CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 470-iii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

INNOVATION, UNIVERSITIES, SCIENCE AND SKILLS COMMITTEE

 

 

ENGINEERING

 

 

Wednesday 21 May 2008

MR KEITH ELLIOTT, PROFESSOR BARRY CLARKE,

DR LESLEY THOMPSON and MS LYNN TOMKINS

 

MR CHRIS ALLAM, MS LEE HOPLEY and MR IAIN COUCHER

Evidence heard in Public Questions 262 - 414

 

 

USE OF THE TRANSCRIPT

1.

This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

 

2.

The transcript is an approved formal record of these proceedings. It will be printed in due course.

 

 


Oral Evidence

Taken before the Innovation, Universities, Science and Skills Committee

on Wednesday 21 May 2008

Members present

Phil Willis, in the Chair

Mr Ian Cawsey

Dr Ian Gibson

Dr Evan Harris

Dr Desmond Turner

________________

 

Examination of Witnesses

 

Witnesses: Mr Keith Elliott, Principal, City of Bristol College, representing the Association of Colleges; Professor Barry Clarke, Vice President and President Elect, Engineering Professors' Council; Dr Lesley Thompson, Director, Research Directorate, Engineering and Physical Sciences Research Council (EPSRC); and Ms Lynn Tomkins, Director, UK Policy, Semta, gave evidence.

Q262 Chairman: Could I welcome our witnesses to this evidence session of the Innovation, Universities, Science and Skills Select Committee's inquiry into engineering. I wonder if I could start with you, Professor Clarke. One of the themes which is coming through this inquiry very, very strongly indeed is the massive skills gaps and skills shortages in the UK engineering field, but engineering, we have also been told, has got so many facets to it, so many parts to it, so can you be more specific in terms of where these huge skills gaps and shortages are?

Professor Clarke: I think there are two things: there is a shortage of engineers entering into the profession of engineering; and 50 per cent of graduates of engineering courses leave the profession within two years of graduation. That is not a bad thing because that means that people with engineering skills go into other professions, financial, teaching and the like, which actually helps the development of engineering in the UK. In terms of the gaps within the knowledge of engineering, this is evolving very rapidly at the moment and indeed the Royal Academy and EPC and others have set up a working group to look into the future of engineering education, which includes DIUS, DBERR, Semta, Construction Skills and universities. The aim is to start to explore how this should develop because we are sensing that a number of bodies, and industry in particular, are stating what we need in five to ten years time compared to what we are producing now. This is really to address the global challenges of climate change, poverty alleviation, and lifeline support systems. There is a gradual change which has been taking place over the years as we are moving from a technology age to an ecological age which means engineers are going to have to communicate much more with the public than they have done in the past, so we are moving into a new era and I think we are the point of change at the moment.

Q263 Chairman: There always seems to be this sort of disconnect between, first of all, getting the intelligence about skills shortages and then actually bridging that gap into actually producing people to do those jobs. Now, you have got that specific responsibility as a sector skills council.

Ms Tomkins: We have, yes.

Q264 Chairman: So where do you see the real problems?

Ms Tomkins: Well, the problems have been identified. We published the Sector Skills Agreement for pathfinder sectors in 2005, which was automotive, aerospace, electronics and marine, and we highlighted that the skills shortages were at the top end of qualified, professional engineers and, in particular, technicians. There has been a considerable amount of work done to look at that. One of the key issues was also an ageing workforce and the need to invest in the over-25 semi-skilled and skilled worker.

Q265 Chairman: Can you narrow it down for us? Are we talking about electrical engineers, mechanical engineers, civil engineers? Where are the real shortages or are there any surpluses anywhere?

Ms Tomkins: Electrical and mechanical are the key areas for ourselves, but also aerospace and marine are the sectors which will have the worst shortages, as such, but electrical and mechanical are core functions in terms of across engineering.

Professor Clarke: I am on the Board of Construction Skills representing higher education and I fully support that there is a shortage, but one of the problems with civil engineers is that they do not sit in Semta, they sit in Construction Skills and, in terms of civil engineers, there is indeed a shortage to an extent and for certain branches of civil engineering we are on the Home Office at risk list.

Q266 Chairman: The college sector really is quite crucial within all of this, particularly delivering Level 2, Level 3 and foundation degrees in this area. What are you doing which is going to be different? Where do you see the shortages and what are you doing about it?

Mr Elliott: Well, as you say, Chairman, the college sector is absolutely crucial, and we deliver around 120,000 engineering places in education at the moment. In my college, which is quite a large college, we have 4,000 engineering students, including 1,000 apprenticeships and also several quite innovative foundation degrees. It seems to me that the skills shortages occur at a number of levels, including at apprenticeship level, but ranging through to the intermediate level, and I think more attention should be given to supporting some of the new developments in foundation degrees. For example, in my college we have developed a foundation syllabus which links together NVQs, key skills and a foundation degree in aeronautical engineering and, in addition, we have a foundation degree that links together a licence to practise qualification for aeronautical engineers which is vital for aeronautical repair, so I think we do need to pay more attention to some of these more practical routes that can bring people into engineering through different ways and can show them a different view of engineering as we move to try to deal with not only the skills shortages, but the upskilling of many people within some of these industries, especially in our case of aeronautical engineering.

Q267 Chairman: One of my personal concerns here is that, if you live in the Midlands somewhere and you are near Honda's factory or you are in the North East and you are near Nissan's factory in Sunderland, then there is an obvious tie-in for engineering with some of those large automotive companies. If you live where I live in north Yorkshire where there are a lot of sheep, there are not any major engineering companies, though there are some niche ones, so do we write off that whole group of young people and adults simply because there is not an engineering facility? I do not understand why this is happening at all.

Mr Elliott: No, I do not think we should. In the Bristol area, obviously there is a significant element of aeronautical engineering, in particular, and still an element of manufacturing, and we are still able to recruit large numbers of students into engineering. We have been working extensively with the schools sector. Every year we run a programme for 800 Year 10 young people working with major companies, AstraZeneca, Rolls-Royce, Airbus, to try to generate greater interest in engineering, and it is possible to motivate people to move into engineering. Despite the overall downturn in student numbers, we have managed to double our intake into full-time motor vehicle courses in a part of the country which is not dominated by the motor industry, so I think there is much more that can be done across the country with young people in this area.

Q268 Chairman: In terms of these higher-order skills, are we internationally competitive?

Dr Thompson: Absolutely. Our best scientists and engineers are internationally competitive. If you look at just where our top PhDs and Fellows are finding places, they are finding places not just in the universities, but also in leading companies, so one of the real reasons we have got Rolls-Royce, BAE, a very strong engineering and manufacturing sector in the UK, is because of the skills base in the UK and particularly we see that by industry being prepared to co-invest with us in developing higher-skilled people. A really successful mechanism we have been running for the last 15 years is the engineering doctorate where graduates spend up to 70 per cent of their time in companies getting the skills that then allow them to complete a doctorate, but they also get, because they have worked in industry, much more awareness of business and needs. It has been very strongly endorsed by industry and they continue to put their money in, and we are just looking to recruit a new set of these centres.

Q269 Chairman: If our Committee went to France tomorrow or to Germany or Spain or wherever, would we find similar pictures in terms of shortages of skills, shortages particularly of undergraduates throughout engineering or not?

Dr Thompson: I think right across Europe you will find shortages in the power sector, France has particular strengths in nuclear where the UK does not, process is a concern for many European countries and the whole issue of structural engineering is an issue across Europe, so we are seeing a flow of people across the world, but actually, although engineering is more prized as a true pursuit in other European countries, they are suffering shortages the same as we are, so we have discussions with analogous bodies across Europe and we are all seeing very similar problems.

Q270 Chairman: Why is it that we have got so many people, particularly at technician level, Level 2 and Level 3, with those skills coming to us from Eastern Europe and flooding some parts of our market, yet we have a big shortage? What has happened which has created that sort of imbalance in terms of work flow?

Ms Tomkins: Certainly England have not supported funding Level 3 skills to develop technicians and apprenticeship funding has only been available for the 19-plus age. We now have DIUS who are going to fund all-age apprenticeships which will actively help develop those workers already perhaps at Level 2 to go on to technician level and complete a full apprenticeship. This was something that was highlighted as a major priority by some of the big companies to have some funding to support the development of people at the technician level and we will hopefully agree that funding offer to companies in our sector with DIUS within the next few weeks.

Q271 Chairman: In terms of Semta, how closely do you work with universities, colleges and industry? What is the relationship?

Ms Tomkins: We work closely through the sector skills agreement process. That was a collaborative process that gave some actions for both HEFCE, for the Association of Colleges and for government departments on some of the issues that were addressed by employers in the supply of education and training which highlighted some of the issues about graduates requiring two years' experience before they were really making an impact in the workplace, so there were some detailed actions. We review those with our partners and report back, and we used to report back to the Sectors Skills Development Agency and it will now be to the Commission on that, so there is a lot of joint work going on to address some of those issues on the system.

Q272 Chairman: What representations have you made to the Government about the nonsensical division between engineering and construction skills? Why have we got construction skills in a separate sort of sector skills council when it is absolutely essential to the work that you should be doing?

Ms Tomkins: Well, there are 25 sector skills councils and ---

Q273 Chairman: I know. Are there too many?

Ms Tomkins: I could not possibly comment.

Q274 Chairman: Why?

Ms Tomkins: There are different views.

Q275 Chairman: Go on! Nobody is listening! Are there too many?

Ms Tomkins: I have not heard the argument about construction and engineering being joined up. We have obviously had some discussions about manufacturing and engineering, as such, but construction, we would say, is a very different sector from high-value added engineering technology.

Q276 Chairman: Come on, we want straight, short answers! Professor Clarke, are there too many?

Professor Clarke: There are two things. First of all, on the point about shortages of skills across Europe, there will be meetings like this taking place in Australia, Canada and America right now because they have got exactly the same problem; the shortage of engineers in developed countries is a problem. The second thing about migration into the UK for engineering from the rest of Europe, some of this is driven by a buoyant economy in particularly construction. If you switch on public sector spend on construction, the fact is that you have got to bring people in to support that construction, particularly here in the South East, and it is interesting that one of the things ConstructionSkills have identified is that, if you live in Scotland, you are trained and, if you live in the South East, people tend not to do as much training, so there is a need and that is one of the reasons that people are coming from Europe. In terms of links between the sector skills and the universities, this is developing, but industry has phenomenal links with universities and most of it is unrecorded. We have people supporting students, site visits, data, projects, lectures, all sorts of things are happening, and it is very much about the goodwill of industry working very closely with the universities, but unrecorded, and it goes from the undergraduate level, further education, all the way up through to research. In terms of the sector skills councils, ConstructionSkills have been working jointly with Semta and the other sector skills councils that work in the construction industry, and the reason ConstructionSkills is separate is because many of its professions are not engineers, but they do collaborate and they do hold meetings and joint events for that reason.

