Examination of Witnesses (Questions 60-79)
RT HON
JOHN DENHAM
MP AND MR
IAN WATMORE
16 JANUARY 2008
Q60 Mr Cawsey: The Chairman mentioned
right at the start of this session the role of FE, which you have
described as not being a casualty, which I would agree with, although
it often feels a forgotten sector, particularly if you compare
it to HE. Again, I think of my own community where we have an
HE college and an FE college, both of which got government beacon
status, yet I still think that it is often thought that the achievers
go to HE and FE deals with what is left. How are you going to
break down that sort of barrier and raise the prestige of that
sector and what is likely to emerge from consultations on the
college of the future?
Mr Denham: We want to raise the
status of colleges in a number of ways. Incidentally, if you ask
people in the college sector I think they would say that they
have been very happy with the amount of time that ministers have
personally engaged with college leaders over the last six months.
We are involved in a major future scenario planning exercise with
nearly 200 college leaders in Birmingham towards the end of February,
so we are involving ourselves personally in those face-to-face
discussions with college principals at a level that perhaps has
not happened previously. The critical thing here is to get the
colleges in a position where they recognise that they need to
serve the needs of employers and individual learners and that
is how their status will rise. When employers say, "People
are providing what we want", as they do in many cases, and
particularly in colleges with beacon status, that is how they
have helped to achieve that. I think it will be helped in addition
by the work of the other departments in improved 14 to 19 planning
where it will be very clear what role colleges play for younger
learners, and in our area, as I say, it is the success of Train
to Gain and of the development of the skills accounts for individual
learners which give colleges a central role. What might we see
in the future? I think that we want to see colleges that have
a core of activity which is uniformly good. I think we need at
sub-regional level to see colleges that have probably different
areas of specialist provision which are necessary within the sub-regional
economy, and at regional and national level concentrations of
particular specialist skills which we are already beginning to
see develop with national skills academies. What I think that
will do is give colleges both their important broad general role
within the local economy and a clear specialist status in the
areas where they have developed particular areas of expertise
and strong links with employers. I think the large capital programme
that we have got, £2 billion or so over the next three years,
enables us to make the investment to make that happen. If we go
round the country, Chairman, the extent to which the FE college
estate has been transformed over the last few years is quite remarkable.
Ten years ago it was very often the boarding school from the 19th
century (in my own case the old workhouse) that was still the
core building of further education. Now they are already taking
place in smart, bright buildings and contributing massively to
the regeneration of poorer areas. That will continue on a very
significant level for the next few years.
Q61 Mr Marsden: Secretary of State,
can I take you back to implementing Leitch? In your department's
paper in July, Implementing the Leitch Review, you talked
about a demand-led skills system, but let us take the example
of a woman in her thirties returning to work after raising a family,
a relatively low-paid, low-skilled job and she wants perhaps to
get extra skills and move out of that job. Her demands and the
demands of her employer and the demands of many employers are
not necessarily the same. Where in this demand-led skills system
is the biggest pinch-point between the desires of individuals
and the desires and demands of employers?
Mr Denham: We have to keep both
routes open. One of the reasons for developing the idea of the
advancement in careers is that the sort of woman you talk about
would be faced with that obvious dilemma, "My employer is
not going to offer me the training that I want. Does that mean
that I have to train on my own account separately? Does it mean
that I should look for a different job which would offer training?".
All of those will probably have implications for things like in-work
benefits or tax credits, for child care arrangements and whatever,
and we need to have a level of careers advice that enables that
individual to make the right choices. The second thing we have
to do is make sure that the individual who is not supported by
their employer has the ability to go and get the qualifications
they want, and the whole idea of skills accounts, virtual accounts,
is to make it clear to that individual that it is not quite so
much in some mysterious way going along to the college and signing
up for a course, but that they are getting money from the state,
from the public purse, which enables them to, as it were, buy
what they want and that is a very empowering message. The third
thing, of course, is to minimise the number of situations where
that arises. One of the reasons for the Skills Pledge, the general
drive around Train to Gain, is to persuade the vast majority of
employers that they will have a better business and make more
money if they invest in the training of their staff.
