Examination of Witnesses (Questions 280-299)
ADVANTAGE WEST
MIDLANDS
12 MAY 2008
Q280 Miss Kirkbride: Only 30?
Dr Hutchins: Only 30.
Q281 Miss Kirkbride: And how many
are there at the moment?
Dr Hutchins: 3,000.
Q282 Miss Kirkbride: But Mr Extance
just said that it was important we had different schemes because
we all behave differently, so thirty is enough, is it?
Dr Extance: Thirty is plenty!
Q283 Mr Wright: In your submission
you argue that the United Kingdom can respond to the challenge
of global competition, especially from China and India, which
has a huge resource of upskilling workers, by employing more graduates,
upskilling the workforce and improving its strategic leadership
and management skills. How much access do West Midlands' companies
have to skilled workers either at production, graduate or post-graduate
level?
Mr Laverty: It is fair to say
it is a well-known fact that it is becoming common knowledge in
the West Midlands that we have a skills issue. At both ends of
the spectrum we have more people with no basic skills and less
people with graduate level skills than almost any other region,
which is not something to be proud of, quite naturally, but understanding
the size of the problem and the challenge we face has given us
some chance of addressing the issue. We have worked out, for example,
the West Midlands needs to get 70,000 more graduates into the
private sector, that is the size of the challenge in the West
Midlands, so working with some of our partners you can start then
saying: Are we producing enough graduates? Are there graduate
employment schemes? Is the transfer mechanism between the graduate
and work experience schemes making graduates more employable?
Have we got the building blocks in place to persuade those businesses
to take on the graduates? The West Midlands is generating enough
graduates; arguably, there are some disciplines like engineering
where we could do with more; it is our graduate retention that
is the issue. So if we could retain the graduates we produce we
would start making an inroad into the skills deficit in this region,
so what we have to do is work with the organisations in the West
Midlands and right across the West Midlands and essentially persuade
them that investing in a graduate or upskilling their current
workforce is an investment in a business, not a cost to the business.
It is not just about graduates—something like 70% of the
2020 workforce in the West Midlands is already in the workplace,
so it is persuading those organisations by a variety of means
to try and invest in their workforce.
Q284 Mr Wright: Do the businesses
recognise the importance of upskilling their workforce?
Mr Laverty: Some do and some do
not; there is a spectrum. Some enlightened businesses understand
the importance of skills and innovation in terms of their future
prosperity; some do not, and you have to use a range of mechanisms
to try and persuade them, from perhaps demonstrator projects where
you can produce case studies and try and influence their thinking
in that sense. There are two schemes that we currently do, and
some are mentioned in this book, like Graduate Advantage where
we place graduates in businesses, we have work experience placements,
we have a brokerage service, we invest in management leadership
skills—there is a range of interventions. We are trying
to crack this problem from a number of different viewpoints, and
there is no one that will work on its own; it is a continuing
struggle.
Dr Hutchins: This is one of the
reasons why, with our partners, the Learning Skills Council and
Higher Education Institutions in the region, and organisations
like the regional Chambers of Commerce and the CBI, the Federation
of Small Businesses, we are the first region—and we are
very proud of this—to produce a Skills Action Plan. One
of the objectives is to try and address the problem which you
have just put your finger on, which is raising the demand for
skills and encouraging employers to invest, in a public/private
partnership between key organisations, to encourage investment
in skills and close these gaps.
Q285 Mr Wright: You mentioned the
fact that one of the problems is retention of graduates. Have
you done any research in terms of where they are going to?
Dr Extance: The major move is
down to London and the South East.
Q286 Mr Wright: Salaries?
Dr Extance: Salaries, jobs, engineers
going to finance institutions and so on.
Mr Hutchins: Aston University
is conducting a study at the moment of just this issue.
Q287 Miss Kirkbride: But do they
not come back when they get a bit older?
Dr Hutchins: Yes.
Q288 Miss Kirkbride: So you really
need to put a lot of effort into stopping them because it is more
fun to live in London, is it not, when you are 21, probably, whereas
when you are 35 it is more interesting to live up here.
Dr Hutchins: I think you are absolutely
right, it is graduate retention and attraction. It does not matter
where the graduates come from as long as they come to this region
or stay in this region and go and work in the private sector.
We are very good at putting graduates into the public sector;
we are less good at putting graduates into the private sector.
We need 2,000 more graduates a year going into the private sector,
and our current projections show that we will not hit the Leitch
level 4 targets in this region, and it would be surprising if
all the money available to higher education were enough to enable
us to close that gap, so therefore we need to work with the private
sector to help us close that gap.
Q289 Miss Kirkbride: On that figure,
is that because the graduates we are talking about are all doctors
and teachers? Is that the comparison you are making when you talk
about the public versus the private sector? Because obviously
they are very big employers, so it would be quite a high hurdle.
Dr Hutchins: Absolutely, plus
the local authorities. Birmingham City Council is a huge employer.
Mr Laverty: Graduates going into
the public sector is good in a sense in that you probably get
better value for money and slightly better efficiency but it is
not a wealth creating sector, and there is a limit to the number
of graduates who want to go into the public sector.
Q290 Miss Kirkbride: In your memorandum
you talk about some pilot programmes to get more graduates into
SMEs. Is that what you have been referring to?
Mr Laverty: Yes. Some of them
are outlined there, and we can certainly provide more information
if you would like.
Q291 Miss Kirkbride: We talked earlier
in the evidence session about the problems of getting STEM graduates
into university in the first place from schools. Is there anything
that Advantage West Midlands can do to help or encourage this
process, or do you have any observations?
