Examination of Witnesses (Questions 140-161)
MR PHIL
WOOLAS, LIZ
MEEK AND
DAVID HIGHAM
8 JULY 2009
Q140 Rosie Cooper: When will you
start to approve them?
Liz Meek: Within the next three
or four weeks, I think. It is a complicated process. They are
with DWP, at the moment, and they are then coming to a regional
panel. I can write to you and let you know when the outcome is.
Q141 Rosie Cooper: Not giving
me any details—I am not supposed to know—but could
you let me know if any of them affect my constituency at all?
Liz Meek: I will let you know
what I can let you know.
Rosie Cooper: Thank you.
Q142 Mr Martlew: On the Learning
and Skills Council, the Government have been lucky, in a perverse
way I think, because we have had all the problems with the FE
colleges. The Learning and Skills Council has not got many friends
out there, but, in reality, if you take it away, there is an argument
that it was doing a good job. Surely, this is the wrong time to
be altering the structures; we are in a recession. Shouldn't the
Government have said, "We're going to put it back."?
Mr Woolas: From the point of view
of the North-West?
Mr Martlew: Well, you can affect the
North-West—you are the Minister for the North West.
Mr Woolas: I support the policies
of my colleagues in Her Majesty's Government. The restructuring
of the LSC is designed to provide a better focus on skill provision,
and the fact that the student or the recipient of the skills training
is perhaps not that aware of, and perhaps not worried about, the
structures in Government means that I do not think that it matters
that much.
Q143 Mr Martlew: I don't expect
you to say that the Government have got it wrong, and I do not
even expect you to say, "If we knew we were going to have
this recession, we wouldn't have done it now," but what efforts
are being made in the North-West to see that the demise of the
LSC will not affect the quality of service that is going to be
given?
Liz Meek: I chair, jointly with
Steven Broomhead, a group that is about the transition for 16
to 19—sixth forms—which is basically being transferred
to local authorities.
Mr Martlew: Where they used to be, of
course.
Mr Woolas: Twenty years ago.
Liz Meek: Our job is to make Government
policy work. I am very encouraged by the progress that is being
made and by the enthusiasm and commitment of local authorities
on that one. The region is doing very well on apprenticeships,
both in the private sector and also we have a programme of public
sector apprenticeships. We are all working together to make the
new arrangements work. That is what we are paid to do.
Q144 Mr Martlew: We have considered
the question of Jobcentre Plus and the evidence we have is that
it has been doing a very good job and has been working with the
LSC. Do you think it worked effectively with the LSC? What provision
has been made to ensure that Jobcentre Plus works with the successors?
Liz Meek: The organisations both
sit on the JEC, and they have worked together with the development
agency on the rapid response arrangements, for example. That wouldn't
have happened several years ago. I really think there has been
a step change in collaboration at the highest level between these
organisations. It is our job to ensure that that collaboration
survives the transition. We know it's a risk. We are very much
on the case and will ensure that no effort is spared to ensure
that the new structures work with us, as well as the old ones
have been doing in recent times.
Q145 Mr Martlew: My last question
is about apprentices. I hear my Government saying everything is
fine with regard to apprentices and that they are being looked
after in the recession. Unfortunately, when a constituent rings
me up and says that her son who was an apprentice plumber has
lost his job and when I try to find out what practical help there
is, it is very difficult to find what the Government are doing.
Can someone tell me what is happening?
Liz Meek: One of the early things
that the JEC did, as a personal initiative led by Bev Hughes,
was to ask the LSC to contract a programme that was about that
very thing—where apprentices were going to lose their position
because their firms were threatened, to find and pay for ways
in which they could continue their training. That contract was
let and has been operational, I think, since February or March.
As I understand it, the aim of it was to do that very thing. I
am not aware of any problems with it.
Q146 Mr Martlew: Nobody seems
to be aware of this particular programme—Jobcentre Plus
didn't, the FE college didn't. Where is it going wrong?
Liz Meek: I will take that away
and see what we can do. The LSC is aware of it.
Q147 Mr Martlew: I hear my Government
saying that we have taken this action and hear the chief civil
servant from the north west saying that if an apprentice loses
a job there is a system to allow them to finish the training.
When I actually tried this with the Jobcentre Plus and the FE
college, nobody seemed to know about this particular scheme. The
apprentice I am talking about is now unemployed.
Mr Woolas: That is not acceptable,
Chairman. The national apprenticeship service is coming into being—we
have 350 staff transferred over. We will take that away and ensure
that that is fed through the FE and Jobcentre Plus sectors.
