Examination of Witnesses (Questions 120-133)
IAN DUCAT,
RACHEL JONES,
TIM LEZARD
AND PAUL
LUCKEN
8 JUNE 2009
Q120 Dr Naysmith: I find that
very interesting, because a few months ago, probably before the
recession began to bite, I visited my local Jobcentre in Monk's
Park in Bristol. A young man told me he was looking for a scientific-based
job because he was a scientist who had been made redundant. This
was just the early stage of his job search and more depth would
be coming later. We typed into the computer and desperately tried
to find a science-based job and there was only one. There were
loads of jobs in shops and commerce and that sort of thing but
there was nothing that he could apply for. Presumably this is
changing because there must be engineers, scientists and technicians
being made redundant in the Bristol area, not at a great level,
but there will be some who will be looking for that kind of job.
Rachel Jones: Yes, and that is
where we have seen the increases—in the skilled trades,
professional and executive people. The first thing to bear in
mind is that the vacancies we get in Jobcentre Plus are only about
a third of the total vacancies in the labour market at any one
time,. That is why we encourage customers to use different sources
rather than just the Jobcentre to look for work. One bit of feedback
we had from the work the universities were doing with us last
week is that customers have benefited enormously from having a
network set up to ensure that they can gain access to a much wider
jobs market information than we might hold within Jobcentre Plus,
through journals and professional organisations.
Q121 Mr Drew: One of the things
that I have been looking at with the larger employers who have
been shedding jobs is what I call the loan transfer. This is based
on football. It is where a company has a big order or needs a
boost in specific skills for a short time—a football team
would get a loan transfer and pay the wages, and the player would
go back afterwards. I smile because that is what Gloucester City
rely on, usually from Forest Green. I have found it incredibly
difficult to get this under way. Why is it so difficult? The parent
company gains because it has an employee who is temporarily surplus
to requirements, the receiving company gains, and obviously the
individual gains because they are in work rather than on the dole.
Why is it so difficult to get these win-win-win situations under
way in the UK?
Rachel Jones: Have you any specific
examples in mind?
Mr Drew: I have small companies always
saying to me that they need a skills bonus that can help for a
period but they do not know whether they can employ someone permanently.
Normally they would go into the contract market, but we want to
avoid that because we want those skills going into other parts
of the economy. If that is not happening, why not? Perhaps Paul
has a view on that.
Paul Lucken: It is happening at
a certain level with young people in apprenticeships. I mentioned
in our submission to the inquiry that we have launched a prospectus
to develop group training associations. That is where an association
of employers pulls together a group of young people to undertake
their apprenticeships. They do not work for any particular employer;
they are employed by the association and have the opportunity
to work among the member companies. The concept of companies sharing
labour seems to work. This is not a new idea; it is one that we
have brought back in the current climate. The challenge arises
on a number of fronts for fully skilled, employed individuals.
The first is competition. The chances are that a company would
be lending labour to a competitor. There is an intrinsic issue
about the willingness of businesses to do that. The second is
cost. The costs between different businesses vary quite considerably.
The wage costs for an individual at company A might be more than
company B could afford. There are other issues with the capacity
of businesses to free up people. Only very large businesses would
have the flexibility to let a number of their work force go to
another company. At that point the question is, which company
could they go to without being in competition? The short answer
is that it works, or has worked, with young people, perhaps those
in the development phase of being in the work force, but there
is no real evidence of it working as you described for the mainstream
work force.
Q122 Chairman: Would the unions
have concerns about employees' terms and conditions with this
sort of loan?
Tim Lezard: We would be worried
about such situations. As far as I know, there is no strict policy
at the moment.
Q123 Mr Drew: If not this, how
can we prevent people from being summarily dismissed? One of the
sad things is that I have talked to individuals who make one wonder
why it has been taken to that extreme—there were other ways
that we might have handled it. I'm off to Cologne next Monday—sadly,
I will not be voting in the election of the Speaker—to try
to save 30 jobs at Deutz in my constituency. It is a question
of going to the parent company and asking it to give those people
a chance. There are only 30 jobs, but they could link with other
businesses. The problem with that is trying to do it within a
matter of weeks; they will be gone at the end of June. We are
trying to buy time, but there is a limit to my time and that of
the work force. These are not impossible situations. Why can we
not make more of this? That is what I am an MP to do—get
out and save jobs. I could stand back and say that this is the
way the market is, but surely it does not have to be that way.
I wonder whether there are innovative ideas out there that you
could tell us about so that we could get out and work with them.
Ian Ducat: We are seeing the "innovation"
in lots of companies allowing people to stand down on half wages.
