EXAMINATION
OF WITNESSES
(QUESTIONS 360-379)
TUC
4 NOVEMBER 2008
Q360 MR
HOYLE: Did I get it right that
you were saying that the interest rate should be cut to 3%? How
do you feel about the Government asking for a 12% return on its
money from the banks? Is that having an effect as well? Do you
think if that was reduced, there would be a saving in redundancies
and that it should be done voluntarily?
MR
PAGE: Yes. Basically
what we are calling for is that the banks should enter into discussions
with the trade unions to explore all the options for how those
mergers take place with a view to minimising the pain for bank
workers. It has not been proven that there have to be compulsory
redundancies at the moment.
Q361 MR
HOYLE: You are saying that should
be the last resort instead of the first resort? I think that is
the message and it is clear that that has not been coming out.
Hopefully, we can get that. Do you think the Government is asking
for too much return on the taxpayers' investment?
MR
PAGE: No, I
do not think so.
Q362 MR
HOYLE: That may ease the effect
on the banks?
MR
PAGE: Yes.
Q363 MR
OATEN: I hate to be brutal about
it but there is a total inconsistency in your argument, as far
as I can see, because on the one hand you are saying the Government
is right to get its 12% pay-back from the banks but, on the other
hand, you are taking away the ability for the banks to be able
to achieve those payments. Two of the ways in which they might
be able to achieve those payments would indeed be to make 20,000
people redundant to cut costs with the merger; and the other way
of course they can help to achieve those payments back is to delay
the point at which they do in fact pass on interest rate cuts.
With the one hand you are endorsing the fact they have to pay
the Government back but you are taking away their levers for achieving
that?
MR
PAGE: I do not
think we are taking anything away.
Q364 MR
OATEN: You are trying to tie them
down to such an extent that they will not have the freedom to
perform.
MR
PAGE: What I
am suggesting is that they enter into full discussions with the
trade unions and explore all the options on how they move forward
to repay the government debt and to try to do that in such a way
that compulsory redundancies are at a minimum. I am not suggesting
that there will be a pain-free way of doing this because there
will not be. We in for a lot of pain right across the economy
over the coming months. We are saying that we have recognised
trade unions in place and we would encourage the banks' management
to negotiate and to discuss all the options with those trade union
representatives.
MS
O'GRADY: There
is a broader point or headline point, which is about the equality
of sacrifice. I am not sure how far the message has got through
about just how angry ordinary people, and ordinary working people,
are about what is perceived to be an inequality of sacrifice.
The very people who are responsible for getting us into this mess
in the first place appear to be still paying out bonuses, still
requiring that they have autonomy of action and are not accountable
to broader social interests, and workers are being expected to
pay with their jobs and their pay and their security.
Q365 MR
OATEN: Is that not an argument
actually for the banks sacking some of those staff in a merger?
I would have thought that the public would be looking for the
banks to lose 20,000 or 30,000 staff if they merge.
MS
O'GRADY: There
is a very big difference between some heads rolling in the board
room and ordinary workers on the bank floor losing their jobs.
I think there is also a real danger of a counterproductive approach
here where we see a contraction in employment amongst lower, middle
income workers, who are the very people who spend their money
in the local shops and local business that we need to keep running
here. I think we need to be very careful about some of the longer-term
impacts of the policies that are pursued. The very simple point
here is that we want dialogue and we want agreement in the way
that we pursue it.
Q366 MR
WRIGHT: This question is slightly
wide of the mark. What are the TUC views in terms of what has
been discussed in recent weeks about the Keynesian type of policy
of buying yourself through public services out of problems which
will probably create construction jobs and numerous other jobs?
What is the TUC policy about that?
MS
O'GRADY: We
are certainly in favour of exploring the extent to which we could
bring forward spending on infrastructure, including housing. When
we have a major housing need in this country, it would seem sensible
to make sure that we create jobs in the building industry and
also create apprenticeships for young people. There are other
projects that could be looked at too, including transport, and
broader infrastructure issues that I think we need to consider
investing in: how do we protect our skills base through difficult
times?
Q367 CHAIRMAN:
We will come to that important issue at the end of the session.
MS
O'GRADY: There
are broader issues there too, and making sure that those who are
least responsible for this crisis are afforded some protection
throughout it. Public services, including I would say protecting
some of our Job Centre Plus jobs, will be very important at this
time.
