Examination of Witnesses (Questions 400-419)
IAN LUCAS
MP, MS JANE
WHEWELL, AND
MR IAN
GREGORY
10 JUNE 2009
Q400 Mr Binley: Where I see surprisingly
large amounts of money, surprisingly large amounts, going in and
have been going into the auto industry sectors in various countries
for a very long time. Are you really telling me that there is
a particular down on Britain and we have to go through many more
processes to get money into our British auto industry which they
do not have to go through in Europe?
Ms Whewell: I think we are perhaps
talking about different types of measures.
Q401 Mr Binley: We are talking about
money into the sector. They say this: "Other countries seem
always to find ways around this particular problem. We rarely
do," and I just wonder if there is a problem with our culture
in that respect?
Ms Whewell: I think in terms of
what the FLA were raising there are very specific issues. I am
not aware of another country which has tried to do what we are
trying to do and it is a very specific type of support they are
asking for. In terms of more general forms of support, we have
gone to the European Commission, pressed them hard and received
clearances in record time, so we have had the clearance for the
AAP in record time, two different sorts. So I do not think we
are backward in coming forward on more generic support for the
industry.
Ian Lucas: I would be very interested
in the document which you have referred to and I will look at
it.
Q402 Mr Binley: We are very hopeful
of your impact, genuinely very hopeful because, as the Chairman
says, there is a great deal of urgent need out there if we are
going to save a vital industry to Britain's long-term future and
I am not sure, prior to your becoming a Minister—and I want
to exclude you because it would be absolutely unfair if I did
not—that I see the degree of urgency that we really need
to see in this area if we are going to achieve that objective.
I want you to take that as a comment because it is an immensely
serious matter and I do not think you have done anywhere near
as well as you ought to as a Department, quite frankly.
Chairman: Well, there you are, that is
being kind!
Q403 Miss Kirkbride: I want to really
touch on what Brian said, which is other governments and their
support for their automotive sectors. Just out of interest, you
said earlier that their unemployment rate was much higher than
ours. What are the two respective rates at the moment?
Ian Lucas: I do not know the exact
figures.
Q404 Miss Kirkbride: Because I wondered
whether that was still quite so true any more, certainly if you
compare the old West Germany with the UK?
Ian Lucas: Yes. Certainly historically
in the last 10 years the German unemployment rate has been considerably
high -
Q405 Miss Kirkbride: After reunification
it is still higher?
Ian Lucas: My official understanding
is that it is still higher, but I will check and I will write
to the Committee.
Q406 Miss Kirkbride: But what is
it that other governments are doing to support their automotive
sector which you might think we could learn from, or that they
do more of, or do better?
Ian Lucas: I am aware of there
being merits in the type of training support which was referred
to by Mr Bailey earlier and the assistance that other governments
have taken to use the reduction in hours, which sometimes occurs
when there is a reduction in demand, to develop training and improvement
in practices within the industry. That is certainly one area which
I know has been looked at. I think as a backbencher I observed
that the Department was looking at that and I will be interested
in looking into that and the reason why the conclusions which
were reached were reached at that stage.
Ms Whewell: On scrappage we looked
at experiences around Europe to try and get the best and avoid
perhaps some of the potential pitfalls, so we certainly looked
at the way other countries were operating their schemes and the
different types of schemes in order to try and identify the best
way for us. I think certainly some pitfalls we were able, so far,
to avoid by looking at the lessons and the experiences of our
colleagues. I have spoken to my opposite numbers in other countries
as well to see what they are doing.
Q407 Miss Kirkbride: Have you got
any figures on the amount of actual money being put in by the
European countries versus us? Where do we fit on the scale of
financial help to the automotive sector in the UK when compared
with our other European colleagues?
Ms Whewell: Strangely, it is very
hard to get figures on actual money going to the sector. Schemes,
yes; money transferred, no. It is very hard to get that data and
we have looked.
Q408 Chairman: Is that partly because
some of the schemes are manufacturing wide, not automotive specific?
Ms Whewell: Even the automotive
specific it is very hard to get the data for.
Q409 Miss Kirkbride: What about the
issue of getting clearance with the EU? Do you have any lessons
to learn, do you think, with Europe on that front because you
were previously telling Brian that months can pass before you
get acceptance, but that does not seem to be the case—maybe
that is just from the newspapers, but it never seems to be quite
the case with other European countries?