Mr Elliott: Certainly I feel there are too many sector skills councils and I feel there is far too much complexity in the system from the point of view of everybody, especially employers. In terms of links, the AoC has developed a system of skills champions. I am the AoC National Skills Champion for engineering and what we have done is we have brought together a committee of principals who themselves have groups working with the various sector skills councils, so I am beginning to work with Semta across an action agenda to support them in developing the business improvement technique qualification and a whole range of other actions. We are signing a memorandum of understanding between ourselves and Semta and we intend to drive the skills agenda jointly across the sector, particularly at Levels 2, 3 and 4.

Q277 Chairman: All my professional life, and I think this will apply to most of my colleagues, we have been playing catch-up with skills rather than actually trying to project ahead to see what our needs are for the future. Now, you are in the driving seat, Semta has got a good reputation, if I might say, so what are you doing to look ahead ten years? How will it be different in ten years?

Ms Tomkins: We have identified a workforce plan for aerospace that they have tested that gives them the projection five years ahead. They are a sector that are able to look at their order book which is very positive. Once we have that, we will be able to enter it along with our Compact.

Q278 Chairman: To be fair, it takes them ten years to actually build a plane, does it not, so what about the rest of them?

Ms Tomkins: It does indeed, but we have a number of things coming along, the diploma for the 14 to 19 age group, the engineering diploma starts this September in schools, we have the fourth largest in terms of apprenticeships coming forward ----

Q279 Chairman: But it is all producing stuff that we wanted yesterday rather than what we want tomorrow.

Ms Tomkins: Well, the Sector Compact will produce very quickly a lot of skilled people because the Government are putting funding behind that, so it is a very positive move.

Chairman: We will come back to funding in a minute.

Q280 Dr Gibson: It is usually a good idea in life to play to your strengths rather than your weaknesses, so what would the AoC say are its strengths and what are its weaknesses?

Mr Elliott: I think the strength of the AoC is that it represents over 400 colleges which, between them, run a very substantial provision of engineering.

Q281 Dr Gibson: Do they work together?

Mr Elliott: They are working together. I formed a committee of principals of leading engineering colleges which is the group which will become the sector skills specialist group for the AoC and that is the group which is interfacing with Semta to help deliver the agenda around the diploma agenda, around apprenticeships and around the National Manufacturing Skills Academy.

Q282 Dr Gibson: Okay, so that is a strength. Now a weakness? I suggested that you did not talk together, but you may have a formal board that only meets once every five years and it holds a conference and some people think that is success.

Mr Elliott: No, I do not think that is success. I think we are working very closely together. I think we have to recognise, however, that within the AoC it is likely that more specialised colleges are going to be the centre of engineering in many areas and particularly at the sub-regional level. I do not think it is possible for all colleges to invest at the level of investment required for engineering training. For example, at my college, we are about to move into the development of composite materials which is a major new development both in aerospace and motor vehicle. That requires significant capital investment and I think it is very likely that we will see growing specialisation with key colleges in the sub-regions working with other colleges, where necessary, and other providers to provide the training that is required for employers. I do not think it is possible for all further education colleges necessarily to be able to provide in every locality the sort of training that is required for 21st-Century engineering.

Q283 Dr Gibson: That is great for team work, that sounds good, but have you got a sort of plan to say to government or government and other organisations how much you really need to achieve? When you are formulating it at home where nobody can hear you, you are not in public, what do you think really needs to happen to make these dreams you have of working together come true and the policies of working together because they do not all do the same thing, so you have obviously got a plan in your head, so how are you going to make it happen in terms of finances and support, if that is your weakness?

Mr Elliott: Well, I think the first thing is that there has to be much greater recognition of the centrality of this sector, not only in manufacturing, but other forms of engineering, and I think we all are fighting a battle in terms of that. As part of that of course, therefore, the funding has to be made available and it does require considerable investment, long-term investment, to fund engineering programmes in related areas, and I think in some cases it is not always possible to achieve that. We are currently planning a major investment in Bristol, a £40 million investment, to develop a national centre of excellence in engineering. Now, in order to achieve that, we have to convince people that this is one of the central priorities.

Q284 Dr Gibson: What are you doing about convincing people and who are these people?

Mr Elliott: The major way we hope to convince people is by forming an alliance with employers, notably the major employers and the small employers in the area, to actually convince the learning and skills councils, and indirectly the Government, that it requires not just rhetoric about engineering and manufacturing, but it requires hard cash and serious investment which is long-term investment and it may provide a short-term fix, but it certainly is an investment in the future of engineering and manufacturing in this country.

Q285 Dr Gibson: Do you think government care about engineering and its development and understand what it is or are you indicating that they do not, despite all your protestations and discussions? Go on, tell us what you think of them!

Mr Elliott: I think there is strong support within government. Obviously within parts of government there may be other priorities, but I think there is a strong recognition and we are receiving, in principle, support. I will believe that support when we receive that support in actual hard cash.

Q286 Dr Gibson: So that is a weakness, that you think you do not get the support. Are there internal weaknesses in your organisation that you see need to be hammered out before you present that kind of unity which even government cannot deny?

Mr Elliott: I think we would all recognise that we need to do more to improve the skills of our staff and, in particular, to make sure that our staff have recent experience within industry. We are working very hard on that, but of course, as technology moves forward, we need to continuously support our staff in being able to meet the latest techniques and the latest technology.

Q287 Dr Gibson: So why do they not react in the way you want them to? You suggest that they are over-stretched, over-worked and over here.

Mr Elliott: I am sure our staff, who are in general very good, would say that they were over-stretched. I think we are talking about the need for an alliance between, in our case, the further education sector and the employers to be able to provide these opportunities, and I think it is a two-way street. We do need more co-operation from employers, not only in this area, but also in providing the places for apprentices, so I think the agenda is one of joining with employers and working with them to improve both the facilities for our staff, updating, but also the facilities for students as they move through the system.

Q288 Dr Gibson: What benefits are there going to be from this diploma that you mentioned? What will we see that is different because there is a diploma?

Mr Elliott: I think a diploma in engineering is a major advance. I sit on the National Diploma Development Group, and I think that the whole reform of 14 to 19 education which the diploma agenda is central to is crucial in doing something about that lost generation of young people who are not achieving five GCSEs, and in the City of Bristol almost 60 per cent of young people do not achieve five GCSEs, and I think the diploma agenda is really opening up a possibility of a valuable applied route. In terms of engineering, it is crucial that it retains the rigour in science and maths and it is crucial that it is able to replace the well-regarded B-Tech qualifications which are understood by employers, but I do think the diploma agenda is a very sensible agenda and we are starting 70 students in the engineering diploma with local schools in September. We are one of five colleges that have the permission to run all the ten lines and we are a very keen advocate of this, of trying to move and develop new applied routes into engineering which take people of high levels of ability into engineering in a different way, people who are motivated by a different form of learning and not just motivated by academic learning. Coming back to the point I made before, I really do think that more effort and more money should be put into expanding the more applied forms of higher education, foundation degrees leading to apprenticeship routes; they can be highly successful and I think they will make an enormous mark on engineering if they are given the resource.

Q289 Dr Gibson: Is it too early to claim success for this diploma scheme or are there successes that you could just briefly tell us about?

Mr Elliott: I think it is too early to claim success, but the fact that we have managed to get four schools to work with us with 70 students for September, I think, is a success and I think that people are being motivated within the Kingswood Partnership, which is the consortium I am talking about, to develop across the five diploma lines, but there is a very good take-up of engineering and I think that is very encouraging, given that engineering is not necessarily the priority subject for many young people.

Q290 Dr Gibson: Let me turn to Semta now. You have said that provision and support for skills must accommodate the needs of small firms, and your phrase is that "flexing training provision and support" could have an important impact on this. What is that all about?

Ms Tomkins: Well, for small companies releasing people for training, it is an issue if you only have a small workforce, so one of the key areas is that the training provision could be more flexible, bite-sized, as small employers are not able to release large amounts of people for training and they are not also able to put in in-company training, so we do need training providers to be far more flexible to the small employer.

Q291 Dr Gibson: In this country anyway it is now all about small firms, small numbers of people, under 25, and I do not mean age, I mean numbers, and they are up against it. They do not like releasing people, they just want the fast buck, the fast profit, and they do not join trade unions either, so they do not get that kind of support, so they are struggling all the time to stay alive, as it were, and to produce the product that is going to be UK plc-approved, so why should they take days off?

Ms Tomkins: I think one of the key things, and we have done some work with small companies, is to get them to see the business benefit from investing in skills. We have done a key piece of work in the East Midlands with the LSE and a number of companies have seen massive improvements in their performance and profitability because they have invested in skills, particularly in Business Improvement Techniques. We have worked with some of the colleges and Rolls-Royce supported it by giving some workshops, so it is about facilitating all the services to come together to address small-company need which is very different from large-company need.

Q292 Dr Gibson: Suppose you look at parts of this country where you do not have the Rolls-Royces of this world having been engrained in the culture there, say, Cambridge, for example. There are lots of small businesses there, no trade unions to speak of around those businesses, no pressure to train people. Is that true or does it just happen, that the young people there who become the entrepreneurs see the long-term gains or are they just looking for the long-term gain when a big pharmacy industry takes them over?

Ms Tomkins: Well, there is a lot in there.

Q293 Dr Gibson: There is a lot in there, yes. Tell me about the areas then which are less successful.

Ms Tomkins: The North West and the West Midlands have the largest number of small firms in the English regions and certainly some of the positive ways we work with the small companies is clusters, so they come together. We talked about Yorkshire and the electronics cluster in Yorkshire came together because jointly they could look at attracting young people into the sector, and so there are 500 companies, very small ones, but they come together, they have had support, we work with them, they will get involved in the diploma and collectively they will support work experience, so Yorkshire are getting involved, but it takes support to bring small companies together and that is where the sector skills council can bring the agencies to support a cluster, and clustering works very well.

Q294 Dr Gibson: It is not a word we have heard a lot. David Sainsbury was very keen on clusters, but it has not been suggested as a way forward. Is it still part of the Government's agenda?

Ms Tomkins: Well, clustering in our biosciences Sector Skills Agreement is one of their major issues, that, particularly for the small entrepreneur companies, if they work together, they can share resources, they can have a hybrid of ideas.

Q295 Dr Gibson: Excuse me just asking this one about science cities. Do you know about science cities?

Ms Tomkins: We do, yes.

Q296 Dr Gibson: Tell me about them and say it loudly because I want some people to hear this.

Ms Tomkins: Well, I am probably not the expert to talk about science cities.

Q297 Dr Gibson: Does it work? Is it a good enterprise?

