Examination of Witnesses (Question Numbers
340-359)
DEPARTMENT FOR
BUSINESS, INNOVATION
AND SKILLS
26 JANUARY 2010
Q340 Miss Kirkbride: Be more?
Ian Lucas:— be more than
that.
Mr Walters: Some of the bids,
I think, are match-funded and the SIF is primarily focused on
capital investment programmes rather than research programmes.
So that tends to be the difference with what the TSB is doing.
Q341 Miss Kirkbride: You say the
SIF is capital investment rather than research.
Mr Walters: Yes.
Miss Kirkbride: So it is research that
is going to take the hit.
Chairman: I think I would like a more
detailed note from the Department about how this £200 million
Strategic Investment Fund is actually going to be used. You have
given some helpful answers but I think I would like more detail
because it is talking about innovative industrial projects and
if it is all going to be capital, given you are cutting research
funding, just explain to us in a little more detail how you expect
the process to work and who will make the awards.* That would
be helpful.
Q342 Mr Hoyle: Just a quick one.
If there was inward investment coming to the UK would they also
apply through the SIF fund?
Ian Lucas: If match-funding, for
example, were being provided then the source of the match-funding
could be from abroad or from within the UK.
Q343 Chairman: Without reopening
on the subject, the reason I am concerned about this is that I
was not persuaded that the original pot of money from the SIF
used for the Composite Centre was used strategically and effectively,
and I want to make sure the bidding processes are more transparent
this time and that what you are seeking to achieve is more obvious.
Anything you can say about it, I think, would be really helpful
just to clarify our thinking for our report. One quick question
from me before I hand on to skills: I was very interested by the
strong support among the motorsport SMEs for the R&D tax credit
system. They say it works well for them. The Pre-Budget Report
said you are going to simplify the system by removing the requirements
for intellectual property. This is a question I do not need an
answer to now—if you cannot give it to me now. How many
additional businesses do you think will benefit from that change?
How good will it be for motorsport, that change?
Ian Lucas: I cannot give you an
answer to that now but I will certainly look into it and try to
give you a response on it.* I have to say that the strong view
that is coming through to the Department is that the R&D tax
credit is very strongly supported.
Chairman: I have to say, the only criticism
I have heard from the small business sector is they are not soon
enough. I cannot remember what year they are coming in now, from
memory. I think 2013. They said: "Why not next year, they
are so beneficial?" So it will be interesting to know what
impact you think that will have on motorsport.
Q344 Mr Clapham: On skills, Minister,
if we could look at, first of all, the two industries, we hear,
for example, science, engineering and maths students are in short
supply and it seems that one of the reasons for this is that there
is a real lack of interest in those subjects. Yet here we have
two industries that have got an enormous image in terms of their
reach to young people. How is government using that image of motorsport
and aerospace to actually encourage young people to come into
the study of engineering, science, etc and to work within the
industries?
Ian Lucas: I think we are beginning
to turn the ship round in terms of the attraction of science to
school students, in particular, in that there has been some movement
towards more science-based subjects in schools. You are absolutely
right there; we need to do more about this. We have set up a body
called Manufacturing Insight to promote amongst young people the
attractions of the manufacturing industry and the excitement of
what I see when I visit these factories (and I am sure you feel
the same when you visit them, too); the design, the innovation
and the levels of intellect that are applied within both aerospace
and motorsports to take forward the respective industries is really
beguiling and, I think, is something that can draw pupils of the
highest intellect in. We want to do that and we are doing that
through the Manufacturing Insight team led by Nick Hussey.
Q345 Mr Clapham: It is enormously
important that we do this, not just in terms of the two industries
but in terms of how those skills can spread out as we move out
of the recession as well.
Ian Lucas: Absolutely. I discussed
with McLaren the attractiveness of the industry, and they said
that they actually had a lot of demand from individuals who wanted
to work in their industry. But, of course, it is also true that
once one gains skills in a very specialist area of that nature
we have learnt that those skills are transferable; that they can
go across to different sectors—aerospace is one sector.
The fact that someone may be drawn into the industry as a whole
by motorsport will benefit UK industry as a whole and it is, therefore,
hugely important that we give support and promotion to the industry
to show people how attractive they are.
Q346 Mr Clapham: I want to come back
to that point in a minute when we look at what the Association
of Colleges have said. When the Committee went to Rolls-Royce
one of the things that I think impressed them is the very fact
that the young apprenticeship scheme works well, but what we were
finding is that some young people were saying they were the only
students out of one class yet there were many other students at
their school that actually wanted to come on to the scheme that
could not get on to the scheme. What is the Government or BIS
doing in terms of future expansion of the young apprenticeship
scheme?