Q368 MR
BINLEY: Let me put a general question
to you first. There is a general consensus that we need a sort
of national or business strategy. My guess is that the consensus
will break down slightly lower down when you dig a bit deeper
into what you want in that strategy. Could you explain that very
briefly to me so that I can have an understanding of what you
want from a national strategy?
MR
PAGE: What we
have said in terms of our industrial strategy, and I do not know
if this is the point you are driving at, is this. We have been
talking about this for some years now and we have been saying
that if you look across the big economies in the world, not just
in the Western world but in growing Asian economies as well, different
countries tend to have strengths in different areas. We have asked
whether it might be a good idea for us to sit down and look at
the areas of the UK's economic strengths, to look at what we are
good at or what we could become good at in the area of globalisation
and to try to gear our economic policy to supporting those industries.
We have been calling for that for some years. A couple of years
back we put this to the Manufacturing Forum. We had some quite
fruitful discussions with the CBI, EEF and others about fleshing
this out. We would like to raise this again. We feel that, especially
in the current economic circumstances, the time might come for
this idea and you might be surprised at the support across industry
for a strategy that asks: where are we strong and should that
be our area of focus?
Q369 MR
BINLEY: That is exactly what I
was talking about. You did say in an earlier submission that the
UK should identify the sectors where the UK is or could be successful
and develop an industrial policy accordingly. That is exactly
what you said and you have told me that that is exactly the same.
Can I ask a quick and simple question? Can Government pick sector
winners and sector losers, or is that a market role?
MR
PAGE: We gave
some figures in our second submission that showed manufacturing
job losses in the UK and compared the rate of decline to job losses
in other major European economies. The one thing that other economies
do that we do not do is look to where they can get the biggest
bang for their buck, if you like. There are all kinds of support
mechanisms that come through BERR and other government funding
channels. In the UK those go right across the board. The UK does
not distinguish, frankly, between a dying industry or a growing
industry. We look with some envy to the growth of green technology
in the Scandinavian countries or in Germany where those governments
have said, "This is a growing sector". If there is one
area of manufacturing that is going to grow in the next 50 years,
it is going to be green technology. Let us get on the bus now
rather than after the bus has left and other countries have stolen
the advantage. That is really what we are trying to suggest. We
quoted the sectors that Lord Sainsbury quoted because we felt
that that was a very forward-thinking report. He identified some
quite imaginative areas where we could grow if we focused on those
areas.
Q370 CHAIRMAN:
You added the automotive sector to his list.
MR
PAGE: Yes.
MS
O'GRADY: May
I add that perhaps rather than the language of picking winners
and losers, what we prefer to talk about is an intelligent, modern
strategy, governments intervening to accelerate success, which
certainly in green industries is something that they are crying
out for.
Q371 MR
BINLEY: That sounds just as much
a sound bite as mine.
MS
O'GRADY: If
people are more comfortable with it, then that is all right.
Q372 CHAIRMAN:
I accept this question is encompassed by this and on the Sainsbury
side there is a list of sectors where they appear to be strong
and directly relevant to the higher value-added economy we want
to create and maintain in the UK. You have added automobiles as
a sector and I agree that should be there. We should salute Lewis
Hamilton of Formula 1 today of course. Can I put two other much
more controversial ones and see how you react to those? He says,
rather coyly perhaps, "new sources of energy". Nuclear
power perhaps would be another one where we could be a centre
of excellence and he has not listed the defence sector either,
which is another area where a lot of very demanding, high tech
work is done.
MS
O'GRADY: The
TUC's position has always been for a balanced energy policy, which
includes nuclear as much as renewables and also includes clean
coal technology. We are hoping to build more consensus around
that.
Q373 CHAIRMAN:
So not just new sources of energy as Sainsbury says, but also
making existing sources of energy better as well?
MS
O'GRADY: Towards
new technologies, absolutely.
Q374 MR
BINLEY: We have looked at the
rather long term and the big picture. Can I come to the specific
situation we now find ourselves in over the next two years maybe
and ask what your views are on the proposals the Government has
made to support business so far in that framework and what additional
proposals you would like to see? Let me give some background just
very briefly to this. My concern is that we have a very scattergun
approach to the whole situation at the moment and I am not sure
that we are hitting the real targets. That is where my question
is coming from in this respect. Do you have any comment to make
in that regard?
MS
O'GRADY: In
general terms we have been very positive about the initiatives
that the Government has taken so far. The test will be in their
implementation—real businesses being able to get hold of
the credit that allows them to keep operating and keep people
in work. There are a number of other areas where we would like
to see more action. Certainly on the housing front, we believe
that we need up-front, bold action there.