Ms Tomkins: The feedback we have from our employers is positive about what science cities are achieving. Newcastle is a science city and there is a lot of investment going in to support some of the developments.

Q298 Dr Gibson: Does it help in the pursuit of the things you are trying to do in terms of support and training?

Ms Tomkins: It provides a focus certainly for companies in looking at the development, links to graduates and those sorts of areas.

Q299 Chairman: When we were in Yorkshire last week, we visited Electronics Yorkshire who were saying exactly the things that you have just said to Dr Gibson which was about networking and, quite frankly, they were not interested in what the colleges could provide. They said that the colleges are not providing what our employers want. They are wanting tailor-made courses which are specific to a small employer, so you can get in, get your training, and get out very, very fast. Now, should we scrap the colleges and just go straight in to new forms of delivery? Would that be much more effective? Do not get apoplectic!

Professor Clarke: I am used to it, Chairman!

Ms Tomkins: Certainly that was big view in our SSA that FE provision was not fit for purpose. We developed a National Skills Academy for Manufacturing, and it is working with both colleges and organisations, such as Electronics Yorkshire, to get their programmes accredited and available, so work is going on and colleges have a role to play, but there is also the need for ----

Q300 Chairman: But they cannot get any money because these guys get all the money.

Ms Tomkins: Agreed, but that is the system, so we do have to look at the best investment of the public purse for skills.

Q301 Dr Gibson: I want to talk about gender imbalance in colleges and engineering, in particular, and ethnic minorities and so on. Is that true and what are you doing about it? In what areas of your endeavour are these imbalances present, if at all?

Mr Elliott: Well, there are gender imbalances, but the gender imbalances are across engineering. It is not just a question of gender imbalances in colleges, there is a gender imbalance in employment in most sectors of engineering. The colleges are working hard in many ways to try to do something about this, both working in schools to try to remove the gender stereotyping by working with the women in science and engineering campaigns, for example, a group of young female students working with Rolls-Royce last summer to try to raise the image of engineering and try to remove some of these gender issues, but these are deep-rooted questions. There is deep-rooted prejudice in relation to gender, in my opinion, within the engineering industry and I think the college sector does need to do more, and I fully accept that, but it needs to be able to work in partnership with schools and it also needs to get more support from employers, particularly in some sectors of engineering. As the funding moves to more employer-based working where we already have a predominance of male staff, then the situation could get worse as more women find it difficult to get funding for programmes which are going to be based around the needs of the currently male-dominated workforce, so I think there are serious issues here which clearly the college sector has to play a part in and a greater part, but I think also employers and schools need to join with us in some sort of alliance around this in a more effective way. There are lots of small examples of success, but what we are not seeing is a breakthrough.

Q302 Dr Gibson: Is it anything to do with childcare and the expectations that women still have put on them in an unfair society, you know what I mean?

Mr Elliott: Well, there may be some of that, but I think -----

Q303 Dr Gibson: Are you doing anything about that? Do you have pressures?

Mr Elliott: We have pressures, but I personally think that more important is the image of engineering, the peer pressure amongst young people which steers young girls into other forms of occupation and that there is not an effective countering of that by schools. What I find interesting is that we do have more female students within aeronautical engineering than, to a degree, mechanical and electrical, very few in motor vehicle, and I think that reflects something to do with the industries, but some of the students we do have are outstanding, and it seems to be the case that outstanding females can struggle through in this situation which is very difficult, I think, for young people working in a predominantly male environment. There is also an issue of recruiting female staff, qualified staff, which is a problem, so there is a sector-wide issue here which we are very keen to be a part of the solution to, but we cannot do it on our own and we need more support from employers and we certainly need more support from schools who often steer young people away from engineering, particularly girls.

Professor Clarke: Perhaps I can say one or two things from the higher educational point of view. One of the things that we have identified is the need to increase the number of role models and what is happening in higher education is that we are seeing an increasing number of female academics. Partly this is driven by the ongoing pressure to engage more females, but also because a lot of our research is moving on to the boundaries of the hard-core, technical engineering and much more into the social side. The second thing is that with the ambassador schemes that we are using to encourage young people to come into engineering, there is a significant number of female graduates and female students who take part in those, so again the children in schools will see this, so we are increasing the numbers gradually.

Q304 Dr Harris: Just on that last question, to what extent, say, in the college sector are you measuring outcomes? In other words, you say you are doing all of these things and you could be doing what you need to do, but, if things do not change, are you measuring whether things are changing so that you know whether you need to do something else, do more?

Professor Clarke: College or university?

Q305 Dr Harris: Both.

Mr Elliott: Absolutely.

Q306 Dr Harris: What are your outcomes?

Mr Elliott: Well, our outcomes are that, whereas there has been a small increase in some sectors, there has not been an increase in terms of gender, if we are talking about gender, of the nature that we would like and, therefore, we do need to not just try harder, but we need to find new ways of forming these co-operations with schools and employers to generate not just provision, but pathways into employment. I do think the central question here is the opportunities of employment and, to a certain extent, the attitude of some employers. Some major employers have a very positive approach. For example, we are the managing agent for Porsche cars and the Porsche apprentice of the year last year was a female student, but for smaller companies, and, unlike what was suggested earlier, we do work with over 200 smaller companies in a membership-based organisation of SMEs, it is more difficult to get employers to recruit females, and I think there are major attitudinal issues here.

Q307 Dr Harris: You are doing a lot, but I want to move on from what you are doing to what more can be done, so, if I turn to Professor Clarke, is there a rigorous metric to say how we are doing and at what point do you say, "Well, government really now needs to do more because they fund the UK resource centre and they, in turn, work with WISE", but in the end you cannot control what stereotypes are created in schools and government has to act? Can you let me know if you think that is something that should be happening more, in other words, you cannot do it on your own?

Professor Clarke: If I can just answer the first part about the metrics, the way that university education systems move very much now is reflecting in numbers of students, types of students, mature students, gender, ethnic, so every course has an annual review, so we do know the numbers of students which are coming through. We are losing out on 50 per cent of the population ----

Q308 Dr Harris: Yes.

Professor Clarke: ---- and that is an issue for us, and the role models I talked about before is one example. The other example is ensuring that, when we interview students, parents come along, so these are very practical solutions to try and engage female students within the idea that they can become engineers. One interesting story of many years ago was when the Gateshead Millennium Bridge opened. The schoolchildren were brought down to see this magnificent bridge arrive and they interviewed the females, the 12-year-old girls that were standing there, and one of them said, and did not say it in these words, but, "I come from a deprived area and I wanted to be a hairdresser, but, after I have seen this, I want to be an engineer", so it is actually getting the impact of engineering over, that is important.

Q309 Dr Harris: I understand that, but all I am saying is that the sector cannot do that much on its own. Do you feel you are getting enough support from earlier in the chain when girls at school are making decisions?

Professor Clarke: The significant voluntary input from academics and from industry and from colleges into schools is from the age of five in terms of funding for that, but, as I say, very much driven by the professional institutions and industry.

Q310 Dr Harris: I am going to change the subject now. The question is whether the university engineering courses equip people, graduates, well for industry and, firstly you, Professor Clarke, is that the aim or is the aim to teach them engineering, not necessarily just for industry?

Professor Clarke: There are 78 universities in the UK that deliver engineering courses, a very diverse range of courses, so you have courses which are delivering the very high level of skills and the courses which are delivering more on the technical side, and not only that, but in the range of disciplines as well, so very diverse. All of these courses are accredited by the professional institutions and the professional institutions' directions are given by industry and by academia, so industry have an input not only on the practical side, but into the design of the courses. In terms of whether they prepare graduates for the world of work, there is a debate at the moment and, for example, we moved from giving technical education many years ago towards technical education and management skills and industry are now saying, "We want you to revert back to the technical education because the management skills can be delivered in industry", so what I foresee in the future will be much more of a partnership between industry and universities.

Q311 Dr Harris: But it has always been a partnership ----

Professor Clarke: More formal.

Q312 Dr Harris: ---- this partnership and that partnership. What you are saying is that there is now a gap between what industry wants because they want more of the technical side and less of the management side, so you would accept that, where we are now in a dynamic movement, the courses are not that well-equipped for what at least some parts of industry want. How long, if that is the case, would it take universities to change the way they deliver the courses to ensure that there is a closer match - next year or five years' time?

Professor Clarke: Well, it is interesting. Some industries want oven-ready graduates who can slot straight into their organisation. There are other industries or parts of the industry that would like graduates who in up to 20 years' time will be leading the company, so there are different skill sets needed. There is also the real concern that our courses have to be both useful and effective and this is really, I think, looking at the demographic changes and looking at the overseas education of engineers because many of our companies are global and they recruit from anywhere in the world.

Q313 Dr Harris: So what you are saying is that you will never be able to match every industry's wishes and you are doing pretty well. Is that what you are saying?

Professor Clarke: That is right, because industry is so diverse and the level of skills that are required is very variable.

Q314 Dr Harris: Semta, do you think there is more that could be done to get the match right?

Ms Tomkins: Certainly our employers expressed that there was more that could be done to get the match right. There were some concerns about bioscience and science graduates coming out without some applied skills that were taught at university previously, so we have documented some of the key areas where there are some concerns. Clearly, where there is a very strong employer link with a university, often it is good, but, if we are talking about in general, there is some work that was identified could be done.

Q315 Dr Harris: Do other countries do better and, if they do, is that because their employers have different expectations, the course is longer, there is more time spent with industry, or because they have a more general education to start with? Do other countries do better and which countries are those and why do you think it is?

Ms Tomkins: I could not comment on which countries do better, but it is varied in terms of whether it is three year or four year, whether there are sandwich courses and those opportunities, so it is a very varied and complex issue.

Q316 Dr Harris: Can anyone comment on which countries do better because I would have thought that, if industry are not happy, they might say, "Well, look at what Japan is doing" or "Look at what France is doing" or Germany.

Ms Tomkins: We have not made any global comparisons.

Professor Clarke: If I can comment on evidence again from global companies, they employ engineers because of their skill sets. One of the advantages that is recognised with engineering graduates from British universities is that they are very good at problem-solving skills, so we have a strength there which other countries do not have.

Mr Elliott: Obviously, as I mentioned before, there is a case for developing degrees, foundation degrees and other degrees, jointly designed by employers where much of the study is actually in the workplace, and that is the work that we are doing with Airbus and developing. We have developed in the third year of this a foundation degree which was jointly designed by that company and it is, therefore, directly aligned with the needs of the industry and I think that far more emphasis needs to be put on that level of training, not as an alternative to traditional engineering degrees, but as something which needs to be expanded to meet the needs of the industry.

Q317 Dr Harris: Dr Thompson, you have got strategic partnerships with certain companies. Is that about research or is there any link and is that about education as well?

