APPENDIX 17
Memorandum submitted by Malcolm Wicks
MP, Minister of State for Science and Innovation, DTI
Thank you for the opportunity to give evidence
to your Committee on 6 March.
As I highlighted in my appearance, we see skills
as one of the key components necessary for ensuring that British
manufacturing, as it moves to a high-tech, high value added sector,
can adapt to future challenges and win in the global economy.
I undertook to provide information on three
points which is set out in the attached paper. This gives further
information on the appointment of Sir Digby Jones as Skills Envoy,
the Government's response to company closures and redundancies
and the extent to which we can forecast shortages and plan ahead
in terms of the demand-led skills system.
I hope this is helpful but if you need any further
information then please do not hesitate to let me know.
I look forward to seeing the outcome of your
inquiry.
DTI RESPONSE TO
REQUEST FOR
FURTHER INFORMATION
Skills Envoy: Sir Digby Jones
The Committee asked for more detail on the appointment
of the Skills Envoy. Sir Digby Jones was invited to be Skills
Envoy on behalf of the Government by the Chancellor of the Exchequer
who commissioned the Leitch Review. His terms of reference are
set out below.
Sir Digby has made a good start at raising the
profile of the skills challenge set out by Leitch, and setting
the ground for action from employers to meet the demands of the
Leitch agenda. In these early months Digby has thrown himself
into his work by getting out and about across the UK, talking
to employers about skills and encouraging them to sign up to the
skills pledge. He has also spoken at a number of high profile
events in the skills world to introduce his role and build a consensus
around the need to work together to improve the UK's skills.
DfES are working closely with Sir Digby to provide
appropriate support and to help ensure a relevant programme of
activities for Digby to reach employers.
TERMS OF
REFERENCE
The aim of this role is to work alongside the
Prime Minister, Chancellor of the Exchequer and the Secretary
of State for Education and Skills in advocating the vital importance
of the skills ambitions for the nation set out in the Leitch Report.
The specific objective is to encourage employers
to endorse and act on the "something for something"
deal between employers and government, linking increased rights
to increased responsibilities, that lies at the heart of the Leitch
report. This is an employer-facing role, focused on the largest,
most influential employers in the UK. In particular, the envoy
will encourage all leading employers to sign up for the "pledge"
advocated in the report, whereby employers commit to supporting
training for their low skilled employees.
At the core of the role is the ability to engage
with the UK's leading employers, their representative groups and
other influential intermediaries to galvanise their support for
the world-class ambition in the Leitch Report, securing the acceleration
in skills investment that is needed to get us on the right track
to achieve those very challenging targets. This will involve:
— setting out the central importance
of skills to the UK's productivity;
— highlighting how changes in the global
economy mean the UK's competitive position will increasingly depend
on skills of its workforce; and
— persuading and challenging employers,
probably in equal measure, to accept the need to invest more in
qualifications at higher levels, whilst also pledging to engage
with government funded programmes to train their low skilled employees—primarily
through the Train to Gain service.
The envoy will be supported in carrying out
their role by the Department for Education and Skills. There is
no salary but expenses incurred will be payable.
The role is likely to require a time commitment
on average of one to two days per week. The initial focus of the
role will be to span the period between the publication of the
Leitch Report and the detailed Government response. This is likely
to be made at either the Budget or CSR. We will then take stick
of the continuing need for the role and also its relationship
to the Chair of the Commission for Employment and Skills. Applications
for the latter post will b e invited in due course. There is no
fixed duration for the role of envoy which will be kept under
consideration in the light of developments.
COMPANY CLOSURES
AND REDUNDANCIES
The Committee asked what support is available
to employees from small manufacturing businesses if they are made
redundant. In these cases, the first source of assistance will
be Jobcentre Plus, who will try and help the individuals find
new employment.
