entirely
sure what the training regimes are in those countries but the
other driving force there would be if you link it to the procurement,
there is a push. Lindsay mentioned Alstrom and Alstrom was a very
good company. I know, and still it is true, that there is not
a French train built outside France, there is not a German train
built outside Germany and there is not an Italian train built
outside Italy, and yet, we, as the second largest user in Europe,
are almost down to our last train builder. That is a driving force
that will require, whether it is by state or employer, the workforce
to build the trains in Germany, to build the trains in France
and to build them in Italy. We do not require people to build
them and we wonder why our training systems do not work or are
not in existence, the answer is apparent. You know what they say
about any business or any organisation, follow the money. Follow
the money, that is where the answer is, follow the money, and
when you do that you see what a number of these things are, you
drive down to the bottom line. We have not got training programmes
and we are not successfully addressing it because in relation
to thisand I do not know what we are doing in the service
industry, I am not commenting on that, it is manufacturingwe
just are not competing.
Q194 Chairman: I would like to ask
what you mean by a clear skills matrix and career map for specific
workers, what that means in practice, who would deliver it?
Mr Simpson: I probably said it
but whoever wrote it will answer.
Mr Jeary: I think what we are
addressing there is looking at skills not just what is needed
now but what is needed in the future. Clearly what industry may
do, and we heard a lot about it from the previous witnesses, is
train people on the job to do the job they are employed to do
at that time, yet we live in a completely changing environment
the whole time within individual factories, within sectors of
manufacturing and across manufacturing as a whole. What we are
talking about is looking at building up skills, matrices which
attach to sectors which attach to individual companies and which
attach to individual employees within those companies so that
we have a programme of skill training which is needed to equip
those people not only to be able to do the job they are currently
doing but to do new jobs and to encompass change within those
sectors and those industries. Who would do that? It has to be
a combination. Clearly, initially we are looking at the employer
and the individuals and the trade unions in the workplace to work
together to formulate training plans or training agreements in
that workplace which take account of the immediate and future
needs as far as that industry is concerned. There is a role for
the national skills academies as they come on-stream and the sector
skills council working together, if we are stuck with both, and
there is a question mark as to how many of these organisations
you do need to apparently do much of the same thing it seems to
me, but certainly having a body which has an overview for a sector
or for manufacturing as a whole to look at the ongoing needs of
skills training as well as the immediate needs is an essential
part of maintaining a manufacturing base which is competitive
within the UK.
Q195 Mr Clapham: Roger, building
on that, how do we re-establish, if you like, the reputation of
vocational education? Derek referred to Gordon Brown's idea of
nudging the economy to the higher value end of the market, not
fully taking into consideration that much of manufacturing has
already disappeared, so how do we re-establish this credibility
of vocational education?
Mr Jeary: I think you have to
go down to base roots again. Derek mentioned the fact that he
was on a college board. I was once Chair of governors of a comprehensive
school in the North-West and what you see within the education
system is a total lack of understanding and knowledge of what
manufacturing is all about and what modern manufacturing is all
about. Also, I have to say my experience of that was not a great
enthusiasm for manufacturing employers to come into the schools
to share that knowledge with both the teaching staff and, more
importantly, the students. You build up this notion of vocational
skills in an old-fashioned way of saying that is the only right
approach and manufacturing, as any of you go around modern factories
will understand, could not be further from the truth. Plus, of
course, you have got a wide range of jobs and functions within
a manufacturing factory, it is not all about just the production
side, there is the design side, there is the marketing side, there
is the sales, but the whole area of manufacturing is simply not
conveyed into the education system at the earliest level. The
other area where I think work can be done is in the whole area
of apprenticeships. Leitch has come forward with very ambitious
targets in terms of apprenticeships and, fine, if we deliver those
targets it would be great to see that sort of increase. Leitch
also makes the point, and I think somewhat contrary to current
Government thinking, that by 2020 we will still have 70% of the
current workforce in employment so we have got to look at apprenticeships
at adult level as well as at school level and yet we see cuts
in funding for adult apprenticeships at the same time. Clearly,
Government have got to look at that if they are going to adopt
the Leitch proposition because we need to be able to train and
develop existing workers and give them those vocational skills
through apprenticeships, through foundation degrees and whatever
is necessary to have the sort of workforce that is necessary to
meet the overall strategy of having a high added-value, high-skilled
workforce.