Q62 Mr Marsden: I want to come back
to the nuts and bolts of how Train to Gain is working in a little
while, if I may, with Mr Watmore, but can I move you on from there,
Secretary of State, and talk about the relationship between employers
and apprenticeships? I know that the promotion of apprenticeships,
not least adult apprenticeships, is something that you have taken
a particular focus on. The previous Education and Skills Committee,
in its post-16 skills report, a committee of which I was a member,
raised a number of concerns about the current structures of apprenticeships
and their fitness for purpose in terms of what we are doing today.
One example is in the construction area where there is a real
problem with completion because students start off, they do very
well in the apprenticeships and they then get snaffled for the
Olympics projects or whatever. Are you beginning to think yet
about really radical changes in the structures of apprenticeships
that will meet the needs both of employees and employers more
in the 21st century?
Mr Denham: We will, we hope, by
the end of the month publish the results of our apprenticeship
review. That will, I think, do a number of things. It will clarify
this confusion about whether apprenticeships are generally work-based
or not, which clearly, in any sensible use of the term, need to
have work-based training opportunities. We will address issues
raised by yourselves and in the House of Lords report about the
leadership of the Apprenticeship Service, and we are willing to
look at, including the fact that we have provision, as you know,
in the Queen's Speech, for a draft bill, the legislative framework
around apprenticeships. I have to say, Chairman, that we would
be very pleased to hear ideas from this committee or elsewhere
about things that might be included in that approach. We have
done a lot on apprenticeships. The idea that they are in decline
is wrong, but they need to be a really powerful, well recognised
and well respected option for young people and for older workers.
Q63 Mr Marsden: My understanding
is that this committee has already expressed its interest in being
involved in important pre-legislative scrutiny on that.
Mr Denham: Yes, and we welcome
that.
Q64 Mr Marsden: I need to move on,
but just one last bit on apprenticeships. In the 2006 White Paper
there was an entitlement to free training to Level 3 for 19 to
25 year olds and the LSC has given £30 million to provide
apprenticeships for those over 25. Are you convinced that the
25 cut-off in general terms is anything other than an artificial
division which you need for financial purposes?
Mr Denham: I think there is a
logic to it and the logic is recognising the reality that not
everybody is achieving a Level 3 at the end of their school/young
college career, and extending the period of time in which financial
support for that is guaranteed. There is also a logic in our broad
policy within Train to Gain that Level 3 qualifications, because
they bring the most immediate returns for employers, should be
a shared financial responsibility, not a pure state subsidy, so
I think that, as a step beyond where we have been, giving the
19 to 25-year olds who are not getting training through work full
financial support, is the right step forward. Yes, of course,
if there was more money on the table one could always look at
more but I think there is a logic to concentrating those funds
that we do have in the 19 to 25 group rather than not having any
type of guarantee and merely spreading it across the system as
a whole.
Q65 Mr Marsden: I entirely agree
and I am not in the business of wish politics without on-costed
funding, but do you not accept that as the imperatives on re-skilling
become stronger there may be a case for looking at an application
which is not simply based on an age division?
Mr Denham: Of course we need to
look at re-skilling. The evidence tends to be that people, once
they have got that level of qualification, get themselves in a
job where it is more likely that they will be re-skilled with
support from their employers, but of course it does not apply
to everybody and, of course, we will always need to look at the
issue of re-skilling as well as first qualifications.
Q66 Mr Marsden: Mr Watmore, can I
take you back to Train to Gain? In its previous life the post-16
skills and other reports of the Education and Skills Committee
were highly critical (admittedly given it was a relatively short
period of time) of aspects of Train to Gain and the take-up, and
particularly the issue of dead weight. Are you confident that
the issue of dead weight, which was admitted by your predecessors,
is beginning to be substantially addressed and that we are not
simply adding on a layer of extra bureaucracy or funding things
that employers are already funding?
Mr Watmore: We are effectively
in the first year of the new system operating and there has been
good progress but we need to see the thing bed down over a longer
period.
Q67 Mr Marsden: That sounds as if
you are not confident.
Mr Watmore: No, no. The issue,
which you rightly raise, is to make sure that as we move towards
a demand-led system, which Train to Gain and apprenticeships and
other products are representatives of, we really are hitting the
needs of individuals and businesses, as was discussed earlier,
and are not just replicating stuff from the past. This is something
that our team are very focused on. Am I confident that we will
get there? Yes, I am, because we appreciate the issue and we are
driving it out. The general strategic direction that we have taken
on the skills policy is to move towards that demand-led system
and that if we do not solve that problem we will not get there
on the bigger picture.
