Examination of Witnesses (Questions 351
WEDNESDAY 13 DECEMBER 2006
Q351 Chairman: Good morning everybody
and welcome to the sixth evidence session on our employment inquiry,
and particularly welcome to you, Lord Leitch, and to your colleagues.
This session is being broadcast; it is being taken down and used
against you in evidence! If I could kick off, Lord Leitch, your
report, as we all know, was published last week. What is your
reaction to the initial response from Government?
Lord Leitch: Good morning everybody.
I think I am pleased with the reaction overall. We have consulted
extensively over the last two years; as you probably know, we
did a major call for evidence last year, and this year we have
consulted extensively with both Government and key stakeholders,
including the CBI, the TUC, the Learning and Skills Council and
the Institute of Directors, and I am encouraged by the response.
Indeed, we have received quite a remarkable degree of consensus
in terms of the analysis and in terms of the key recommendations
that we are advocating. So I am pleased, Chairman.
Q352 Chairman: Good. What do you
regard should be the top priorities for Sir Digby Jones in his
new role as Skills Envoy? Delivering your report, presumably?
Lord Leitch: Actually it is not
delivering the whole report because, as you say, the report is
extensive in terms of the number of recommendations. There are
four major objectives, five principles, eight recommendations
and it is a large array of change that we are saying we should
deliver. I think Sir Digby Jones is an excellent appointment in
terms of being a Skills Envoy. We need someone with his pedigree
and his standing to help us deliver this, and specifically he
will be looking at the Pledge. As you know, this is initially
a voluntary Pledge that employers can deliver skills to eligible
employees in the workplace up to Level 2, because this is somewhere
where we want to change the percentage from moving the percentage
from 69% to Level 2, up to 90% by 2020 and then move towards 95%.
It is a tall challenge, a tall order, and that would be Digby
Jones' main priority, to deliver that Pledge. Remember, we had
a two-step process: first it is a voluntary approach, where employers
will be encouraged to do thisand I think it is quite a
compelling proposition for employers to do this, and I will expand
if you wantbut if the trajectory is not right by 2010 then
we would have the statutory entitlement to training in the workplace.
So I think it is a very important role and he is the right figure
to do this, to be a champion, to be an evangelist for the Pledge.
Chairman: Mark Pritchard.
Q353 Mark Pritchard: Lord Leitch,
you are quite right about Sir Digby Jonesgreat pedigree,
great experience and no doubt he will bring a lot to this particular
role. Do you think, however, that if he were successful in running
for Mayor of Birmingham that that would, shall we say, diversify
his skills beyond the time that he is given to do this particular
Lord Leitch: No, I think this
is not a full-time job for Sir Digby. I do not know how many days
per week he will be allocated but I think he can certainly do
more than one thing at a time. As I say, his pedigree, his standing,
his style is an excellent way forward to deliver this Pledge.
Q354 Mark Pritchard: Whilst I know
that clearly this role may be a part-time roleand just
to digress for a momentdo you think that running a major
city like Birmingham, the UK's second city, is a part-time role?
Lord Leitch: I am not qualified
to answer that really.
Q355 Chairman: We are obviously anticipating
the 2007 Comprehensive Spending Review. Have you been given any
indications that money will be there to match the programme?
Lord Leitch: I hope that increased
money will be there. I think what we are saying in the report,
if you look at the analysis, is that we must invest more in skills
as a nation, but we are also saying that no single entity like
Government can do this on its own; it is a combined initiative
with the Government, with employers and individuals all investing
more, and in the report we define some principles about where
the balance of responsibility should lie. For example, Government
should be providing everybody with a basic platform of skills;
Government should be intervening where there are market failures;
Government should be giving people assistance where they need
it; individuals and employers should be investing more where there
are greater private returns. So really, Chairman, what we are
trying to do is to say that there has to be investment from all
those areas, all those stakeholders, to drive this forward. The
Government has said it will increase percentage of GDP into education,
and skills will be a beneficiary of that. As of now I do not know
an indication of the CSRI cannot be expected to know that
at this point in timebut I am optimistic.