Dr Thompson: It can be about research or training, so it depends what the company needs are, so certainly with AstraZeneca we have a partnership to provide a different sort of PhD student, so it is much more about business articulating their needs, so we are very flexible on that. An awful lot, 40 per cent, of our portfolio on training is in partnership with industry and that gives some very different inputs into what you want to see and different outputs.

Q318 Dr Harris: How do you evaluate that, the success, because you are investing public money there, and what does the outcome show? Is it working?

Dr Thompson: The one big investment we have had is in this engineering doctorate scheme which we evaluated over the summer. The outputs were incredibly positive, both from industry of being involved, the students that had gone through the scheme with where they were now placed in companies and what they were now earning and the feedback from the universities, so much so that our Council has just taken a step back and said, "Actually, what shall our portfolio of PhD training be?" There is quite a lot of evidence coming through from the evaluation of the engineering doctorate and other activities that a central approach to PhD training, as opposed to individual academics working for four years with their individual students, might give us things which are actually more attractive to industry, so the team-working, which you get if you are in a big research group, but you do not necessarily get it, the communication skills, the working on industrially enhanced problems, the ability to have to report back your findings regularly rather than just wait for the end when you write your PhD thesis up, all of those things produce a skill set which actually, we think, is something quite valuable.

Q319 Dr Harris: And now we have got that in the written evidence. My last question is around the funding of university engineering departments. Could you say, Professor Clarke, whether you think there is adequate funding on a per-student basis or a departmental basis and, if not, what can be done about that? From which courses should the money be taken to properly fund engineering, say, media studies, for instance?

Professor Clarke: The ETB and ETC have just produced a report where they did an in-depth study of five universities to look at the funding for engineering courses and it demonstrated that there was some 14 per cent under-funding and that was met by the recruitment of overseas students, so we are very critical on overseas students to make sure ----

Q320 Dr Harris: And you charge them over the odds?

Professor Clarke: No, we charge them the standard rate, the standard fees.

Q321 Dr Harris: But, if you are getting 40 per cent less standard fees from the others and then you charge the standard fees to these, then surely you are still short?

Professor Clarke: No, we increase the number of overseas students to make up the shortfall.

Q322 Dr Harris: So you are making a profit, and I am not criticising you, but I am just saying that you make your margin on the overseas students in order to subsidise the own-funded?

Professor Clarke: Yes. The other form of funding which comes into universities of course is through industry, so that is also used, but you do have to realise that the funding that is allocated for students by the Funding Council, HEFCE or the Scottish Funding Council, if they have so much for an engineering student and so much for an art student, that does not necessarily go to engineering or art because within the universities they distribute it under their own formula.

Q323 Dr Harris: Can I just probe that because we have had this from science generally about the formula and there is an issue around the closure of chemistry departments. Are you saying that you can show evidence that the increased funding you get per student compared to other subjects is inadequate and then there is a further problem of some universities firing the money into areas where they can attract more students, I guess? What bridges the divide?

Professor Clarke: We can demonstrate that the engineering departments are under-funded for teaching, absolutely. We have that evidence and it has been published.

Q324 Dr Harris: What have the Government and HEFCE said? Do they disagree or fine?

Professor Clarke: Well, this was published a few months ago, so people are digesting this information at the moment. That is the response we have had from HEFCE.

Q325 Dr Harris: Sounds of digestion?

Professor Clarke: Yes.

Q326 Chairman: Has the Committee got that evidence?

Professor Clarke: We can make sure you have got that evidence.

Chairman: It would probably be useful and also because we can then ask the Department for a response to that.

Q327 Dr Harris: Approximately what is the quantum across the sector where you feel there is a shortfall?

Professor Clarke: Well, the 14 per cent is just to get us to stand still.

Q328 Dr Harris: What is that in millions of pounds?

Professor Clarke: I would have to give you that in the report.

Q329 Dr Harris: But 14 per cent to stand still?

Professor Clarke: Yes.

Q330 Dr Turner: I would like to ask both Dr Thompson and Professor Clarke about their feelings about engineering research in the UK. What do you think are its strengths and weaknesses?

Dr Thompson: The UK has some real strengths in engineering and, increasingly, in engineering linked to other disciplines, so breaking out of traditional mechanical, chemical and civil into application domains, so, if we look at where we stand on transport studies, for instance, a great strength in the UK, if we look at where we stand on elements of materials engineering, huge strengths, control engineering, so we have some great strengths. I think a real problem in the UK is actually brigading the different groups together to look at how they work together on problems, so, if you look at the great strides which have been made forward in nanoscience, actually bringing the engineers in alongside the nanoscientists so that you make sure you can produce more than one of these structures or devices, multiple devices, is a real key challenge. That is about the engineering research community looking to the global challenges and opportunities rather than staying where maybe their traditional undergraduate teaching was, which tends to be in their core disciplines of chemical, civil and mechanical. We are seeing those changes happening in an awful lot of universities around the country. The breakdown of the boundaries between engineering disciplines has moved faster, I would contend, than the breakdown of the boundaries between some science disciplines, so a great strength is increasing opportunities, and a lot of those opportunities come from industry bringing problems into the universities where actually a structural engineer working on their own would not provide the full solution, so I think the UK engineering base is strong, but you can always do more to strengthen it.

Professor Clarke: There are two things on strengths. One is the international provision of our engineering research, it is truly international, and we are held in esteem by our peers in America, Australia and other leading countries. The second thing is that much of our research is applied research and that is a strength. In the current research assessment exercise where peer assessment was key, that is recognised and one of the concerns we have is that in the future we still need to recognise that and I gather that is going to happen, so the applied research and the link with industry is actually very important. When we bid for research council funds or funds from industry, we can demonstrate the beneficiaries as being industry and society. Also, we not only have contributions in kind, but we have a direct input from industry into our engineering research, so the strong links with industry and the strong international focus, and we do not have a regional focus, it is international.

Q331 Dr Turner: Overall in science, the UK is second only to the US in the world in the number of citations, but in engineering we are fifth. Should we be concerned about this? Is there a difference between engineering research and the rest of scientific research that there is less pressure to publish or what? Can you explain?

Professor Clarke: I looked at this yesterday when I was on an editorial board. When you list engineering publications, for example, let us take civil engineering, there were 5,800 publications in civil engineering last year, but actually many civil engineers publish under the banner of the environment, earth sciences and other disciplines, so engineering does not just fit into little boxes called 'civil', 'electrical' and 'mechanical', they fit in different boxes depending on what they are doing, so our research is diverse. In terms of citations, all that is referring to is other people and usually academics referring to other engineers as well, but what they do not do is the citation by industry, and we are still conducting research into this now, but the fact is that industry uses the output from the universities because a lot of that is fed into codes of practice, for example, for design for manufacturing, so our work is cited, but it is not publicly quoted and it is used by people, so a lot of our work is used by others, but not necessarily publicly.

Q332 Dr Turner: So that metric can be misleading?

Professor Clarke: Absolutely.

Dr Thompson: It is only one measure.

Q333 Dr Turner: The most important thing is this relationship between engineering research and innovation, and how strong, how effective, how productive is it in the UK?

Professor Clarke: Innovation in terms of?

Q334 Dr Turner: In terms of exploiting engineering research.

Professor Clarke: To commercialise it?

Q335 Dr Turner: Yes.

Professor Clarke: Having set up two spin-out companies myself, I can suggest that there are many entrepreneurial academics. Academics are entrepreneurial by nature and they will generate research output, some of which may not be used, some of which is used, as I say, in

spinout companies. There has been an increase partly driven by government funding, by HIEF funding to encourage innovation and to encourage entrepreneurship, so there has been an increase in activity. In terms of universities receiving funds from industry to support this, I think there is still a gap, there is some way to go, and I think that what you find is that a lot of academic research is driven by people wanting to investigate something, not necessarily because there is an industrial need, and I think that we need to strengthen that component.

Q336 Dr Turner: That of course is perfectly normal in research, it is a perfectly proper drive. How would you suggest that we measure the contribution of engineering research to the innovation process? Are there any measures that you can get a handle on, do you think?

Professor Clarke: One of the most successful areas, and I am very pleased to hear that TSB are going to double the number of KTPs and the RDAs are running as many KTPs, which is very successful as a means of linking industry to research output and also allowing industrial needs to be fed into universities and universities' knowledge being fed into industry, so KTPs have been a huge success. The doubling of the KTPs in the next three years plus the mini-KTPs, I think, will enhance that. I think there are other schemes going on. For example, we are developing, a number of universities are developing with ECUK and HEFCE a proposal to have research-led MSc programmes, so we are looking for innovative ways to create those links.

Dr Thompson: Every country in the world is trying to find the right metrics to better innovation and the conversion from pure basic and applied research to innovation. There are all sorts of measures you can use and one of the most important things is actually the people you produce from investing in research and training, and we very much underestimate that. Case studies provide some really interesting examples, but they can never be a complete set, so you have got the case example of what has happened with Polymer Electronics and you have also got to look at areas like the whole investment in doping fibre optics in Southampton which happened 25 years ago and you just look at how that has revolutionised telecoms with fibre optics and band widths, so there are lots of examples. I think one of the pieces of work we could do is that all of the universities have recently had to cite the impacts of their research in their return to the RAE. If we analyse what sort of evidence universities put forward systematically to say, "Well, does that give you a shopping basket of the types of things that really measure innovation?", a systematic analysis of the types of things universities themselves identify as a measure of impact they are having would be a real step forward rather than people designing from a blank sheet of paper. We can check the patents, we can check licensing, but that is not really what it is about. There has to be a really good two-way flow of knowledge and, if you have got that natural two-way flow of knowledge from universities into business and back again, the UK economy would be very vibrant. Actually the UK economy, despite where we are at the moment, is very vibrant.

Q337 Dr Turner: That brings me straight to the question I was going to pursue because the very process that you have eloquently described does not actually sit very well with the research assessment exercise as it is being carried out. The research assessment exercise does not give you enough credits, so firstly, do you think that that is a disadvantage to the attractiveness of engineering departments because, if it did, there might be more five-star engineering departments than there are which is an attraction for students and, secondly, what changes would you want to see in the methods of measuring research excellence so that it properly reflects the relationships that you have described?

Professor Clarke: The EPC would welcome, do welcome, the move that HEFCE are proposing to go to a peer assessment. What we would like to see is that peer assessment look at the impact that the engineering output and research has upon industry, because much of our work is applied and does not necessarily lead to scientific papers which are cited. It leads to commercial reports which are then used by industry; it leads to products which are used by industry; it leads to design activities which are used by industry. What we would like to see is that captured in the incoming research assessment.

Q338 Dr Turner: It is clearly not too easy.

Professor Clarke: No.

Q339 Dr Turner: Dr Thompson, your research council has expressed concern that the number of PhD graduates has remained static over several years. You would obviously like to see a larger number of PhDs graduating in the UK. How important do you think it is to have more engineering PhDs, engineering doctorates, and how can we do that?