Q196 Mr Clapham: You would agree
and presumably, Derek, and I am thinking in terms of Amicus generally,
with the Government's approach on vocational education in secondary
education where, for example, in schools around Barnsley and Sheffield
you have got a number of new vocational courses which would bring
young people at the age of 14 on to those courses with the opportunity
of being able to work with an employer, have a placement with
an employer, whilst they were studying but at the same time is
geared to the apprenticeship scheme. The kids, for example, at
16 or 17 who do not want to follow the apprenticeship can stay
on and, say, if they are on a vocational course that is skewed
towards, for example, construction, may be able to stay on and
do design. Within that course you capture a number of aspirations,
the girl or the boy who wants to go on to do an apprenticeship
and then the kid who wants to stay on to do AS levels and go and
do design, but it is all within that framework of construction
vocational studies, so that would be very much what you would
like to see, Derek.
Mr Simpson: I can answer that
by saying yes.
Q197 Mr Clapham: So now what we need
to do is to put pressure on Government, and particularly your
friend Gordon Brown, to take cognisance that it is not just nudging
the economy to the higher value end of the market and concentrating
on foundation degrees, but really concentrating at secondary level
on vocational studies.
Mr Simpson: It is, and there are
two sides to this. There is the side that you raise by your comments
and points there, which is what we would want to do if we had
a future in it because the other side of it is unless we do something
about the actual future in it, it does not matter what we do,
we can do the right or the wrong thing, the result will probably
be exactly the same. There are two sides to it. I have to get
a little plug in for the one factor that I think Government could
look at when it looks at manufacturing. We see time and time again,
and I am sure that this is the one that is affecting us now, when
companies come to look at the investment strategies, and particularly
when you are looking at new technologies, you have got two things
that come from that, one, it is very expensive and, two, you generally
only do it because you want to improve efficiencies and that generally
means a reduction in labour. If you put those two things together
and a company looks, as they do now, almost globally, but certainly
pan-Europe, you would say where would a car company put down a
new car plant, and Peugeot has been mentioned. Peugeot has built
a plant in Slovakia. It can take advantage of the wage rates that
are less than a third of the UK rate, and that is probably a good
proportion considering some of the potential areas in the world
that you can do this, so you have got the advantage of cheap labour.
In terms of laying down plans like that, it is the other side
of it. We are the most expensive place to make redundancies and
reductions and the costs associated with wind-up. Those two things,
will you invest, will you get cheap labour and where it is easiest
to shelve, all those things mitigate against UK manufacturing.
Eastern Europe, never mind China, has got the cheaper labour rates.
We are the easiest and cheapest to dismiss in terms of western
advanced Europe. Our rates suggest that you would not be able
to compete with Eastern Europe and then when you look at the reductions
we have got them in the target. That is why, for example, Peugeot,
a French company, apart from its apparent un-provable, un-established
(according to the Siemens director) loyalty to France nevertheless
will not make Peugeot workers redundant in France when they transfer
the Peugeot plant to Slovakia. The UK plant, despite it being
profitable, will go because it is the balance sheet argument.
This is why I say follow the money. If you do not address the
economic factors none of these other answers will amount to much
more than theoretical musings by all of us because they will not
be the basis for whatever the result is, whether you get it right
or wrong, it will not matter because there will not be any jobs.