Q375 MR
BINLEY: In what way?
MS
O'GRADY: Housing
is not just a social need, though obviously it is a very important
social need, and it is not even just a job-creator for construction
workers; it is also crucially a way of keeping people mobile.
You will be very aware and familiar with the arguments around
the need for more council housing and better quality council housing
and to build that in order to allow for greater positive flexibility
in a workforce that may well have to be more mobile in order to
get hold of the jobs that do become available and fill the vacancies
that are still in the British economy. There is a wider economic
benefit to house building as well as meeting social need.
Q376 MR
BINLEY: You may be surprised to
know that I am a supporter of council house building and always
have been. Let me move on to this business of the relationship
between banks and business because that is absolutely crucial
over the next nine months. You did talk about retaining an infrastructure
not only of a skills base but also of an organisational management
base in that respect as well. I am concerned that banks no longer
have the expertise to deal at the very lowest level. The bank
manager did live in a businessman's cupboard 25 years ago; they
have moved those decisions up and they do not have the expertise
at local level. Does that concern you? Am I hitting the right
sort of target there when I point this out as a real concern?
MS
O'GRADY: That
is certainly borne out I think from some of the feedback that
we get through our involvement in regional development agencies,
regional LSEs and so on. It is certainly a concern that we would
share, particularly as I say when it comes to the real economy
and new and potentially growing areas like green industries. I
would add one other concern, though, and something else that the
Government could do. In our discussions with green industry leaders
and unions representing workers there, a key issue is about certainty
of policy framework. If you take something like the feed-in tariff
and the potential that offers for new and growing companies that
can provide community scale energy generation, what they really
need to know is: where are we going with that policy; when is
it going to kick in; and on what scale? Some of that information
just is not there yet. It is a current issue.
Q377 MR
BINLEY: Let me come back and dig
just slightly deeper and it relates to what the Chairman said
about losing 160 jobs in his patch just yesterday because that
suggests to me that there is not enough real knowledge about whether
a business is profitable or whether they have had a cash flow
hit because of an extension of their debt repayment or a one-off
hit because of a bad debt not paid. It is that level of understanding,
the difference between understanding whether a business is viable
or whether it is not. I do not believe they are making those decisions.
What are the ways that we could make those decisions and then
go to the bank with a health check in that respect? Are there
any other ways?
MS
O'GRADY: We
have always argued for a stronger role for RDAs; there has been
patchy performance but in many areas they have been strong champions
of local and regional businesses. I think we do also need to counter
this British disease of short-termism, decisions being taken around
short-termness rather than long-term investment.
Q378 MR
BINLEY: I have one more question.
Does the provision of the substantial funding by DIUS suggest
that some of its responsibilities are key to business and consequently
that these responsibilities should be transferred back to BERR?
MS
O'GRADY: My
own view and the view of the TUC is that the reorganisation of
skills being combined with innovation and universities in one
department has been a good move. I think the current Secretary
of State in many ways has demonstrated some of the most advanced
thinking about aligning skills strategy with industrial strategy.
Certainly his speech last week at a breakfast showed very clearly
his understanding of areas where Britain is strong and needs additional
skills investment to try and grow jobs and grow industries and
prosperity in a way that perhaps I would like to have seen from
other parts of government. I think he is on the right lines there.
One of the key problems for us of course is that we still in Britain
have one in three employers who do not train at all, despite the
very significant publicly-funded offer that is on the table in
the form of Train to Gain.
CHAIRMAN: We
will get to training in more detail later.
Q379 MR
HOYLE: Can I take you on to looking
at innovations, rather than R&D and focus on that? How can
the Government actually extend its support for innovation and
innovations within the service industry beyond science, technology
and R&D?
MR
PAGE: We were
very supportive of the Innovation Nation White Paper earlier this
year. The White Paper breaks down innovation into the different
components. I think this is why innovation is such a difficult
subject. People have a sense of what we mean when we talk about
skills but when we talk about innovation, we mean lots and lots
of different things. An area of innovation we are particularly
interested in is enabling the workforce to be more innovative
in their everyday experience in work. That links with skills policy
of course because an unskilled worker cannot be innovative in
the way that a skilled worker can be. Ten years ago when people
talked about innovation, they talked about the latest piece of
machinery. Now we talk about innovative management practices,
devolving power down to the shop floor, giving working people
the freedom to arrange their work in a way that is most flexible
and constructive for them. Trade unions of course are well placed
to enter into discussions to introduce those innovative working
practices. We would certainly like to see a focus on that.
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