Dr Thompson: I think it goes back to an earlier discussion we had on the flow of people coming through. It is a real concern when certain university departments, despite having funding for bright, young people to do PhDs from us, have difficulty recruiting the bright, young things and when increasingly you are asked: could we not make overseas students eligible to do EPSRC PhDs because we can get high quality or stronger candidates internationally than we can from the home base. That is a real concern for us, and it means that we have to work together to think about how we make sure we exploit the whole talent pool in the UK to get them doing the right subjects at school, and I do not think just engineering but seeing the whole of science, of which engineering is one possible route, as something they value and want to do and then carry that through to the universities and on. I just think at the moment there are far too few people who really understand the excitement of engineering. It is really exciting, but you do not see the excitement of engineering explicitly stated in many things. I think it is fascinating. I love my job.

Chairman: I think that is a pretty good note on which to finish this first section. Can we thank Keith Elliott, Professor Barry Clarke, Dr Lesley Thompson and Lynn Tomkins. Thank you all very much indeed. I am sure that is a very quick canter round the course, but we are very grateful to you for your contribution.


 

Examination of Witnesses

 

Witnesses: Mr Chris Allam, Project Director SUAV(E), BAE Systems, Ms Lee Hopley, Senior Economist, Engineering Employers Federation, and Mr Iain Coucher, Chief Executive, Network Rail, gave evidence.

Q340 Chairman: We welcome our second panel of experts this morning, Chris Allam, the Project Director of SUAV, BAE Systems, Ms Lee Hopley, the Senior Economist of the Engineering Employers Federation, and Iain Coucher, the Chief Executive of Network Rail. Welcome to you all. We are delighted to see you this morning. I wonder if I could start with you, Lee. We have heard some of the strengths and weaknesses outlined there of the UK engineering industry. How would you paint the picture of strengths and weaknesses?

Ms Hopley: Of the industry as a whole?

Q341 Chairman: Yes.

Ms Hopley: I think there has probably been quite a shift over the last decade in terms of its strengths and weaknesses. Certainly engineering is a lot leaner, it is a lot more efficient and productivity performance has been pretty good over the last ten years, certainly relative to the economy as a whole. I think in more recent times it has proved to be fairly resilient in the face of the economic challenges that we are facing at the moment. The outlook still remains fairly good for the sector as a whole. It certainly started exploiting faster growing emerging markets in terms of its export base a lot more. Some growth rates to emerging markets in some engineering sectors have been quite staggering over the last five or six years.

Q342 Chairman: Give us an example?

Ms Hopley: Of an industry?

Q343 Chairman: Of a staggering increase.

Ms Hopley: In the electrical and optical sector, growth rates of three to four hundred per cent in places like Russia and India over the last five or six years; that is pretty impressive relative to manufacturing as a whole and certainly the whole economy. I think, in terms of some of the weaknesses, it perhaps falls down to the skills and innovation debate that you were having with the previous panel. I am sure we will pick up some of these issues in more detail, but on the innovation side, it seems that companies are quite good at coming up with new ideas but getting them to market and the commercialisation side of things is perhaps something of a weakness, and I think that comes back to some of the skills problems that the sector has been facing more recently.

Q344 Chairman: Okay. Very briefly, Iain, strengths and weaknesses as you see it from an industrial point of view?

Mr Coucher: On the engineering side, I think we do a pretty good job. I think this country undersells the value that engineers bring to society; there is a perception that it is the dirty end of the business; but when we look around some of the things that we do in Network Rail and at other colleagues, what we achieve is fantastic. The depth and breadth of our skill-base is unsung really, and so I would say from our perspective the cup is half full rather than half empty.

Q345 Chairman: Are we too keen to concentrate on the weaknesses?

Mr Coucher: I think so, yes. I think we really do. We run ourselves down, we undervalue the contribution, as I said before.

Q346 Chairman: Is that not your fault?

Mr Coucher: No, it is not our fault.

Q347 Chairman: In terms of your own industry, what is the big tail? What are the things we should be putting in our report to say Network Rail gave us an example of world leading engineers?

Mr Coucher: Let us give you some examples of stuff that we do. Unfortunately, from Network Rail's perspective, our measure of success is complete invisibility, so when we are successful you do not see what we do but---

Q348 Dr Gibson: Like your trains in Norwich!

Mr Coucher: I think that is being slightly harsh as well. Every night when people go to bed, even in Norwich and Harrogate, we go out on the railways and have next to no time to repair and maintain a railway which is built by Victorians for a different age and it is hammered. When we come to do some of the infrastructure that work we do, we do incredible things in incredibly short periods of time, and, sadly, when it overruns, as it does from time to time, people see that side; but if you were to go out and see what our engineers do in terms of work, we do some 5,000 projects a year, four billion pounds of capital investment on the railway, and I think we are very, very good at doing that.

Q349 Chairman: All right. Chris?

Mr Allam: Our industry, in terms of defence and aerospace, definitely leads the world at the moment in terms of engineering.

Q350 Chairman: We lead the world.

Mr Allam: We lead the world. We are as strong as anybody else in that position, and our intent is to stay there. What we are looking at at the moment is: what do we do that facing a globalising economy, facing some demographic changes that mean our supply chain of engineers is becoming more fragile and facing a lot of competition across the world effectively moving into the same markets that we run? We believe we are very strong at the moment. What we see coming is a threat. I completely echo Iain's point that we completely undersell that. One of the reasons we do struggle in terms of the supply chain is engineers are not respected in the same way as, say, a doctor or a lawyer.

Q351 Chairman: Whose fault is that, Chris?

Mr Allam: To say "society" is a very weak answer, but, in reality, I think it is the way our country works. We were saying before what countries do you look at that are better? If you look at France, and I spent six months travelling around Europe working with them being trained, but if you look at the way an engineer is respected there, it is different. I would say the same in Germany as well. The level of respect they get is different. I am not sure they are any better than we are. I have worked 20 years as an engineer. I do not see that the Germans and the French are any better at engineering than we are in defence and aerospace, but I do see they are respected in a different kind of way. I think that must have an impact in terms of the way people are attracted to engineering generally, not just defence and aerospace but generally, when they are 12 to 14 and thinking about what do they do, if they see the respect you get being an engineer that would lead them more towards staying with that as a profession.

Q352 Chairman: You are a company that clearly competes on a global basis. You could not exist purely within the UK. It is important that you hit those export markets. Do you feel that you are competitive because of your engineering skills and strengths, and who else in the world is really pressing you, your biggest competitors, in engineering terms?

Mr Allam: To take the second part of that, engineering is fundamental to our success. The absolute bedrock of what we do is associated with engineering. Once you broaden that to effective, complex engineering projects, and fundamentally, although a lot of our business is around working those complex projects, which is about engineering but also the management of engineering and the project management around it, in terms of global scale, there are a number of very big companies, predominantly in the US who are competitors in terms of where we stand now, but there are also strong, emerging markets.

Q353 Chairman: China?

Mr Allam: Like China, for example. Some of those markets we are watching in terms of the way that will affect the global economics. Defence is a slightly unusual business. It is not a completely open market. We have a strong alliance in the UK on the defence sector. So, while we are a global company, we also operate very strongly in our home areas. The UK is a particularly strong area we operate in, and one of the things we are looking for as part of this is lining up that supply and demand; so there is a big, long chain between the supply side of getting trained engineers in and the demand side of effectively the defence strategy of what do the Armed Forces want out of us.

Q354 Chairman: Iain, I am in France next week and I am going on the Eurostar through to Paris; and I look at the French railway system and I know if I get on a train it will arrive on time, the engineering seems to be absolutely out of his world. Why are we not in that ball park, or are we?

Mr Coucher: Once again, we do undersell ourselves. If you want to get off your shiny TGV train as it speeds through the French countryside and get on to a rural French railway, you will find an appalling service.

Q355 Chairman: I would not in Switzerland, though, would I?

Mr Coucher: To be fair, Switzerland is the size of Kent. We run more trains in Kent.

Q356 Chairman: There is a lot of snow and leaves there though?

Mr Coucher: It is a very simple railway. It is beautifully timed, I would never criticise it, but if you look at the size, complexity and scale of what we do in the UK, we run more trains in the UK than in Germany. Our railways are better performing than the French railways. Unfortunately, the British perception of French railways is driven entirely by the TGV, a railway which is dedicated to high speed. It does not share a track with any other railway, it is beautifully timed, and I wish we could do the same here. Whether we could justify that in the UK, given the size and demographics of the UK, I do not know, but we do run a service which delivers very high levels of punctuality. Yesterday, for example, 94 per cent of trains ran on time. We like to see the down side in this country, but I think that we do compete very favourably and if you come and see the number of exchange visits between France and Germany and the Japanese, who come to see what we do in the UK, you may well be surprised just how highly regarded we are round the world.

Q357 Chairman: Lee, one of the questions I asked the earlier panel is this business of preparing engineers for tomorrow's world rather than today's world. Do you feel that we are taking that agenda seriously? Do your employers think that? They have to look ahead, do they not, as well as provide today's workforce?

Ms Hopley: Sure. We have recently carried out a survey of our members on expectations of skill demand in the medium term, and there is definitely a change. Obviously technical and practical skills that the universities and colleges are delivering will continue to be important, but if you look at the kind of activities that companies are increasingly becoming engaged in, things like design, project management skills are going to become increasingly important. The question is how are those delivered. I think the responsibilities of business and higher education, as was said by the previous panel, is a complex one. Perhaps what BAE Systems demands of the higher education system and what they want is perhaps not quite the same as what a small or medium sized company expects. There is going to be the need for greater flexibility. The industry is just becoming more fragmented in the UK, there are fewer really big players and more small and medium-sized companies. There is more work to be done in terms of how you develop that responsiveness from both parties.

Q358 Chairman: That seems to be the big challenge. We hear that time and time again that there are few very, very large companies, but a lot of those large companies are actually dependent on SMEs to do a lot of their subcontracting work or some of their very highly specialised work. I just wonder whether you feel that the Government has got its agenda right in terms of actually supporting those SMEs in terms of engineering to actually deliver the skills, the innovation, the project management for tomorrow's world?

Ms Hopley: I think there has been a lot going on on the skills and innovation agenda for the last couple of years. We have had the Leitch Review, the Innovation White Paper and the Enterprise White Paper.

Q359 Chairman: Is anything happening? We are delighted to have all those papers, but is anything going to happen?

Ms Hopley: I will have to read them. There are a lot of positive initiatives in the pipeline. A number of them were mentioned on the previous panel. The increase in KTPs, the introduction of mini KTPs, particularly for small companies, the proposal for innovation vouchers which is perhaps a really good idea for getting small companies on the first rung of the ladder with that relationship with research institutions. It is in the pipeline, but, yes, there is a need for implementation and delivery.