Q356 Chairman: You will know from
the work you have done that, sadly, many employers just opt out
altogether of the training agenda. Is that market failure or is
Lord Leitch: If you look at what
employers do you are right, one-third of employers in the UK do
no training at all, and in some sectors it is even worsein
some sectors it is 50%. But the glass is more than half full.
If you look at employers in this country we have some stunning
examples of brilliant employers within the United Kingdom. After
all, we are the fifth largest economy in the world and that has
been driven by some stunning performances in terms of employers.
Many employers do invest very significantly in training to increase
productivity, so we have many, many good employers driving that
forward. In terms of failures, what we tend to do in the report
is to say that we must be much more demand-led and that the employers
should have a greater voice in defining the skill types that they
need. We also say in the report that Sector Skills Councils should
be reformed and re-licensed and empowered, and that is a way of
engaging and increasing awareness of employers, such that they
are more engaged.
Q357 Chairman: I am sorry to put
pressure on this, but that third of employers doing nothingand
I accept your point that Government needs to come in on market
failureis that third market failure or is that something
where we need other mechanisms to get that third engaged?
Lord Leitch: I think we need other
mechanisms, and indeed I think that would be the rationale behind
the Pledge. The Pledge we saw, by the way, is starting to be delivered
very successfully in Wales, where it is a voluntary Pledge where
10% of employers are already being trained in this voluntary way.
So I think the Pledge, with Sir Digby Jones at the helm pushing
this forward, is a way to encourage those harder to reach employers
to would do more. I think the redefining of the role of the Sector
Skills Councils will engage more employers than we have at the
present time. I do not know if you define that as a market failure,
but I believe that these are certainly mechanisms that will help
Q358 Michael Jabez Foster: Could
I just ask, with so many freeloaders in the employers' side of
the equation, is not the answer a training levy so that everybody
pays for the training?
Lord Leitch: I do not think the
answer is a training levy. We looked hard at compulsionwe
looked hard at compulsionand where I am coming from philosophically
I would rather have incentivisation and encouragement and mechanisms
which increase awareness of the benefits of training, because
there is a direct correlation between skills, productivity, which
is good for your bottom line and employmentthere is a direct
correlation hereand so I would rather go that route.
Q359 Michael Jabez Foster: Why not
a training levy?
Lord Leitch: Because history tells
us that it does not work. It has been tried many, many times in
terms of training levies and if you force it it is shown that
it does not work; if you have a working together it can work.
For example, Sector Skills Councils, in some Sector Skills Councils
they have an arrangement that if the majority of employers do
agree on a levy they can do that, and they have done that, for
example, in the Skills Sector Skills Council, and it has worked
very effectively. But coming on to the widening of compulsion,
there are other areas, like Licence to Practise, which is to say
that you have to have a certain licence to practise, which is
a compulsory one, and, again, we have looked at that and we have
currently said, "No, that is not the right thing for Sector
Skills Councils to edict." But Licence to Practise has worked
in certain situations and I think that compulsion can be a very
blunt instrument or it can be a fine instrument that can deliver,
and if you look at License to Practise in the health industry,
where we need to have a certain level of qualifications to work
in care homes, for example, then that is a Licence to Practise.
My own background is in financial services and in financial services
there has been a Licence to Practise in the qualifications that
you need to sell retail financial services productsyou
have to have a financial planning certificate. That was compulsion
introduced by the Government, defined by the Governmentpainful
for the industry at the beginning, but I believe it has been a
very good thing for the industry and over time it has improved
the productivity, the professionalism and the esteem. So I think
that is the way we have to be; we have to be very focuseda
rifle shot to say, "Where would compulsion work?" Training
levies in a compulsory way do not work.