It is better than being dismissed and having no job at all for
the future, but it is not exactly ideal, is it? I understand Paul's
Lucken's comment. Within the public sector it might be possible
because there is not the competitive issue between organisations,
but in the private sector, particularly when you are talking about
cutting edge technology and people with knowledge of processes,
technology and so on, there would probably be some practical difficulties.
Paul Lucken: Colleagues may have
picked up on this: the RDA is introducing a talent retention initiative
around the aerospace and engineering sector. That strikes to the
heart of your point, which is how to keep those highly qualified,
highly skilled people who may go in the short term but are needed
in the medium term. That initiative is around utilising all the
information there is about available vacancies and opportunities
and bringing it to the attention of those people who are at risk
before they lose their opportunities. It requires the co-operation
of all the employers because you could end up losing good people
to someone else's business. It requires significant management.
They are in the process of developing that now. From the Learning
and Skills Council's perspective, our contribution concerns whether
those individuals might need to change or develop their skills
if they move from employer A to employer B. Quite often there
are transferable skills and specialist skills linked to a particular
business or company, so there are innovative ideas under way.
My fear, which is probably the same as yours, is that they take
a while to develop. They cost a lot of resource, and the sort
of crisis management that I think we are talking about militates
against developing them quickly enough.
Ian Ducat: I know that your focus
for today's session is recession, but in the long term—again,
this was mentioned in the first session and Kerry's devil's advocate
question about what is the south-west for—does it matter
whether there is a perception about the south-west's place in
the UK? I feel very firmly that it does. I was quite surprised
by one of the employers' responses. This whole business about
building up supply change networks and skills in this region is
heavily dependent on people outside the region and within it understanding
that it is about more than just hotels and agriculture. It is
important that we convey the message that the south-west has a
high skill base of engineering, aerospace and the marine sector
in the far west. That is crucial to attract that investment into
the region. Again, the RDA is very interested in that and trying
to address it. We need to monitor its work on that continually.
Q124 Kerry McCarthy: I agree entirely
with what Ian was saying just then. In my constituency the other
day, I met an organisation that is the world's largest wind energy
consultancy. It said that there is a huge amount going on at the
"intelligent academic sitting at a computer" end of
the work. However, Denmark produces all the wind turbines even
though we have the manufacturing base in the south-west. Apparently,
those turbines are Denmark's second biggest export after bacon.
Those sectors are not necessarily exclusive. You don't have to
have the dividing lines between the manufacturing sector and some
of the more innovative things that are going on. There is a definite
link. My question is probably more for Rachel. We have these employer
schemes to put people on flexible working or lay them off for
short periods, which is obviously fairly disruptive to household
income. The self-employed are also going through rocky times.
So, how flexible is Jobcentre Plus in responding to people's circumstances?
Traditionally, the benefit system is not at all flexible. People
have come to me to say that their last job was several months
ago and they may have received a lump sum for it. I gather that,
in those circumstances, Jobcentre Plus will assume that that lump
sum is their income for the coming period. I think that that individual
was told that he had earned £5,000, and therefore that was
deemed to be income, divided by 52 weeks. That is ludicrous, because
at the time that he earned that £5,000 that individual didn't
realise that it would have to last him that long. Are there things
that could be done to help people in those situations?
Rachel Jones: The rules and regulations
of the benefit system are subject to legislation. The one thing
that has happened over recent months that has helped relates to
people and their mortgage position, where we have responded to
people who found themselves out of work. We have reduced the time
that they have to wait for mortgage interest payments to be received
and raised the level at which we can pay mortgage interest, from
£100,000 to £200,000. Legislation and benefit rules
are a matter for Ministers to consider.
Q125 Kerry McCarthy: I think that
it is an area where we need to collate the information about what
is happening on the ground. That is because, when you are drawing
up the rules and regulations, it is very easy to think of people
being either in or out of work. Would that mortgage help kick
in if somebody was put on, say, part-time hours or short hours?
Rachel Jones: No, it wouldn't
at that particular point of time. The other thing I would say
is that we endeavour within Jobcentre Plus to take each individual
case as it comes to us. So, although there is the legislation,
when we assess benefit we do that on an individual basis and we
look to see what rules and regulations would affect that particular
individual.
Q126 Dr Naysmith: The moment has
probably passed, but I just want to go back to Ian. My question
relates to the green recovery. If you want the real recovery,
that is the green recovery. In your submission, Ian, you mentioned
that the Government seem to lack a bit of commitment in that regard.