Q360 Chairman: You mentioned earlier this massive problem there is, particularly for small, innovative companies, if you like, in this space of actually getting the resources to take good ideas to market. Does your organisation actually engage with that? Do you have any suggestions as to how it can be done better?

Ms Hopley: It is getting business and universities to talk to each other differently. There is a lot of expertise out there and business does have good ideas, but it is the commercialisation skills and getting that idea to market; it is linking the two. I do not think the skills are not there, it is how you bring the two together, and it is things like the innovation vouchers and mini KTPs that will hopefully make a difference when we see them rolled out next year.

Q361 Chairman: Do innovation vouchers and KTPs mean anything to you?

Mr Coucher: We have an involvement with them, but our view really is that we need more engineers, we need more project managers, we need a lot of highly skilled people if we are to turn the railway into a very reliable, dependable rail service. Of our own initiative, we have created one of the biggest UK apprenticeship schemes and we are working with universities to give us the skilled graduates coming out. Our need is quite dramatic and short-term, so our simple solution is to go out there, recruit, develop and train rather than waiting, for reasons which are very worthwhile but would not meet our timescales.

Q362 Mr Cawsey: Perhaps I will start with you, seeing as you have just said that. We have been told, of course, that there are serious skills shortages and gaps in the sector. From an employers perspective what precisely are those problems? Is it an overall shortage? Are there specific gaps? In which case, in which sectors and what type of roles?

Mr Coucher: From our perspective the gaps that we face are not the absolute quantity of engineers, although we would like to see more electrical engineers coming through because of their anticipated wider role out of the electrification programme on the railways; so we would like to see more skills in that. We would like to see much greater diversity in our workforce. We are suffering, like most employers, in that the types of applicants we are getting do not reflect society as a whole - so a lot of male dominated roles - but the skills that we need more than anything else are in project management and delivery, what we might call real-life skills in terms of turning theoretical experience in engineering into deliverables on the ground. That is an area where we have the biggest skills shortage. If you look from our perspective, over the next three or four years we need probably 1200, 1500 new project management type skills.

Q363 Mr Cawsey: Chris, what about your industry?

Mr Allam: From our perspective, there are some specific areas that we felt the need to take action on. One in particular is what we term "systems engineering", which you know is effectively software and electrical engineering. We have seen that coming for some time and, if you look at just the way the industry is going, more and more of those skills will be needed but particularly a higher level of skill as well; so it is not just about the numbers game. If you look at the pure facts and figures for our apprenticeship scheme and our graduates, we will actually still get the numbers that we need and we will still get the 300 people a year coming into the apprentice scheme. We have got about 1,000 apprentices going through all the time. The numbers are still there. What we are looking at is: will that continue and can we get the right skill levels in there? In particular, the area of systems engineering is one, and we have formed some strategic partnerships with Loughborough University, for example, to try and deal with those and, as Iain said, to try and take action, which helps us fulfil our own needs, but that is really just sorting out our problem rather than sorting out a more general problem. Can I come back and think about SMEs that we talked about before. We put about two billion pounds into the supply chain, so a lot of the money that goes through into the supply chain and SMEs are a key part of that, and we do find it fragile in terms of when SMEs are there or they are not. One of the things I do think we have got wrong is this idea that only somebody working in a garage can have a good idea. I think that is fundamentally wrong. If you look at big business, the ability to have great ideas and to take them through to fruition is absolutely fundamental, and that is something that smaller businesses really struggle to do because they just have not got the size you need to turn a great idea into a good innovation. It is that difference between what is a good idea and a great innovation that you can then do something with. I think something that needs to be looked at as part of this is: yes, you can create that supply chain of getting good ideas out of SMEs into big industries, or you can support big industries creating their own good ideas, which is one of the ways we have gone about it, again, linking through to universities.

Q364 Mr Cawsey: Lee, you have heard what the two guys from the business say. Is that something you are hearing from the Federation as well about the shortages and the gaps?

Ms Hopley: Yes. Again, our survey suggests that all sectors and parts of the country are having difficulty recruiting sufficient numbers of engineers. Lack of sufficient numbers of applicants is quite often the problem. It is very varied across the industry in terms of the specific engineering disciplines that are in short supply, but I think it is probably fair to say that there is not an over supply in any engineering discipline. I think we have started to see in recent years a return to the apprenticeship scheme by more companies that was abandoned eight or nine years ago. They have actually returned and are trying to grow the skills of their company that way. That is a positive sign, but it is going to come back to ensuring that you have got the young people coming through the education system who are already aware of the opportunities that an apprenticeship can offer and have the appropriate qualifications in order to do an engineering apprenticeship, because clearly it is quite stretching.

Q365 Mr Cawsey: Would you say that your industries are coping at the moment? Is it something down the line or is it real, in your face, now, and if it is now, how badly are your companies being adversely affected by the shortages?

Mr Coucher: We are okay today. We are expecting to see significant investment in the railways and very large complicated infrastructure projects which require a lot more skills. So our skills shortage in that area will become acute in two or three years', and we do, of course, compete for very big infrastructure projects such as Crossrail and the Olympics, so we fight amongst that, which drives cost into the business. The other thing that we are facing as an industry, as we move towards providing a rail service that is open longer into the night and that starts early in morning and at weekends and, of course, at bank holidays, is that we are driving people to work anti-social hours - so into mid-week nights - and people have choices and we are seeing it difficult to recruit people who are prepared to work in an anti-social environment. So that will be a challenge for Network Rail, the industry and, of course, the UK in the coming years.

Mr Allam: We see some real hotspots now. We are okay at the moment, but there are some hotspots. I think nuclear is one that you are particularly going to look at. I would just mention that nuclear is a particular problem area generally. What we see coming is a problem that is going to hit us in the three to five-year period. So if we are looking at the supply chain coming through, looking at the quality of students, the people choosing to do degrees, then what tends to happen is, whilst we might push more people towards degrees, that tends to hurt us in terms of our apprentice intake, and there is a very small pool that are actually working in this engineering area. What we are looking at is the quality of people as they come through the education system. Our business is getting more and more demanding, competition is getting harder and harder. We need the best people in engineering, not just the numbers through engineering, and so we need that whole system to work for us.

Q366 Mr Cawsey: In an earlier session of this inquiry we were looking at all of the engineering demands that are coming down the line for the UK, including for Network Rail, and talking about the shortages that we are likely to have in the future. One of the points that was put to us was that this was a matter for the market and actually, if there are shortages, the market will self-correct and in the end it will all resolve itself. Is that an attitude that we should be taking or do you look to the Government, or is it not your industry's responsibility to ensure that you are getting people through the door to keep yourselves viable for the future?

Mr Allam: It is definitely the responsibility of industry to play a part in ensuring that our business works, that this is one of the mechanisms that makes our business work, and there is no way we will back away from that. However, just to rely on market forces does not necessarily seem the best way to protect one of the best assets of the UK in terms of driving our economy. Just to rely on market forces does not seem the best way forward. What we are looking at in that (and I think your point is a very good one) is what is our national strategy towards engineering, what are the things that we are good at and are we going to stay good at? What are the things that maybe we do not want to do any more? What are the areas in which we want to train and develop our people and, therefore, connect together, effectively, the output of engineering back to the start of engineering and make that work together? Whereas at the moment there is a feeling that it is not really connected in terms of do we really see defence and aerospace as still being important in the future or is it really about railways or something else, and, therefore our engineering pull gets more focused on what the output is going to be; but that is a big picture and it is long-term. It is not even the three to five, it is the ten-year picture.

Mr Coucher: It is not an either/or, is it? The market place has certainly got a role to play in driving it forward, and I think the market has been particularly poor in promoting the value and the excitement you get working in engineering and construction industries. There are plenty of people going to university to study engineering, but where do they go when they come out? Do they go into financial services? Do they go overseas? Do they go to consultancies? We have got to try and track them from our perspective - this is Network Rail talking - to come and work for Network Rail, so we have to make Network Rail an attractive place for people to want to come and work, and that is a role for the market place, I believe. We have got to get out there and promote what we do amongst young people so they want to go university to study engineering and, when they come out, there is going to be work in places like Network Rail or BAE Systems or Rolls Royce, and stuff like that. It is very much a market responsibility to do that, and any help we can get from government, of course, is welcome.

Q367 Mr Cawsey: Lee.

Ms Hopley: Yes, it will take the market a long time to solve the problem, and then it kind of assumes that there is not a market failure, if you like, because all the actors in this do not have access to good information, young people, careers advance and guidance. Do they really understand what giving up science at 16 actually means for their future career? Once you have done with it, it is difficult to return to. You are assuming that everyone in the market has access to good information, and I do not think they do.

Q368 Mr Cawsey: Both BAE and Network Rail have graduate schemes, so we understand. I wonder whether you might like to tell us something about the quality of the graduates that are coming out of the universities. Are their skills matching the requirements that you have for your business? What about (back to Phil's point) ensuring that graduates will have the skills that you will need not just now but in ten years' time? What is your experience of all of that?

Mr Coucher: I can tell you where we started, when the Network Rail acquired Railtrack five or six years ago, and when we looked at the intake for graduates then it was 25: 15 management graduates, ten engineers. This year we will take on 120 engineers and a similar number of management graduates. I would like to double that again. That would be about the level that I think we can cope with going forwards. The quality is good and improves year on year as graduates feedback, people talk to their counterparts back at university and they sell it so we are getting really good quality graduates, and this year we have started a trial - it is more than a trial because it is the first two universities of five that we want to do - where we enter into a specific arrangement with the university - UCL and Warwick first - where we will take people out of the MBSC courses or BEng courses. We will then sponsor a year's project management skills course. They finish that with an MSc and then they come straight to the work place. So we actually sponsor their first year of an MSc course. It gives them an MSc in our skills and our techniques. We will do that and, we believe, when we get the whole system running for five universities aligned to our work for jobs around the country, we will generate around 200 new project managers coming into the industry. We generally believe that we need to keep our pool of engineers and project managers replenished and growing, because nobody else is going to do it for us. The quality is good. It is our responsibility to make Network Rail more attractive than other companies out there.

Mr Allam: We have got a very well-established graduate development framework. Our take on this, our job, is to attract people into our business by offering them the opportunity to develop, to continue to both train and offer a stable and lucrative career in the business. What we try and do, therefore, is structure a training programme and ensure that there is a level stability in that. What we try to do is keep a constant level of graduates coming in. We recruit about 200 graduates every year, and we are consistently doing that. Literally, just at the moment, is probably the first time we have started to struggle in terms of getting in the right level of both quality and quantity. We have to be careful about who we select in that, but, generally, we do get good graduates coming in with good relevant degrees. What we try to do is to work closely with the universities to ensure that is the case, but over the last five years we have tailored some specific courses that really focus on achieving the needs of BAE Systems, and we do see it as our responsibility to work with the universities to do that. We set about that programme and we intend to keep going on it. What we do see, though, is that as our demands get higher and higher the level that we need gets harder and harder to achieve. We do see that supply chain is starting to collapse on us at the moment.