Q148 Mr Martlew: That is obviously
a bad case, but there is actually a national scheme that is operating
regionally, which should stop this waste of future skills happening.
Mr Woolas: The Prime Minister
has made it very clear what our priorities are in real help for
people in hard times. He made it clear in the policy launch last
week that our goal is that we will not allow for a generation
of unemployed. Therefore, the point that Mr Martlew is making
is extremely important. If there are structural problems that
are resulting in this particular case, we will solve them. If
it is a matter of political will, I will take that up. It is very
clear that the Prime Minister's instruction to his Ministers is
to prioritise this area.
Mr Martlew: That is very comforting to
us. Thank you.
Chairman: We have been advised that it
is not a problem of funding; it is quite often a problem of finding
places with employers. The desire is there, but how we can practically
ensure that it happens is the point.
Mr Woolas: Thank you for bringing
it to our attention. It shows the value of the Committee.
Q149 Tony Lloyd: Can I return
more specifically to the Learning and Skills Council? One of the
issues that has been raised with us is that, while Train to Gain
had a relatively slow start, nevertheless it is now oversubscribed
in the North-West. Since the LSC has told us that it is a demand-led
programme, obviously what that does not mean is that when the
money runs out then we are effectively rationing training. Now,
training is the seedcorn of the future. This is for the existing
work force, most of whom are the long-term work force, as we know.
Can you, Minister, shoehorn more money from central Government
into Train to Gain? In any case, can you help us in seeing how
we can expand the work that Train to Gain so clearly does, which
employers and employees want?
Mr Woolas: Yes. Can I shoehorn
more money in? There is a further pot available, of which we are
attempting to get our—more than our—share, because
obviously that is critically important. What might help are some
figures that we have, which the Committee might be interested
in, if you have not had them already.
David Higham: Since it was launched
two and a half years ago, it has helped 34,000 businesses in the
North-West. It has enabled 28,000 people to achieve higher qualifications
in the North-West. It gets extremely good feedback from employers
and from trainers. It is a very good scheme. As the Minister says,
more money is being made available for it. We need to make sure
that we access that funding.
Q150 Tony Lloyd: What proportion
of the national Train to Gain cake can we take in the North-West?
Mr Woolas: The number of businesses
helped is, as David said, 33,763, and it is 127,000 nationally,
so we have more than our share of companies.
Q151 Tony Lloyd: In that case,
there is a good argument, since we can use the money, for the
North-West being an efficient place for the Government to spend
their money.
Mr Woolas: That is a very important
point, and I am going to write it down.
Q152 Tony Lloyd: Minister, you
will remember in the last recession that one of the things that
employers did was simply to lay people off. We saw huge levels
of unemployment—long-term unemployment, when people who
went out of work stayed out of work. One of the things that is
an interesting phenomenon this time around is that more companies
are prepared to keep people on a short-term basis, which is encouraging,
because it means that there is always half an eye on the future.
But are we doing enough to encourage both employers and employees
to stay in short-term work where that is inevitable? Obviously,
if we are not doing enough, the alternative is long-term unemployment,
with all the social and economic consequences.
Mr Woolas: The point that has
been made is central to strategy. The mechanism of course is financing,
in large part, through the guarantee loan scheme and liquidity
of the banks. The question you asked was whether we are doing
enough. In the job watch that we have, I am not aware of the numbers
of unemployed who have been made unemployed because of lack of
such finance. There must be those people—of course, there
are many thousands of small businesses—but going back to
the previous discussion, what proportion of that comes back to
late payment we think is not significant. However, the agenda
that we have, which was actually the first briefing that I received
as the new Minister, included this point. Our agenda is to ensure
that those options are looked at as best we can and that public
finance, if it is possible to make it available, is used for that
purpose. It reflects the point about the higher skill levels,
because companies have reported that they do not want to lose
critical mass of skills because of the investment that they have
made in them. Retention levels are higher as a result of the situation
than they have been for some significant time. I think that they
are higher than they have been since the 1960s, which is a very
interesting development in the North-West economy. So we could
probably do more, as you ask, but on whether or not I am satisfied
that it is central to our strategies, yes, I am.