They talk about green issues but they do not do very much. There
is no urgency or leadership in terms of establishing these green
industries. What do you think would be better done than the things
that are being done now?
Ian Ducat: The Government have
been very slow, although in the last six weeks or so the RDA in
the south-west has been the beneficiary of some additional cash
to support projects in the far west of the region based around
wave-hub technology. We would certainly like to see more of that
type of investment. There was also the point about wind turbines.
There is huge scope to try to put that sort of technology at the
centre of the south-west's economy. Any support that industry
could get to help it through this time would be welcome.
Tim Lezard: I would just like
to add to that. Obviously, the south-west has huge potential in
that sector, because of our geography; we have the waves, the
wind and the tidal situation too, with the Severn barrage. So
there is loads of stuff there. The TUC is trying to go into businesses
to work with employers to set up green workplaces—green
projects within the workplace—to help employers to best
use their energy and other things, so that development is sustainable.
Any support that the Government could give for that would be helpful,
too. I know that such green activity is only on the micro-level,
but it all helps and it all adds up, doesn't it?
Q127 Chairman: May I come in at
this point and talk about, first, the way in which companies advise
you and enable you to prepare for significant redundancies. Just
from looking at the Plymouth experience and then looking at what
happened with Honda here, things are hugely different. Some companies
seem to turn up in the morning and drop this bombshell on their
work force. When you say to the company, "What measures are
you putting in place to ensure that people have support, advice,
and so on?", their answers are all a bit vague. Some of those
companies are quite significant ones, with international reputations.
If you compare that with others, which have clearly had pre-negotiations
and discussions with trade unions and other bodies, what do you
think can be done to improve the way in which employers think
in advance of making changes? What can each of you do to try to
ensure that this is much better managed and that we get protections
in place? Also, how do you think Honda has managed what happened
in Swindon? Has it been managed well or not, and are there lessons
to be learned?
Rachel Jones: That is an interesting
point. In the same way as Jobcentre Plus has not experienced anything
quite like this for some time, that has to be true of employers
as well. They may well not have been through a recession before
and may never have been in a position where they had to think,
"I'm going to have to lay off staff and make them redundant."
One of the things that we have been working on across the south-west
region with our area action forces is producing information for
employers telling them not only what services are available, but
also how we are trying to join up those services between the RDS,
the LSC, the local authorities, HMRC and Jobcentre Plus. We are
trying to present that as a single package for an employer who
might be beginning to struggle financially and is asking, "Do
I at this point need to declare my work force redundant, or are
there other things that I can do before I get to that stage?"
We have produced and sent out across the region a leaflet that
jointly summarises what our response could be before an employer
gets to that redundancy stage. Of course, as soon as we know that
an employer needs to make people redundant, we can respond pretty
quickly; the usual response time across the area action forces
is within 24 hours of an employer publicly announcing a redundancy
situation. At that point, we would go in as a joint public sector
response to offer what services we could.
Q128 Chairman: How many have left
it to the last minute? Can you give an approximate percentage
of such employers?
Rachel Jones: I don't have those
sorts of figures in front of me, but we had to respond very quickly—as
did the rest of the country—to Woolworths. That response
came literally within a few days of the announcements of which
particular stores would be closing. Again, our response had to
be pretty swift.
Q129 Chairman: What is the view
on the trade union side?
Tim Lezard: We think that they
should give notice, as they are supposed to have a consultation
with employees. The trouble is that once they have decided to
close, what else is there to do? We would obviously encourage
people to give as much consultation time as possible and to work
with trade unions. We have seen situations before where employers
have actually worked with employees to work out ways to save businesses—there
might be voluntary redundancies, for example, or people might
be happy to work part-time. Things like that cut back on costs.
Ian Ducat: I believe that the
penalties for failing to have a consultation with your work force
before making big decisions involving redundancies should be more
severe. Otherwise, they, the staff, are just ignored and the employers
simply take the hit imposed by tribunals.
Q130 Chairman: Have there been
any difficulties in defining significant redundancy and how it
relates to getting additional help through the system?
Rachel Jones: Jobcentre Plus has
been clear that what significant means for us is any redundancies
of 20 or more. At that point, we would trigger our services to
have the conversation with the employer about the help we could
give.
Q131 Chairman: Paul, let me put
you on the spot a bit. LSC is currently in a position of flux
and going into a transitional period. Do you envisage any problems
for the service that you currently operate during that transitional
period? It is not going to be easy for you or your staff, is it?