Q369 Chairman: Lee, very briefly, before I bring Dr Gibson in, when I came to see the Engineering Employers Federation recently one of the issues that we did not discuss was how, in fact, you represent the economic significance of engineering, because that is crucially important. I wonder if the Federation has actually thought around that problem.

Mr Allam: Representing?

Q370 Chairman: Representing the significance of engineering and its economic impact. I think that in order to actually portray engineering both here and within Parliament and for the purposes of our report and also to actually give it greater prominence, how do we put values on it? How do we put economic values on it? Is anybody doing that work - can you point us in a direction - to get that work? You will think about it?

Mr Allam: Yes, I would rather do that.

Chairman: All right.

Q371 Dr Gibson: Are apprenticeship schemes really worth all the effort you have to put in, or are you just doing it because the Government gives you money to promote the idea? What do you feel about them really?

Mr Coucher: I am extremely positive about it. We started our scheme three years ago. We take 250 people a year, so we have got 750 young apprentices coming through. They are engaged with the right attitude and the right skills and we genuinely believe that they will become the leaders of our industry in the future. It is a way to a cultural change programme that addresses some of our age-old institutions out there. We would have done this if the Government made no contribution because it is absolutely the right thing. It costs us roughly £56,000 to get an apprentice to be fully qualified. They tend to stay in industry. We do get a large amount of retention because of the workplace system that we have got, so they provide a long-term pay-bank. Just by way of example, this year we were over-subscribed for places tenfold; so we had 3,000 applications for 250 places.

Q372 Dr Gibson: How about BAE's experience?

Mr Allam: Exactly the same. It is absolutely fundamental, the apprentice scheme. We have been running it for an awfully long time. Again, it is a three-year scheme. We take in 300 places a year, so we have got roughly 1,000 people on the apprentice scheme at any one time. It is very important in terms of getting that skilled level of resource into the business, getting it trained effectively to work within the business and comfortable with, if you like, the non-academic side of operating within big business. The key to us and the thing we measure coming out is what is our completion rate? Does everybody just disappear because they are not interested? We have got around an 85 per cent completion rate on our apprentice scheme, and that is a big test for us that says, yes, this is working. We have also been asked recently to do some best practice work, so last month we did a best practice workshop. It is just coming in, but this is how we go about it.

Q373 Dr Gibson: You say you would have done it without the Government funding too?

Mr Allam: The Government funding helps, absolutely.

Q374 Dr Gibson: I am going to take it away from you: governments do that. Then what do you do?

Mr Allam: I think we would do it anyway. You need to supply resource into any business and, therefore, an apprentice scheme and training is the right way of doing it, and we are not going to get that level of skill. We could not work in our business in any other way, apart from to help support the training ourselves.

Q375 Dr Gibson: So it would not matter if the Government changed its public funding arrangements: you would still go ahead with it and you would run with it whatever it was?

Mr Allam: It would matter, because, obviously, the funding is an important part of it and we believe it is important that the Government supports engineering, so we get an economic benefit out at the end. What we would question is: what is your driver for doing that? What are you trying to tell us about engineering? But it is important too that we supply resource into our system and to keep doing it; so almost irrespective of where the company has been and the business has been, we are consistently taking on apprentices.

Q376 Dr Gibson: How would you like the funding of these skills to be arranged? You have said some aggressive things about the Learning and Skills Council.

Mr Coucher: We did say some stuff about the Learning and Skills Council. Our principal concern actually is some of the funding of apprenticeship schemes, because it is primarily aimed at 16 and 17 year olds, and we are starting to see apprentices coming through who, for whatever reason, whether they have stayed on at school or done further study, want to go back and do apprentice schemes, but, of course, the funding drops off quite dramatically once you are over 18[1], so we would like to be able to use the same funding.

Q377 Dr Gibson: When you think about the Learning and Skills Council, do you still feel the same? You are semi-smiling.

Mr Coucher: No, there are parts of it, because of the way in which we are funded - we are not a professional learning organisation, we do not commercially train people, and yet we are treated just as any other organisation - there is quite a lot of bureaucracy that goes around with that. It is quite labour intensive to collect all the information necessary to award some of our qualification certifications and, of course, we are now subject to a full Ofsted type assessment as well, even though we are not necessarily doing this to give vocational qualifications. So there is an imposition of bureaucracy; I wonder whether it is all absolutely necessary in what we do.

Q378 Dr Gibson: Which parts of it are too bureaucratic?

Mr Coucher: The basis that we are assessed like any other learning institution. I appreciate that we have got to make sure that we have got appropriate qualified people who are training and stuff, but there is quite a lot of administrative overload caused by the fact that we have to maintain standards imposed by Ofsted and the Learning and Skills Council.

Q379 Dr Gibson: Two per cent of engineering apprentices are female, four per cent from ethnic minority backgrounds. What are you going to do about that? What are you doing about it?

Mr Allam: One of the things we are trying to do is to attract people into that generally. We have just set up, effectively, a schools road show. Effectively what we do is take a road show, which is very informative, quite light-hearted and entertaining, about what it is like to be engineer and we have taken that into all schools. We are ensuring that we do cover all schools: girls' schools, areas where there are ethnic minorities, and ensure that they get the right level of coverage.

Q380 Dr Gibson: What is the feedback when you do that?

Mr Allam: The feedback is actually positive in terms of, yes, it is well received, but when you measure the output, we are just not getting any change in that, and it is very concerning to us. We have just undertaken a review. Are we doing something wrong? We must be.

Q381 Dr Gibson: Do you have any women working on them?

Mr Allam: Absolutely.

Q382 Dr Gibson: Do you have people from the ethnic minorities?

Mr Allam: Absolutely.

Q383 Dr Gibson: I think you are smart enough.

Mr Allam: All those kind of obvious things that are fundamental to what we are doing wrong we have kind of been through and we are still sat there questioning: "This actually is not working. Is it a bigger issue that we need to tackle?"

Q384 Dr Gibson: How do you pick the areas to go into?

Mr Allam: We do target areas whereby we think we will get a response in terms of people close to our footprint. Having said that, our footprint is massive. We are in all areas, so we do end up hitting pretty much all areas of the country, and if you spread a net widely around our sites you do hit all areas.

Q385 Dr Gibson: Are you aware that there are certain secondary schools which are engineering schools?

Mr Allam: Yes.

Q386 Dr Gibson: Do you go to them particularly?

Mr Allam: I believe we do. I do not see you offering me a list where are we targeting those schools, but we have been through and got support in terms where should we go, where should we target, particularly looking for areas that have got an engineering bias. What we do tend to do though is make the work we do as widely applicable as possible, so make it as broad as we can, provide Internet services to teachers to give them information.

Q387 Dr Gibson: I would hope you would look into it, because if you want to maximise your success, as you obviously do, with the groups I mention, you really have to find the schools where you have got an audience which is at least prepared to listen or is halfway there anyway.

Mr Allam: Yes.

Q388 Dr Gibson: When we asked the group that were before us the last time they did not know how many schools there were in engineering in this country. I find that astonishing. If you are trying to get young people into the profession, that is where you start. Did you read the previous section?

Mr Allam: Yes.

Q389 Dr Gibson: You saw that?

Mr Allam: Yes.

Q390 Dr Gibson: What did you think of that?

Mr Allam: Obviously it is concerning about the level of knowledge, and I think, as I walk in, I am absolutely sure of our level of awareness. I will go back and check that point, but it is of concern if we have already got engineering colleges and schools set up and that we are not making full use of that. One of the points we are making is the system we have got here is not quite joined up; there are some bits missing in this jigsaw.

Q391 Dr Gibson: Iain, do you have a view about that at all? Do you have road shows at Network Rail?

Mr Coucher: We do.

Q392 Dr Gibson: Do you take the train to get there?

Mr Coucher: Of course.

Q393 Dr Gibson: Do you make it?

Mr Coucher: Because it is a lot more successful, reliable and a better experience than going by car.

Q394 Dr Gibson: Touché.

Mr Coucher: We have nine full-time education officers that spend their time going round talking to schools. They have two purposes. One is to highlight the dangers of playing on the railways to children in schools, so it is targeted largely around the railway environment anyway, but they have also got a secondary role promoting engineering. We do a lot of engineering road shows, we do a lot with local communities, but we do still have a diversity and ethnicity problem. On the apprenticeship side, the people that we are taking through our apprenticeship scheme tend to end up doing physical maintenance of the railway asset. It is anti-social, it is hard work, it can be physical and is not particularly attractive to everybody. We take onto our scheme roughly the ratio of people that apply to us, and that is probably fair, but I would like to see more. Elsewhere in our schemes we get a good balance, not as much as I would like, but on the graduate schemes, again, it is representative of the engineers that we have at universities.

Q395 Dr Gibson: You can understand why we asked that. It is not just to put a few fingers up, it is quite important in this society that that is seen to happen, and that might help your recruitment, yes, but it makes a contribution to the society we live in.

Mr Coucher: That is true. On the ethnicity side, what we tend to do is target areas where there is an obvious disparity between our organisation and the indigenous society. So in places like Leicester we are very, very unrepresentative. In part, whilst we do talk to the communities as to why the railways is not attractive to certain groups of people, we also have to look at the way in which people are attracted to the rail industry in the first instance, and there are lots of personal recommendations in the industry, and that causes you a problem in terms of perpetuating a diversity problem. So I think you will see us doing a lot more to try and attract people, because in our work places all over the country we want to try and get representative in the local communities, and it can be quite difficult. If you are looking somewhere you might live, or where you might live, we do have populations there, but they are in groups of 200, and it is sometimes difficult, in a group of 200 people, to get traction in terms of attractiveness for certain groups of people. So if diversity in Harrogate is---

Chairman: That is the point I was making earlier.

Q396 Dr Gibson: Even in counties like Norfolk there are 108 languages spoken, which astonished me, and they do travel on trains!

Mr Coucher: Yes, and that causes us problems as well because it is all about signs and level crossing which they have to use as well, and it is all in English.

Dr Gibson: Your loudspeakers are not all they might be in some of the stations. Anyhow.

Chairman: We will move on at that interesting point.

Mr Cawsey: Some very brief questions about research and innovation. The Government puts support into R&D through tax credits and research councils and HEFCE and all that kind of thing, yet it strikes me from your industry's point of view, it is crucial to your future that you have good R&D for yourselves. Should it not be more about the industry getting involved in R&D work with universities and partnerships rather than relying on the Government to fund a lot of these things?

Q397 Chairman: Could I ask Lee to start on that.