You will not have to worry about who builds cars, trains or who
does this, we cannot all be design engineers. Quite frankly, the
number of posts available seriously in design at the end of the
day, if you think about it, would be quite limited compared with
the size of the population and politically, as a government, you
would have to run a country in which the bulk of the people have
either no jobs or are unemployable. That would be an interesting
thing and that is probably why we see the rise in the BNP and
the rise of fascism and all that.
Chairman: We are ranging quite widely
for a session on training and skills. Interesting as your views
are, I think perhaps I am going to bring in Roger Berry.
Q198 Roger Berry: Despite this, we
are told by the CBI that employers observe a shortage of skills
across a whole range of areas. You have said that manufacturing
as an industry embraces a whole range of skills, a broad spectrum
of skills are required, and yet in your submission you have got
a very specific statement that I would like to explore a bit further
and Derek referred to it a bit earlier. You said: "At present
the majority of funding is directed at FE to the detriment of
higher education" and "there needs to be a significant
redirection of funding", which I assume means away from FE
towards higher education. What is the evidence for that? What
exactly are you suggesting?
Mr Simpson: Again, it is the direction.
I think I have already referred to it. If we are saying that we
cannot compete in lower areas of manufacturing, then we really
have got to think about whether we can compete in the higher end
and that is what I am saying. There is no good entering into further
education and so on to NVQ level twos when you have got to be
thinking higher than that, you have to go beyond it, that is the
point in that. As regards the skills shortage, we do experience
this. In construction, for example, we have complained about the
importation of cheap Eastern European labour but recognise very
often that without that the economy would not manage. I was across
in Ireland where ironically for their somewhat massive regeneration
programme. I was in Dublin, they are talking about developing
the Dublin harbour and moving it 20 miles up the coast and then
having a marina they have not got the people to do it because
most of their people are over here doing things like getting ready
for the Olympics and so on and so forth. People require skills
to be brought in. That is fine, but we probably do not experience
that in some parts of manufacturing. I do not know many engineering
factories that have to import skilled labour from abroad but there
are skills shortages. When I started on the Training and Enterprise
Councils, which was "a fairly modern day start of all this
business", we had the same phraseologies: hard to fill vacancies
usually got turned into "skills shortages" and that
usually got turned into the fact that there was not enough money
to pay people to do these things. Again, if we have abandoned
manufacturing, if we have allowed things like the Engineering
Industry Training Board to go by the board, we are going to encounter
shortages because we have not been able to turn the people out.
I do not think the further education effort we have made has ever
replaced proper apprenticeships in terms of what we do in the
industries and many people who have gone on into technical scientific
and managerial work, you will find have gone through some process
similar to an apprenticeship and they have gone on in a career
development because they have been in the industries and very
often the best people are those who have grown up in the industry
because they know what the industry is and what they are talking
about. That has largely disappeared over the last 20 or 30 years.
It is not surprising then that we have a period where the CBI
say, "There is a skills shortage". Well, whose fault
is that?
Q199 Roger Berry: Would that not
suggest more emphasis on advanced apprenticeships rather than
higher education as such? Linked to that, if I might add to that,
people who access training these days are usually the better educated
staff and so one of the things that worries me about saying basically
we should take the money from FE and put it into higher education
is that it might increase that inequality in skills which is,
in my view, already a problem.
Mr Simpson: I am not going to
deny your point just to try and make our point sound better, but
it is two sides of the same coin. Again, what is the point in
concentrating on training people for jobs that we will not have
soon when the argument is we will not have them, it is unavoidable,
you cannot stop globalisation, you cannot compete on certain products
with China and India and places like this, so what do we do about
the future. I am not denying your point, I think you are right
we have not got the training right, but we will not have the industry
anyway if we get it right and our argument really isand
this is the point about being muggedhere we are trying
to create a training system in an environment where we will have
no need for it and we are being told that the real answer is to
have a training system that equips us for the higher skills and
we are not doing that either.
Chairman: In the interest of making reasonably
rapidly progress, you have said that once or twice already very
convincingly.
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