Jobcentre Plus works closely with local partners
including RDAs, LSC, Local Authorities and Chambers of Commerce
to help individuals from companies of all sizes. For example,
in the West Midlands, the LSC provide a package of support available
to all individuals who have lost their jobs in the manufacturing
sector. This package includes free job-searching and careers information,
advice and guidance, and job-focussed training and support in
up-skilling.
Jobcentre Plus also manages the Rapid Response
Service, which is designed to help employees from redundancies
that have had a particularly significant effect on the local labour
market. The exact nature and extent of the assistance is tailored
to the circumstances and to the needs of the individuals, the
employer, the local economy and the labour market concerned. The
key factor is the economic impact of the redundancy on the local
labour market, rather than the number of people being made redundant.
The initial impact on the local labour market
is often assessed in terms of the number of direct job losses
relative to the number of existing JSA claimants in the area.
Further impacts on the local (and often wider) economy may also
occur if, along with the direct job losses from the closures,
there are indirect job losses within the associated supply chain.
Additional factors to consider are the age and skills profile
of those being made redundant as this affects the time taken to
find alternative employment, the extent to which these new claimants
affect the ability of existing claimants to find jobs, and the
overall direction of the local, regional and national economy.
The Rapid Response Service offers practical
support in job application techniques and re-training. In all
cases, the over-riding aim is to provide individuals with the
advice and support that best meets their particular needs, regardless
of whether they have left a large or small employer.
Employers anticipating redundancies of twenty or
more at one establishment are legally obliged to notify DTI and,
under certain circumstances, such as a major company going into
administration, careful consideration is given to any additional
Government assistance that might be warranted. This is the exception
rather than the rule. For example, the closure of the MG Rover
car plant led to the direct loss of almost 6,000 jobs at a single
site with knock-on effect on jobs in the company's supply chain
and the wider West Midlands area. DWP have undertaken an extensive
tracker study of ex-Rover employees and found that within eight
months, 56% of those who claimed JSA immediately after the closure
had found alternative employment.
FORECASTING SKILLS
SHORTAGES
As Lord Leitch acknowledged in his report, it
is difficult to have a system that seeks to forecast and address
future skill shortages but is still responsive enough to meet
employer's immediate needs.
Although forecasting work is designed to say
something about the future, it is nearly always based largely
on a continuation of past trends. It therefore presents one scenario,
but it is not so good at anticipating shocks or sudden changes
in market conditions.
We do need to develop a flexible, responsive
skills system which can cope with shortages or sudden demand in
the short term. However, Government has to try and anticipate
the UK's future skills requirements in 10-15 years' time when
most employers' business plans only cover up to the next five
years. Also, the primary concern for most employers is their own
workforce, whereas the Government has to consider the needs of
the whole sector. However, there is a common misconception that
there are considerable skill shortages across manufacturing as
a whole. The latest data from the National Employers Skill Survey
does not appear to support this; there are seven skill shortage
vacancies per 1,000 employees across all sectors of the economy,
but in the SSCs covering manufacturing this figure is between
three and five.
We agree with Lord Leitch that the delivery
system should be demand-led and support measures such as Train
to Gain and the reform of Further Education which are helping
to bring this about. But, we do also need to consider some analysis
of the future labour market and skills needs for each sector.
Here we agree again with Leitch that Sector Skills Councils (SSCs)
are best placed, through their Sector Skills Agreements, for producing
data on future skills priorities.
SSDA produces highly detailed forecasting work
at a regional and sectoral level in the form of the Working Futures
series. The most recent analysis offered projections of employment
and skills to 2014. The same model was used in the Leitch Review
but extended to 2020.
We acknowledge that there is concern over the
performance of some SSCs but we would point out that all SSCs
are employer-led and the network is still relatively young. Also,
the proposed new Commission for Employment and Skills will scrutinise
SSC performance and recommend any necessary improvements.
It is important to also highlight the responsibilities
of employers in this area. SSCs can only produce reliable data
if they are actively engaged with businesses in their sector.
If employers are serious about wanting to influence the immediate
and future supply of skills provision, they must be prepared to
work with their SSC.
22 March 2007
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