Dr Extance: Through the Science
City activity we have engaged Thinktank and Millennium Point with
partners in the region like the science learning centres and Setnet
to look at the plethora of activity that goes on in trying to
encourage young people to take on science and technology, and
the problem we have is that it is quite unco-ordinated nationally,
so we are looking to do some work through Thinktank to try and
bring some co-ordination to that. We are running a number of events
through Thinktank, as many other people do, to provide some interest.
In 2010 the British Association are bringing their Festival of
Science to Birmingham and that will become a permanent venue every
three or four years, they are not moving around the country as
much as they used to, so in 2010 we have a big opportunity through
the Festival of Science to make a big song and dance in the region
about the value and the interest in science and technology. We
did a festival innovation last year at the NEC as part of the
Lord Stafford celebration, where we had a number of school children
coming round to see what the universities and other players were
doing in science and technology, just to excite them about what
was going on, but it is long-term strategy and, whilst the exams
are seen to be more difficult than other subjects, it is quite
a challenge. I remain absolutely surprised that children do not
see the interest in science and technology. I was a physicist!
Q292 Miss Kirkbride: How much do
you get the schools to engage in this with you? Or do they have
too much to do?
Dr Extance: The schools are engaged
through a number of programmes, not directly through us, and we
are certainly working with a number of partners to identify what
is best, because the danger is we have a number of unconnected
activities and schools do not know who to ally with. That to me
is one of the national challenges. There are so many options;
it is very hard for a school's head of physics or chemistry to
decide which one to go with. So there is a national challenge
there.
Q293 Mr Oaten: You have taken over
the managing of the European Regional Development Fund. How is
that going? Has it been helpful taking direct control of that?
Mr Laverty: Yes. We have managed
to align the European programme directly behind the original economic
strategy. We think we did that fairly successfully with the last
round, the 2002-6 programme, but this programme here is directly
in support of the Regional Economic Strategy; it supports innovation
and business support, so we see that as resource that has come
in right behind the RAE which is what we are keen to see happen
across all public sector funding streams. We are very pleased
that there is good alignment there.
Q294 Mr Oaten: Would you say that
you get more support for innovation from European funding than
through United Kingdom government funding?
Mr Laverty: Not necessarily. We
have what is called a Single Pot; we get money in a basket from
government that we can spend in line with our priorities, so we
have chosen to spend a certain amount of money on innovation,
for example, from our own resource and when we have articulated
the European programme, which is fairly flexible as well, we have
articulated how much money we want to spend from the European
programme on innovation, and again we have decided to spend another
big chunk of money on innovation, not least because you need to
spend your own money to draw down European money as matched funding,
so no, I would not necessarily say we have more money for innovation
from Europe. We have been able to articulate with partners how
much we want to spend on innovation from our own source and from
Europe and it adds up to quite a considerable bit in this region.
Q295 Mr Oaten: So it would be, say,
30% coming from European funding and 70% coming from UK government
funding on innovation?
Mr Laverty: Off the top of my
head I do not know the exact figure but we could certainly let
you know.
Q296 Mr Oaten: But you would say
United Kingdom government funding is more than the European funding
coming in?
Mr Laverty: Yes. In practice we
have decided to spend it in a certain way, and I can provide you
with the exact detail, but in theory the whole of our Single Pot,
which is £300 million per year, could have been spent on
innovation activity if that was what the region as a consensus
thought was sensible. It is substantially less then £300
million per year, but that was our choice as a region.
Dr Extance: Over the next six
years of programmes there is about £95 million earmarked
of European money through the structural funds for innovation.
Q297 Mr Oaten: Finally, do you think,
then, given all of that and those figures, that United Kingdom
government should be doing more to directly help with innovation
than it is?
Mr Laverty: I think that is a
difficult question to answer. Everything we have said today is
in summary saying that we need to convince the private sector
to invest in innovative activity and in our workforces. There
is a role for the public sector but it cannot solve the problem,
and I wonder how much money the public sector would need to solve
the problem. Substantially more than the Government could afford
across England. So I do not think necessarily, if you just keep
piling in more resource, things will get better. It is perfectly
correlated; there will come a point where you are spending more
but where it is not making any difference, and I do not know what
that point is.
Mr Hutchins: It comes back to
the point of joining things up through our enterprise agenda,
our innovation agenda and our skills agenda. You get much more
bang for your buck if you join those up and point them all in
the same direction under the Regional Economic Strategy than if
you just focus on innovation.
Dr Extance: I think the Innovation
Nation White Paper is very important because it puts the focus
on procurement and pre-procurement activity in way that is stimulating
innovation. In West Bromwich we have an "i-health" house
in a two-up two-down in Edgar Street which we have fully equipped
with aids to help older people stay in their houses, with products
mostly available in the market place, some are new, but it is
a demonstration of what you can do with technology and what new
technology is required to support that activity. That demonstrator
approach of putting things together and saying: This is what it
is like, these are the product opportunities and this is where
we want innovation to be focused are very valuable, and anything
the Government can do to stimulate that approach would be very
valuable on top of the funding for basic research and on top of
the funding for skills, because it just provides a market focus
for what we are doing.
Chairman: Thank you very much. I am afraid
we must cut things short there. Can I express my gratitude to
all those who made this evidence session possible, including the
Committee staff, our hosts at Coventry University and, not least,
our witnesses. Thank you also publicly for the programme you have
put together for the Committee, and we will see some of you later
at dinner where we can talk over these issues more informally.
Thank you very much.
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