Q68 Mr Marsden: And I take it you
would be happy to come back in oral or written form at some stage
when you feel you have something substantive to say about the
further progress of that?
Mr Watmore: We are absolutely
happy to do that.
Q69 Mr Marsden: That is really helpful.
My colleague, Ian Cawsey, referred to his experience in his constituency
with employers. In my constituency, in Blackpool, of course, we
do not have a large number of large employers. What we have is
a very large number of small and medium sized employers and you
yourself acknowledged one of the problems there have been in the
IT industry in respect of that. Given that you have this new commission
being set up, are you confident that small and medium-sized businesses
will have a sufficient crack of the whip in terms of developing
the needs that they have for Train to Gain and the support because
in the past that has not always been the case?
Mr Denham: One of the things we
have done, and it is built into the programme, is increase the
funding for the management training for small and medium sized
enterprises from, I think, £4 million a year to about £30
million a year, and this is very directly reflecting the experience
that one of the major problems with engaging small and medium
sized employers is a lack of capacity to understand the skill
needs of their business. There will be, we think, a considerable
time lag, possibly as long as 18 months, before investing in the
leadership and management of a small business and enabling it
to understand its skills needs and people turning up to use Train
to Gain. We are quite realistic about the time lag that will be
there. We are convinced that investing in the capacity of the
leadership of small businesses to understand their skills needs
is the key in this area, and if we do not do that then we will
run a system that is theoretically open to small businesses but
where they never turn up.
Q70 Mr Marsden: Can I have a quick
question to Mr Watmore? You said that you found your experience
of serving on a sector skills council very productive and useful
and all the rest of it, and presumably it contributed to you finding
your present job, but one of the things that has been said generally
is that the performance and structures of the sector skills councils
have been highly variable and that indeed there may be too many
of them at the moment. Okay, you have got a new badge, the new
commission is going to oversee their performance, but how can
you be confident that you will have enough of the employers who
are doing innovative things in those sector skills councils rather
than some people who simply shout louder or network better?
Mr Watmore: That is a very good
question. In the IT one that we did we started off a bit at the
negative end of your scenario. We made sure that it was only the
chief execs of the companies themselves who turned up and if they
did not turn up they were not at the table and it became a kind
of badge of honour to turn up. I think it was when we got the
real top end engagement that we started to get traction. The variability
in performance in sector skills councils is an issue and it is
one that in moving to the new commission we want to drive up the
rest to the best. That, I would say, starts with one called Government
Skills , which is closer to home and where we have a new and vibrant
chief executive who is really making quite a difference on that,
and we can start to apply what I call "practise what you
preach" approaches to our own skills development within the
public sector.
Chairman: That is going to make you very
popular.
Q71 Dr Iddon: John, the Office of
Science and Innovation, previously in the DTI, appears to have
been divided between mainstream DIUS and the Government Office
for Science, the trans-department called Science and Technology
Group, for example, going to GO-Science. Was there a rationale
to divide the OSI in that way?
Mr Denham: Yes, I think the rationale
was that the Director-General of Science and Innovation within
DIUS is clearly a senior official responsible for the research
councils and also, in the way that we have started off, the TSB
and so on, part of that area of ministerial accountability to
me as the Secretary of State and to the ministerial team. The
office of GO-Science, with its critical work in support of the
Chief Scientific Adviser and being a support and challenge on
science across government, if you like, hosted with us, provides
enormous support to us but has a degree of autonomy from us because
it has a cross-government role, and so I think that what was done
was to create a division which reflects essentially the difference
between those functions which are cross-government and those which
are within DIUS as a department.
Q72 Dr Iddon: The previous Science
and Technology Committee, on which some of those on this committee
sat, always argued that the Government Chief Scientific Adviser
should be completely independent of state departments. Could I
put it to you that this suggests to me giving the Government Chief
Scientific Adviser more responsibility within DIUS and embeds
the GSA further in a state department and makes the office less
independent?