Q153 Tony Lloyd: In a sense, you
have already answered this—well, you have given a partial
answer to it. I think you said that you are not aware that the
financial issue is a major question. That's interesting. The Federation
of Small Businesses and the TUC have together put forward a proposal
for a short-term wage subsidy. They clearly believe that—they
must believe, to be putting that forward—that this addresses
an issue where some firms are laying people off that would not
do so if there was that wage subsidy. You might simply want to
take this away and reflect on it, but you said that we are not
aware. Are we not aware because we do not ask the question, or
are you saying that we really are aware that we do not need a
short-term wage subsidy?
Mr Woolas: Let me be very clear
about what I was saying. Of the significant numbers of job losses
by single employers, we have not been made aware that that was
the significant factor. Outside of that, there will be that factor.
Q154 Tony Lloyd: In that context,
and this will perhaps help David Higham respond, there certainly
is a demand—that has been enunciated by the FSB and the
TUC—for a wage subsidy for short-time working. What is the
position on that? Are we considering its efficacy, or is that
something that has been ruled out?
David Higham: Ministers have said
that they do not support the proposal. I think that is for two
reasons. First, as the Minister said, there are some more effective
ways of helping companies at the present time, most notably through,
for example, dealing with shortages of credit etc. Secondly, when
you look at wage-subsidy schemes that have been introduced in
the past, they tend to be quite costly. They are costly because
of what, in technical terms, is called dead-weight, in other words
you often find yourself supporting employers who would not have
laid people off anyway. It is a question of costs and benefits.
At the moment, Ministers have taken the view that the costs of
wage subsidies outweigh the benefits, given that there are other
ways of addressing the problem.
Q155 Tony Lloyd: Access to credit
is, of course, very important, we know that there is a huge issue.
However, access to credit does not provide the same function as
a recognition that in a period of low demand the cost of maintaining
the labour force is too high for the revenues that are coming
in. The whole argument around the wage subsidy is that it is a
temporary stop-gap allowing us to go to the bottom of the recession
until demand picks up. That is not really the same as access to
credit because you can have access to all the credit that you
want, but if you cannot service that credit then you go bust,
so it is not the same.
David Higham: No. To come back
on that, I quite take the point that employers have got to balance
the cost of holding on to labour against likely revenues. If you
look, not just at the initiatives that have been taken around
the provision of credit, but more general initiatives around accelerating
infrastructure projects or, taking account of some of the Minister's
opening remarks, what has been happening on the export side, we
know that the North-West is a very export-dependent economy. We
know that the pound has fallen substantially and gives north-west
firms a substantial competitive advantage. I would have thought
that that, added into the mix would give a lot of companies now
the confidence that although they may not have the revenues at
this point, come six or nine months in the future, they will.
You have to look at the whole package in totality.
Chairman: There is a Division so we will
suspend the sitting for 10 minutes and recommence at 5.14 pm.
Sitting suspended for a Division in the House.
On resuming—
Q156 Chairman: Welcome back.
The NWDA has a reduced budget at a time when
you could argue that it needs more? What kind of message does
it send to the North-West business community if we are cutting
the NWDA's budget?
Mr Woolas: The focused money that
is available for businesses has increased over the years. If you
look at the help that is provided—this probably goes back
to the previous question on the wage subsidy—most significant,
of course, is the tax credits, which relates to the question that
was asked before. The cancellation of the referendum on the Regional
Assembly, the refocusing of the regional structure and the development
of the city regions and the local area and multi-area agreements
meant that we could have a bottom-up approach. I think that that
makes it more focused.
David Higham: When we look at
the NWDA budget of about £400 million a year and the size
of the North-West economy, which is worth about £120 billion,
focusing on the budget itself rather underplays the role of the
development agency. The key issue for the development agency is
how it uses its budget to lever in other forms of funding, and
how it uses its leadership in the region to influence other agencies.
It is only by influencing the private sector and by levering in
other funding that it makes its main impact. While it is tempting
to look at the budget itself, that gives a slightly misleading
impression of the role of the agency. The agency continues to
play a very important role in taking the region forward, and will
continue to do so.
Q157 Chairman: What can we do
to speed up the delivery of support to business men? For example,
why did it take six months to launch the venture capital loan
fund?
Liz Meek: As I think you know
from other witnesses, there have been technical difficulties with
the model that was proposed. It looks as though it is falling
the wrong side of the Treasury classification rules, in that it
will be public expenditure rather than private. That is actually
a serious issue, because it relates to the risks that the Government
would have to take on if it went ahead. The scheme that has been
developed does not look as though it will be able to go forward
in that form. However, we—the Regional Agencies, the Treasury
and the Department for Business, Innovation and Skills—are
working urgently to produce an alternative way forward that would
do what we want to do, which is to make money available for the
businesses in the region. Meanwhile, as you will have heard from
the development agency, it has diverted some resource to an interim
scheme and we are all putting pressure on the banks. The Minister
is seeing the banks in Liverpool on the 20th to get bank lending
back up to the levels that it was at, which is really important.