Ms Whewell: Again, the issue which
might take months is a very, very specific, very technical, very
complex financial instrument. In terms of the sort of support
that is being made available across Europe, we have had clearance
in one case in 10 days, in another case I think it was 14 because
a holiday landed in the middle, so we are getting very, very swift
clearance. This one particular issue is very, very complex and
it is probably the most complex issue I have ever dealt with.
Q410 Chairman: Can I, just before
I bring in Roger with the last questions on short-time working,
just press you a bit on finance arrangements? There has been a
lot of concern in the industry about the failure to move something
like the schemes available in the financial services sector. This
is the role of automotive car finance arms and they are not quite
banks. Do you feel there is still scope for doing something more
to help people and companies finance their car stocks, their car
purchases?
Ms Whewell: That is the very piece
of work I was talking about in Europe and it is definitely progressing,
and we are doing our best to move it as fast as possible.
Q411 Chairman: Excellent! What about
this issue which I do not pretend to understand, which is a detailed
point, port rents, which is the backdating of rates at ports where
cars are stored? I will read out what it says: "SMMT urged
government to defer the imminent change to the way business rates
are assessed and collected at ports changes to 2010 and not to
backdate their reach to 2005. This change still poses a real concern
to automotive companies which import and store vehicles in statutory
docks and harbours in the UK. There are no more leads on any action
government is taking here."
Ian Lucas: I need to look into
that matter, so perhaps if you could supply me with the information
I will do so.
Chairman: We will get the SMMT brief
to you. We will do that. The point is, there is some macro stuff
here which we were talking about and also a lot of micro things
which add up in total to quite a bit. We also need to remember
in all this—and I think you understand this—that although
the manufacturing arm is very important and we are concerned about
that, also the retailing arm actually employs twice, even perhaps
more people, so actually the support for the industry in things
like business rates matters a lot.
Q412 Roger Berry: Congratulations,
first of all. Short-time working is a common response as an alternative
to redundancy during a recession. It has been a significant response
to the automotive industry, as it has been elsewhere. My question
really is, what is the Government's attitude to short-time working
compensation schemes of various kinds because throughout Europe
we see a range of schemes, wage top-ups from social security,
training costs, a whole range of schemes and we see some countries,
in fact most countries are doing some of this and there are few
countries, of which the UK appears to be one, where the UK does
not appear to be doing (according to Brussels anyway) any of these
things? Can somebody explain the Government's attitude to short-time
working compensation schemes which for many seem a sensible, if
not without problems, response to the situation?
Ian Lucas: I think what the Government
would like to see is the reduction of working hours for employees
being used for increasing training and the development of skills
and for investment by Government to be used to develop those skills
in England through the Train to Gain scheme. That is why more
money has been invested in the Train to Gain scheme to achieve
that. So I would say that the Government is putting money into
supporting employees who are on short-time working to use it as
an opportunity to train them. That position is happening in England
at the moment and I think there has been quite a flexible and
positive response from the Department of Innovation, Universities
and Skills in respect of Train to Gain in putting forward Train
to Gain as a scheme which could be used in this context.
Q413 Roger Berry: I do appreciate
the need for conditionality, but the Train to Gain scheme is pretty
modest when it comes to the automotive industry, is it not?
Ian Lucas: £100 million.
It has been increased from 65 to £100 million.
Q414 Roger Berry: I accept there
has been a significant increase, yes. How many jobs do you reckon
that takes?
Ms Whewell: It will vary from
company to company.
Q415 Roger Berry: I was thinking
in total, that kind of money. I do not want to go on at length,
but looking at what other EU countries are doing, looking at an
EU document published only a fortnight ago it seems to suggest
that most EU Member States are actually doing far more in terms
of short-term employment support schemes than we are doing. Do
you feel that is accurate or inaccurate?
Ms Whewell: Helpfully in this
context in my previous life I did European employment law. The
other countries are indeed making—it varies, but many of
them are making extensive use of this system, but in almost all
cases this has in fact been a fundamental part of their social
security system and both manufacturers themselves and in many
cases workers themselves have been paying into a system almost
a form of insurance, you could say. So they are now getting paid
back what they have paid in, and indeed in some countries the
very, very high social charges about which employers and companies
complain bitterly—this is the flip side of those high social
charges and, speaking personally, I am not sure I would like to
confront the manufacturers if I suggested introducing the same
level of social charges in order to fund a wage subsidy scheme
in the future. So we are not comparing like with like with a system
into which companies and sometimes workers themselves have been
paying in for sometimes many years and now they are paying out.