Mr Denham: No, I think the opposite,
and I am happy, Chairman, to put on record the discussion (which
was a private one but I am sure he would be pleased to have it
on the record) that I had with Sir John Beddington when he started,
which was that in his role as Chief Scientific Adviser I respect
absolutely his complete autonomy in his role of giving advice
to the Prime Minister, giving advice to Government as a whole,
and that there is no sense in which, in playing that role, he
is expected to come through me to seek my leave or to discuss
what he is intending to do. In my role as the ministerial champion
of science, as I see it, within my department and across Government,
it is much better, I think, to have the Chief Scientific Adviser
on the patch and available and his staff available to work with
because we need to work closely together in doing that. I believe
that if GO-Science is in the Cabinet Office it will be a less
good outcome both for the Chief Scientific Adviser and for me
as a department. If I can give you an example which is in a speech
I will be giving later tonight about science in society I have
been able to draw both on Sir John's expertise and that of the
people around him, and we know the way things are in Whitehall.
If it is all over there somewhere it is harder to build up the
relationships which enable you to draw on it, but I did want to
put on the record this morning my support for his professional
autonomy and his professional position as the professional leader
of the science advisers across government.
Q73 Dr Iddon: I think that is important
and I welcome those remarks. The CSR announced interdisciplinary
programmes in "key areas". Obviously, the seven research
councils will be responsible for delivering a lot of that interdisciplinary
research. How will DIUS be influencing that?
Mr Denham: I am not sure that
DIUS itself will be influencing the detailed delivery of that
interdisciplinary work. It is a different relationship with the
research councils, for example, from the Learning and Skills Council
where there is a much stronger degree of performance management
across the piste. Clearly the research councils are delivering
interdisciplinary work in areas which the Government also believes
are areas of great importance and where the science from different
fields needs to be brought together to achieve results. I think
it would be giving the wrong impression if I gave the impression
that we were sort of performance managing that work because that
is not the way it works.
Q74 Dr Harris: Can I just come in
here on this question about the Haldane principle, because on
10 January you referred to the Haldane principle and you said
that that says that ministers should not intervene directly in
the funding decisions of research councils, but then you cited
that to say that it was inappropriate for you to vie between budgets
because you then said it would not have been appropriate to breach
the Haldane principle to step in and take money away from the
MRC and give it to the STFC. There are two questions. Are you
saying that Haldane prevents you from allocating money differentially
between research councils, because that is the implication?
Mr Denham: No. Clearly, big decisions
are taken and they are taken in the CSR and we made the CSR announce
how much money the MRC and the HRC were going to get. That is
a decision that is signed off by ministers, but we do not get
involved in saying to a research council, "We want you to
fund this particular research project" in a way that you
might in another area which was not to do with the research councils,
and we do not involve ourselves in the detailed activity in the
same way. The one exception that I would put on the record here
today is that there are some areas where research councils are
involved in projects which have much wider implications than just
the activities of the research council itself, where inevitably
discussions take place at official and ministerial level. The
research project centre in Camden, for example, which was discussed
earlier, could not feasibly have got to this stage if we had just
said to the MRC, "That is an interesting idea. Go and get
on with it". There had to be discussions across government
departments and with the MRC, so sometimes what a research council
is doing has a much wider implication and it is appropriate to
have a ministerial or official discussion at that level.
Q75 Dr Harris: But the general point
is that if a problem arises between CSRs it is quite possible
for you or the Government to take money from one area and put
it in another. That is not affecting how it is spent; it is just
money, because you could take it from the MRC's Innovation Fund
and stick in the Large Facilities Capital Fund, and no-one is
arguing that you have that power so you cannot say you are powerless
not to ensure that a problem arising is not funded, like the STFC,
arguably.
Mr Denham: That is probably technically
true, but it is important that we try to limit how we do that,
and if a problem arises it is very often the case that my response
is going to be to say, "Look: there is a problem here that
I am concerned about and it would be good if this could be addressed",
rather than me stepping in and saying, "I think this is a
solution". Let us take one particular example. Because of
the implications of some of the decisions that were taken I was
concerned about the possible implications for the health of physics
as a discipline across the system as a whole, but obviously, talking
about STFC and some of their decisions, I did not feel that it
was my job, given that lots of physics is supported very healthily
within this budget, to step in and say, "I think this amount
of money should be taken from the MRC and put in to plug this
gap". For a start I would not have known which piece of research
I was changing in the MRC. It seemed to me that the appropriate
level of my intervention was to say, and I think this was initially
done to Ian Diamond, the Chairman of RCUK, "Can we have a
review of the health of physics as a discipline?", so that
if there are consequences of these decisions which are wider than
whether just this particular research project is going ahead but
are about the health of the subject that is highlighted to us.
Q76 Dr Harris: I understand.