Q158 Chairman: We hear about the
prospects of a double dip recession occurring with the second
part of it being the result of cuts in public expenditure—right
or wrong—after 2011. What is your view on that? How will
the prospects of that specifically affect the North-West?
Mr Woolas: Part of our strategic
goal is to boost confidence to show that the jigsaw puzzle, as
I described it in my opening remarks, has the leadership that
it needs to develop confidence. The role of the media at a regional
level is much more positive in helping build confidence than it
is on the national scale, which tends to confuse politics with
economics too frequently in my view. Local papers, regional papers
and regional electronic media have a vested interest in our success,
in talking us up, not talking us down. The suggestion that has
been made in some quarters that a double-dip recession would be
prompted by public expenditure is not based in any economic reality,
but there is this factor in the modern world of confidence, and
we are determined that we are not going to let that happen to
us.
Liz Meek: It is worth mentioning
the future projects that we have in line for the JEC.
Mr Woolas: This is the exciting
bit.
Liz Meek: We talked earlier about
some of the JEC work to save schemes that were threatened. The
JEC is actually in transition, I think, and obviously, with a
new Chair, will take a different course. To answer your point
about the future and confidence, we are very keen to prepare for
the upturn and to ensure that all the regional agencies work together
around a relatively small number of key regional priorities. We've
identified four, which include the media industry—building
on what's happening at media city—renewables, the nuclear
industry, and the corridor between Manchester and Liverpool. But,
we will be moving on to others. The idea is to come up with specific
proposals to ensure that we are ready to fly when the situation
is right.
Q159 Chairman: Over what time
scale are those proposals?
Liz Meek: They are medium term,
so, I guess, over a period of years. Obviously, media city is
being constructed as we speak and big decisions are being taken
in the next year or so on nuclear. We want to be sure that the
region is ready to take advantage of those.
Q160 Tony Lloyd: Can I turn to
one of the fairly new initiatives, which is the role of the city
region? Obviously, Manchester and Greater Manchester—our
city region—is one of the pilots. As a Greater Manchester
MP, I very strongly welcome that initiative, but two questions
stem from it. The first is about the time scale of the devolution
of power and what powers will be devolved to the city region because,
frankly, this doesn't make sense if it's only a batch. It only
makes sense if it gives the city region some real control and,
to quote your words Minister, bottom-up power. The second part
of the question is that I can well understand that there is anxiety
from other parts of the region about the role of the Manchester
city region already being the economic development part of our
region. There is an issue as to how we maintain equity across
the region whist legitimately devolving power to the city region.
Mr Woolas: We are leading in the
North-West. The Greater Manchester city region is the leading
city region in the United Kingdom.
Tony Lloyd: Some would say in the world.
Mr Woolas: Well, it's undoubtedly
that, Mr Lloyd. I have to choose my words very carefully because
I am a Greater Manchester MP myself, but there are two city regions
that we're putting into place—the Greater Manchester and
the Leeds city region. In our case, it is overseen by the Chancellor
of the Exchequer; in the Leeds case, for information, it is overseen
by the Secretary of State for Communities and Local Government.
With the city region, we are in the process of discussing the
relevant powers. We are ahead of the pack on that. Indeed, I met
the leadership last Friday to discuss the political priorities
involved in this. On the equity point, it is very important and
it is a goal of policy that we have such agreements in place for
the whole of the region. Of course, as I mentioned before in relation
to the quote that you read out, Mr Chairman, Merseyside and Greater
Manchester are big city engine rooms. But we have tremendous advantage
across the region and, in all the areas, we will have those multi-area
agreements. Cumbria, of course, is a county—a district—so
there is a slightly different arrangement there. Parts of Lancashire
are obviously two-tier, but we will have those multi-area agreements,
or local area agreements where applicable, in place for the whole
of the region. Then, of course, the priorities can be set much
better for those areas.
Q161 Tony Lloyd: In terms of time
scale, do we have any idea when?
Liz Meek: We are hoping it will
take three to six months to have the new arrangements in place,
but they're being negotiated as we speak, so it's not possible
to say exactly what will be in the agreement.
Chairman: May I thank you again, Minister,
and your team, for what has been extremely good evidence in what
must be a very busy schedule?
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