Paul Lucken: The Learning and
Skills Council will be replaced by two agencies in April 2010:
the Skills Funding Agency, which will look after post-19 learning,
and the Young People's Learning Agency, which will support local
authorities for 16 to 18 learning. We are now in the process of
transition towards that, which means that all of our staff will,
I hope, be matched to roles in either of the two new agencies.
There will be challenges in the south-west because of geography;
the new structures will have far fewer outlets than the LSC currently
uses and will therefore probably place demands on people's flexibility
to work away from an office base, which is what many staff are
currently used to. That is a general picture. Our goal is to continue
services so that it does not show on the outside and we continue
to fund provision, maintain quality and, where possible, try to
flex that provision to react to our environment. That is our policy
intent. We see these changes as a significant risk which we need
to manage. Our management team regard it as a priority to consider
how our service is being delivered in the light of these changes.
Rather than ignore them and hope that service carries on, we are
taking steps to ensure people are in a position to do that while
going through the change.
Q132 Mr Drew: I want to pick up
a point from earlier. If anybody wanted to invent the reason for
trade unions, it would be the way in which some companies have
handled redundancy situations. They don't understand what they
are doing and they make the rules up as they go along. A lot of
good people have to dig them out of the holes they have gotten
themselves in, otherwise we would be for ever in the courts. However,
that is just a statement. Can I look at one thing which is overarching
the south-west and about which I am quite worried? It is the narrowness
of our employment base. Although we seem to be the most diversified
of regions, with tourism, agriculture, manufacturing and the creative
industries, in fact we are quite narrowly focused. When we have
seen some of the cutbacks, we have perhaps done disproportionately
badly in the south-west. Gloucestershire was seen as one of the
major losers. That has been manifested in the way we have seen
a lack of security in business. Maybe we were too complacent in
the past, thinking that it would never hit the Gloucestershires
and Swindons of this world because we were the growth models that
the rest of the region was trying to catch up with. We have learned
some real lessons in this, haven't we? Paul or Rachel, would you
like to respond?
Paul Lucken: We certainly have.
In my experience, this recession has had very different characteristics
and we have been through a few of them. The capacity to understand
how it will impact on industry in the south-west—we have
really been learning as we go along because of the nature and
cause of the recession and the impact on different types of business.
We have a reputation as a community in the south-west for having
been the least damaged by some of these things. The word you used
was, I think, complacent. This time we have not been complacent
in terms of our capacity to recognise the danger we face. I picked
up on a point made earlier; we face challenges beyond other parts
of the country. Rurality and isolation are crucial when it comes
to dealing with recession in the south-west. We have an added
challenge here.
Q133 Chairman: May I finally ask
for some short responses to a question? It will not be easy. The
RDA are clearly facing funding issues and I understand an announcement
has already been made. Which sectors or schemes, in your view,
should not be cut? I am sure you will say all of them. However,
given that there are pressures, which areas do you think are vital
to the region and should be continued in terms of support?
Rachel Jones: I reflect back to
the experience we have had working with the RDA over the last
12 months. My home patch is Bristol and we have had a major new
development called Cabot circus which is one of the biggest shopping
developments in Europe. The RDA gave support to the Bristol Alliance—the
developers of the Cabot circus approach—and to the LSC and
Jobcentre Plus, as well as providing funding to knit that partnership
together, support the work of each of the public sectors to outreach
to the local community and provide pre-employment advice and training.
In the previous session, it was suggested that the RDA was not
that focused on employment opportunities and growth. Actually,
the experience I have had in Bristol was that they were dedicated
and committed. That would be my one plea: that they keep their
focus on supporting new development sites that are opening up
job opportunities to the most deprived and disadvantaged areas.
Ian Ducat: For the record, I should
declare an interest.
Chairman: Yes, I had forgotten your position.
Ian Ducat: The exercise at the
RDA of going through and trying to work out who were going to
be the casualties was painful. Ultimately, the RDA decided to
focus on its three key priorities: place, productivity-led growth
and the green agenda. That was the correct way of doing it. The
circle could not be squared and there were some casualties. I
would say that, wouldn't I? The discussions about how to do it
were very long. The answer is not to say the priorities were wrong.
The answer, for those of us in the south-west that make the case,
is that this region in particular has done quite badly out of
the settlement, from the Department down. Lord Mandelson has said
that the RDA is the cutting edge of the economy and recovery from
recession. The delivery of that has not been evident in the south-west.
Tim Lezard: I only add the learning
agenda to that. I know the RDA is a key funder of those sorts
of situations. That should be encouraged.
Paul Lucken: I endorse everything
my colleagues have said.
Chairman: Thank you very much for coming,
it is much appreciated.
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