Mr Denham: If I may just follow
the point through, that seemed to me to be the right thing to
do. We do not know what Bill Wakeham's report will say. Depending
on its conclusions though, it is perhaps more likely that I will
go back to the research councils and say, individually or collectively,
"Can you address the issues that Bill has highlighted?",
than I would be likely to say, "He says we need £10
million here so I am going to take £10 million from there".
Do you understand the level of intervention that I am talking
about?
Q77 Dr Harris: I want to deal with
the middle way. Health of physics, yes, that is fine; the research
councils deciding to fund or withdraw funding from individual
research projects for presumably scientific reasons, fine; I would
strongly endorse your interpretation of the Haldane principle
there, but if a research council suddenly says, "Right, we
are going to have essentially random calls for voluntary redundancies,
not based on science but on who happens to want to leave",
that cannot be your idea of a rational approach to arranging science
to have, "Gosh, we have got a black hole here. Who is coming
for redundancy?". That is not planned, is it? That is panic
and cannot be ideal.
Mr Denham: Part of the proposal
from the STFC is undoubtedly the closure of SRS, which is taking
place according to the schedule, whichever way has been publicised
and has always been planned and where it was always anticipated
that redundancies would take place. I understand the point you
are making, Dr Harris. I have to say, and the committee may disagree
with me and may need to say so, that I do not think we will help
the situation we are in if ministers intervene on a very specific
basis to say, "You must withdraw the call for voluntary redundancies
in this particular area". I think the relationship between
our department and the research councils needs to be strategic,
and that is why understanding the consequences of what is being
proposed for physics seems to me to be the right level on which
to respond. It is certainly true that in relation to Daresbury
this was one of those areas where what a research council was
proposing went beyond simply the allocation of research funds
because we have an enormously strong commitment to the development
of that science and innovation campus in the national interest,
and it is only one of the players there. That is why, amongst
other things, we expressed concern about plans to close activities
artificially early, which could have sent a very damaging message
about the commitment to Daresbury, and why we have also asked
Sir Tom McKillop and the North West Regional Development Agency
to produce a report for ministers about securing the future of
Daresbury as a science and innovation campus. Again, I have tried
to judge my intervention in this at the appropriate level. I have
to say, Chairman, that as a Secretary of State, if the committee
were to express a view on whether Secretaries of State should
intervene less or should intervene more, I would not find that
unhelpful at all.
Chairman: I am going to leave that if
you do not mind because we are returning to this with the Minister
of Science and therefore will be able to explore those issues
in greater detail, but I do not think we as a committee would
in fact disagree with the fundamental principles that you have
set down, recognising that there are times when clearly strategic
national interests have got an important requirement of science
but that that should be open and transparent in that way.
Q78 Dr Turner: The responsibility
for Government's involvement in the innovation process used to
rest entirely within the DTI, and it is not unfair to say that
the UK's record in terms of outcomes of innovation is far less
impressive than our record in terms of outcomes on basic science
in the UK. You have now got a part of the responsibility in DIUS.
Can you tell us what you are going to do to stimulate better outcomes
from innovation in the UK?
Mr Denham: You will not want me
to go on too long, Chairman, and we will produce a White Paper
in due course, but one of the direct responsibilities we have,
like the Technology Strategy Board, the Energy Technologies Institute,
which are places that bring together public and private money
for particular investment in the translation of research into
innovative products and services of companies, is that we have
got to run those well and support them properly. Secondly, we
need to do a lot to build on the growing interface between business
and higher education in particular, which is, despite what you
say, Dr Turner, much better now than it was five years ago, and
there has been a considerable improvement in our innovation record
but we can go a lot further there. Thirdly, and I think crucially
important, we need to be a department which is able to inform
the whole of Government about how to create the environment for
innovation. As David Sainsbury has said, what we do with our £125
billion procurement budget in government is as significant as
what we do in direct investment. If the Government creates a market
for green energy through its energy policy that pulls through
innovative energy supply solutions every bit as powerfully as
the fundamental research that we do. One of the things that we
will set out in the White Paper is how we intend to introduce
our annual innovation report which will be our report on the whole
of government's innovation record. One of the big challenges to
us is bringing together the direct investment in things like TSB
or the research council work in that broader environment in which
innovation can take place. I think it is very clear that unless
we get all of that working together we will not get the innovation
environment that we want.
Q79 Dr Turner: There must still be
a need for the involvement of DBERR in the total process.
Mr Denham: Yes.
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