Ms Hopley: I think when you think about innovation in engineering, new product development and scientific R&D is a very narrow definition of what goes on in the industry. A lot of it is about new or improved industrial processes, increasingly it is about innovation in marketing and distribution as companies are penetrating markets that are further away, selling into niche markets. Those aspects are increasingly important for engineering as well and probably should not be overlooked. Clearly things like the R&D tax credit are welcome in the industry and can make a difference, particularly for smaller and medium-sized companies. Industry is doing a lot. It is the point I made earlier about pulling together what is going on in higher education, institutions and research institutions with what is going on in business better and enabling them to speak to each other better as well.

Q398 Mr Cawsey: Chris, at BAE you have an on-going relationship with universities. What have you gained from those partnerships? Are there any examples you can give us of successes?

Mr Allam: Absolutely. Firstly, I do not think we do rely on governments to be the funder and drive research. We take very seriously pulling research through into our business and it is fundamental to what we do, we are absolutely reliant on it, hence a lot of partnerships. We have got a number of relationships set up. To take an example of that, let me give you the example of autonomous systems. The one we are working through at the moment is pulling research very quickly from universities through small, medium enterprises into our business and then getting it in the hands of the war fighter out in Afghanistan at the moment in a short period of time. I think there was a quote before that it takes ten years to build an aeroplane. That is very interesting. Within two years we got brand new technology to the war fighter from blank sheets of paper to result. That is the kind of thing we are doing with our university partnerships and pulling through, effectively, the innovation in the business. There are some real positives there, if you like a small model, of what it can be like if you go about things in a different way.

Q399 Mr Cawsey: This might be more for Lee. You spoke about the difficulties that SMEs can appear to the bigger guys. Is it possible to set up schemes where SMEs can become involved in universities as well?

Ms Hopley: There is activity going on. Some businesses can do it, some universities are very business focused and there are relationships with SMEs and higher education that work well, but then it seems quite polarised. There are a lot of companies who do not really know what to do or where to get information or really how to go about starting a relationship, who they should contact, and universities do not always think about talking to a medium-sized business if they have got a relationship with a big player, for example. Some of the initiatives in the pipeline that I mentioned earlier could actually really make a difference in that respect, just helping kick-start that relationship from an SME point of view.

Q400 Mr Cawsey: That is where the Government could help?

Ms Hopley: Yes. There is work going on. There is potentially a role for organisations like ours to perhaps help to a greater extent.

Q401 Mr Cawsey: Given that it is all global competition now anyway, is the UK a good place to attract R&D compared to other countries around the world, or is there more than we need to do, and what are the differences?

Mr Allam: It is a good place. We have a long history of fantastic innovation, particularly in the defence and aerospace industry, we are very good at it, and that remain the case. There are other parts of the world that spend a lot more money in terms of research. The US just spend more money. What we need to do is really target our research money. We are not going to run our economy in the same scale that they are, but that does not mean that we cannot compete. What we need to be is clever about we do and probably more focused and joined up in terms of our intent and the outcome of it, and that is why I think a more national strategy would be useful.

Mr Coucher: We get the benefits in the rail industry from global competition, because a lot of the equipment and technology that we buy and put onto our railways comes from global suppliers. All of our signalling systems come from European suppliers, from Far East suppliers, from Japan, and likewise, our trains, were it is a very competitive market and innovation is driven on a global basis and we get the benefit of that. From our particular part of research and development, I would tend to agree with Lee, a lot of our focus on innovation is how to do the same thing much, much quicker, so it is innovation in process delivery, and we are looking at the speed by which we do work on the railways, how quickly we replace a set of points, and within a couple of years we will be the world leaders in that - we will be doing it in eight hours, and nobody else in the world can do it in less than 12 - so we drive leadership in that area. Equally, the use of materials. Modular builds: for example, you will start to see footbridges and even road bridges made out of plastic, for want of a better word, glass reinforced fibre, because we can install those in a matter of hours and just lift them in. So you will start to see innovation driven by market forces, driven by the need for us to change what we do and how we do it, and I think we are pretty good at that and I think many people will learn from what we do.

Chairman: Last but by no means list, Dr Harris.

Q402 Dr Harris: I will come back to the national strategy that you have just mentioned in a moment. I want to ask you what you make of the fact that the discipline of engineering has, we count, 36 bodies running it from the TB and the 36 engineering institutions, the Chartered Engineers and the Royal Academy and the Engineering Council. What is it like, big employers working with such a wide range of different organisations, each with a locus in this area? Does that create problems?

Mr Allam: Is it a big problem? No, probably not. It is difficult to get a single voice out of that. There are, to me, too many. Each one is very well-intentioned, they are very professional bodies, all very good, but there is no-one that really represents engineering and, therefore, no one of them has a particular strength, as it were. They are all quite small with a very small voice.

Q403 Dr Harris: Do you both share that view?

Mr Coucher: It may well be 30 odd, but we deal with three or four of them. There are many parts of them which do not apply to us, but we deal and work very closely with people like the Institute of Civil Engineers, the Mechanical Engineers, Railway Signal Engineers and that is it.

Q404 Dr Harris: Would it be useful to have a one-stop shop or at least some streamlining and, if so, what can industry do to press for change? Otherwise things will stay the same because they have each got their own boards and their own habits?

Mr Coucher: From our perspective I do not think it would make any difference. I am quite happy with the arrangements. It does not cause us a problem.

Q405 Chairman: Are they irrelevant?

Mr Coucher: No, from our perspective getting people through a chartered engineer status is important, it professionalizes the industry, it does give a certain level of professionalism and standard, and when you start to get into the work that we do, we do want our people to be specialists now in certain engineering disciplines and I think that the institutes that are there at the moment do bring up the profession in certain areas; and I know they are keen to work much more closely together in some of the common engineering principles, but I want my signalling engineers to be experts in signalling and not generalists who know a little bit about electrical creation and wattage, which will be of no interest to our people. So I am quite happy where it is, because we only deal with three or four of the big ones and, while there are a plethora of smaller ones, they do not have a significant impact on what we are doing.

Q406 Dr Harris: We would like all your engineers to be good at signalling. I cannot disagree with that. Mr Allam, you have mentioned this issue of the National Engineering Strategy. We have got little time left, but can you specify the main reasons why - if you just list them - you think we need that? What are the main deficits that that would be aiming to meet?

Mr Allam: Fundamentally, I think we have got a gap between what we see as being the outputs of engineering and the real focus in terms of what drives the economy and the input side, where we are training and developing our people and where we are focusing them. I think that spans such a breadth that we need to be focusing on both sides of that: what is the output we want and, therefore, what is the input we want going in terms of the training and development? The second part of that, I think, is to get this focus on engineering as a professional institution, and that does come back to professional bodies. I would like to see a more professional engineering profession within the country whereby there is a real drive to become accredited in engineering. At the moment, in a lot of areas, there really is not a drive to do that; you can quite happily carry on without being accredited and be a good engineer, but I think we need to lift that standard, and that is why co-ordinating the bodies, I think, would be useful.

Q407 Dr Harris: Where are you up to with this strategy? Is it something you want to do or is it in the process?

Mr Allam: What we are looking to do is to try and encourage the Government to support that. We do not see that as being necessarily an industry-led strategy. We are recommending here that you think about: would it be a good idea to join that together? We do not see that as something industry can do on its own.

Q408 Dr Harris: If our report that we are going to do meets your requirements - and you do not have to pay us for this anyway, we will do it anyway - would you give it some backing?

Mr Allam: Yes.

Q409 Dr Harris: To help us with this, to use the words you put in your evidence, again very briefly, because it is a big question I am going to ask you, how can we "encourage" the brightest and best people to seek careers in engineering as opposed to politics?

Mr Allam: To keep the answer brief, it is fundamentally about encouraging people about the benefits that engineering brings to society and the benefits they will get from entering the career of engineering. It is that key focus area around the school time where people decide what their career is going to be where we see the weak link at the moment in terms of attracting people into engineering. We have got a lot of good further education courses that people can go into, but a lot of people are deciding not to. Fundamental beyond that is then around ensuring that our engineering businesses are supported within the country so that there is a strong blend of businesses that people go into, that is both the small businesses and the big ones as well that really drive the economy.

Q410 Dr Harris: Thank you. Admirably brief and succinct and I appreciate that. Finally, there is this intriguing line in your description of what we need to do, which is to say we need to alter our approach to public and private research funding to ensure that research outcomes generate greater competitiveness. Discuss briefly again.

Mr Allam: What we are really talking about there is getting the focus on research so it has an impact on the end goal. Defence and aerospace is an easy one, effectively: you can see the end goal in terms of supporting war fighters, getting equipment to the front lines. It is really around getting research focused on and actually supporting that end goal and more the pull of research with maybe a little bit less of the push of research. It is absolutely valid for some research to be speculative, that is a good way of doing research, but we see a more focused pull of research would be beneficial so that our money is more targeted in terms of where it goes.

Q411 Dr Harris: You think the public funding EPSRC, for example, should be directed differently, more in collaboration with industry?

Mr Allam: Yes.

Q412 Dr Harris: Do they agree, or do they say, "Yes, we have got it wrong. We are not industry focused", or do they say, "We are doing that already, thank you very much"?

Mr Allam: I think there are some very good examples where that is happening. Some of the defence technology centres are starting to do that. I cannot answer for them, and therefore will not, but I think there are some good examples, but that is something we can do more.

Q413 Dr Harris: I have finished my questions. Is there anything either of you wanted to add to that?

Mr Coucher: I was only going to reinforce what Chris said about the role of government and promoting engineering as a worthwhile career. If you look at places like France, Germany and Japan, where you have got a very large industrial society, people understand automatically the value of engineering contributing to society. In the service economy here in the UK, people do not necessarily connect future careers in engineering with the success of the country, but it is more in tune or more obvious in the big industrial relations inside the rest of Europe. So I think there is a role for the Government to be more supportive of what we do, because at the end of the day the country needs engineers to drive the UK economy forward.

Ms Hopley: Although I do not necessarily think that this needs another strategy, I think Lord Sainsbury had a lot of good stuff to say about the issues in schools with careers advice and teaching and embedding STEM more into the curriculum. I think that should be the basis of progress going forward really.

Q414 Chairman: I do not think there has been a single session where that comment has not been made over the last two or three years; that STEM subjects are absolutely crucial to so many of these agendas. I would have loved here to have talked to you about why Chris can send a piece of kit into Afghanistan within three months and yet the level-crossing at Poppleton still requires a little man to open it six times a day, which means my train is always delayed into York. I leave that hanging in the air.

Mr Coucher: I will happily write to you. I was at Poppleton level-crossing about three weeks ago talking about the very same subject.

Chairman: A note of accord at the end. Could we thank you very much indeed, Lee Hopley, Iain Coucher and Chris Allam for your evidence this morning.



[1] Note from the witness: "This figure be 19"