So it is apples and pears.
Q416 Roger Berry: Thank you, that
was a very, very helpful reply. I certainly looked at part of
that but not all of it. That is really helpful. In terms of what
we do have then, where we are today with Train to Gain, do you
see scope for a further ramping up of that? Clearly there is a
need out there to do more to keep people in employment, doing
useful things. Is that ramping up Train to Gain, or is it Train
to Gain plus other initiatives which the Government is considering?
Ian Lucas: I think the key to
getting through the situation is what we were talking about earlier,
namely increasing demand in the marketplace. I think these issues
are important but I do not think they can take the place of that
demand because ultimately we can train but I think, as the gentleman
said earlier when he was giving his evidence, we have to make
sure the jobs are still there. So the focus needs to be on keeping
the companies going at this juncture by increasing demand within
the market and obviously whatever we can do to try and facilitate
the systems for an individual company which thinks it has a future
and could benefit by improved training for the workforce we will
try and do that.
Q417 Roger Berry: You will know that
today manufacturing output in total has stopped falling and there
is a little increase. The prospects for the automotive industry
over the next six months, how do you read that?
Ian Lucas: I sense—and this
is my perception in my constituency, which is a manufacturing
constituency—that things are getting better from a very,
very difficult position and the Government is doing what it can
to make that happen. I do not think it has happened by accident,
I think it has happened because of decisions which were made in
the autumn and action which was taken then. I am pleased to say
that with the scrappage policy we have pursued orders now sit
at 48,000, so that has been an increase in demand, and companies
have actually taken on staff in the automotive sector because
the positive response to that scheme is high. So we are doing
all we can because we recognise the importance of the industry,
but it is still a tough time and if the present position continues
then obviously we need to look at the position again.
Q418 Roger Berry: A final question.
I am getting the feeling here that you believe the scrappage scheme
has actually been probably one of the most significant ways of
boosting demand for the industry. If that is the case—and
I know you are not the Chancellor, at present—is the Government
looking at ramping that up in some pretty obvious ways? Is it
under consideration? Can it please be under consideration? I think
you know what I am saying.
Ian Lucas: I know what you are
saying. I will have to look at how successful the scheme is and
what the position in the marketplace is at that particular time,
but obviously policies that work are generally good policies to
follow.
Roger Berry: What a good note to end
on!
Q419 Chairman: Not quite, just a
last word from the Chair. I agree with you, it was a good note
to end on. It is really a bad note now, but this is an asymmetric
recession, it is affecting certain sectors worse than other sectors.
We are all agreed now, there is a new consensus, a very welcome
consensus in the UK that we need to do more to help manufacturing
businesses in general and make sure that the economy has an even
stronger manufacturing base than it does. It is a much stronger
base, you will know from your constituency that Airbus and the
automotive sector is very strong. We have still three world-class
manufacturing sectors and many other small sectors. The big ones
are automotive, aerospace and pharmaceuticals. Now, here is the
British automotive sector facing its biggest crisis for I do not
know however long and we see, most worryingly of all for me, possibly,
the supply chain gets "hollowed out" (to use the words
of your own team's report) and we see those supplies losing skilled
labour and they go off to start filling shelves in Tesco, or wherever
it is, instead. There is a real risk of a permanent loss of a
huge swathe of currently highly skilled people to the industry
and so when we come out of this recession, as we all know we will
in six months' time or a year's time, whenever it is, there is
a real risk that our competitors, who have done more to keep that
skills base alive within functioning businesses, will be better
positioned than British automotive companies in the supply chain
will be and we could see that in a year or two year's time we
are paying quite a heavy long-term price if we lose that skills
base, not just the MEs but also for the supply chain. That is
how I feel about it and I am most worried about losing that skills
base and I hope that is something you will focus on very strongly
in your new role, Minister.
Ian Lucas: I will do that, but
the key to keeping the skills base is to keep the jobs and the
big companies going, and clearly we want to do all we can to ensure
that happens.
Chairman: You look after JLR, please.
Can I say how grateful the Committee is to you and your two colleagues?
I hope we were relatively gentle, but I hope still probing and
inquisitorial. We do aim to produce a report of our views as a
result of these sessions, but we are genuinely grateful to you
and we wish you every success personally, and we wish the new
Department every success because a lot hinges on it! So to your
officials and you, Minister, thank you very much indeed.
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