Ian Lucas: We recognise that,
particularly with the smaller businesses, it is much more of a
challenge to provide apprentices in smaller manufacturing businesses
than the larger businesses. So we are increasing levels of support
through the sector compact; there is a £100 million package
of support which is support for Level 2 and Level 3 priority qualifications.
That is something that we strongly believe in.
Q347 Mr Clapham: That will be aimed,
really, at the young apprenticeship scheme?
Ian Lucas: Yes, that is Level
2, which is GCSE equivalent, and Level 3, which is A-level equivalent.
So that is taking young people who are leaving school and developing
from 16 the skills that they need to support these industries.
Q348 Mr Clapham: Returning to what
you said earlier, and looking at what the Association of Colleges
have said regarding much of the internal training that goes on,
it tends to be closed in the sense that if a person is learning
the new skills within an industry and then comes, at some time,
to move on, those skills are not always transferable. What we
really need to do is to look at what is going to be a better fit
for what we require in terms of skills. The Association of Colleges
was saying that what government needs to do is to improve the
relationship between industry needs and FE. I remember going to
an FE college many years to learn skills in relation to a given
industry, but at that time what would happen is, for example,
electricians, fitters, blacksmiths would all be trained at a college
or the educational side of the college and it meant that when
they left an industry, of course, they took those skills with
them because they were universally applied, whereas when the training
is internal it is not universally applied. What are we doing to
look at how we might take on some of the ideas from the Association
of Colleges and further education to give that sort of universality
so that we can ensure that our skills go further than the two
industries that we are talking about?
Ian Lucas: I think employers have
a very strong responsibility to get involved with further education
colleges. I would like to see more of that happening than does
at the moment. I think sometimes some employers talk more about
engagement with education colleges than actually do it. One of
the complaints that you sometimes get from business is that the
courses supplied are not appropriate to what they actually need.
However, I find that colleges in my experience, within my constituency,
have been very responsive to employers' demands if the engagement
is there from the employers. So I do urge and encourage employers
to engage with local further education colleges to try and devise
courses that are appropriate to their needs, and I think if they
do work together it is a willingness on both sides. Sometimes
I think that businesses are under pressure and it is difficult
to set aside the time to spend with colleges, but I do think it
is worth spending that time and putting the effort in.
Q349 Mr Clapham: Of course, any change
in that relationship between business and the colleges would mean
a funding issue as well. Are we looking at all at funding to ensure
that we are able to make the fit better?
Ian Lucas: If the relationship
changes then there may be implications but I am not sure this
is really a funding issue.
Q350 Chairman: It is not the level
but the structure, or model.
Ian Lucas: Certainly the model
of funding. If there is a different model that would work better
then certainly I would look at it. Getting this close linkage
between the industry and the education provider is hugely important.
Q351 Mr Clapham: What about training
levies? I think there are just two training boards now: the Agricultural
Training Board and the Construction Industry Training Board. One
of the things that one of the unions within the two industries
has suggested is that we might look at a levy with regards to
training. Is this something that BIS has considered?
Ian Lucas: At the moment, financial
pressures on businesses are very intense, as we all recognise,
in a recession, and although we want to improve the take-up of
apprenticeships and develop the relationship with employers and
their local colleges we are encouraged by the progress that has
been made in apprenticeships. Therefore, certainly at this time,
we do not think it is appropriate to impose levies which would
be an additional cost at this juncture.
Q352 Mr Clapham: It could be something
that we might look at as we start to see a sustained recovery
from the recession.
Ian Lucas: If we can pursue the
voluntary route and if that is working, then I think that is the
avenue that needs to be pursued.
Q353 Mr Clapham: Just turning now
to the motorsport industry in particular, there is the need to
develop a skill strategy for the industry. Is that something that
you are now looking at—to develop a strategy that is going
to ensure that our motorsport industry keeps its lead, a lead
that we have currently got but we have got our competitors breathing
down our necks? It does seem, looking at what is required for
the future, that we do need a skills strategy. Is that something
that is on the board?
Ian Lucas: I think it is something
that the industry, certainly, has to have. I talked earlier about
the Automotive Council and how engagement from sectors is very
important in that. I would like to see motorsport companies come
forward with what they think needs to be done by government to
support the sector, and we will work to try to provide that. You
are absolutely right that to stay ahead of the game in a very,
very competitive business that everybody else wants we have got
to do things better the whole time. The industry will know what
needs to be improved, and we want to hear about it.
Q354 Mr Clapham: The engagement between
the industry and the Government, of course, is going to be so
important as we move forward because, as you say, you want to
know about it, the industry knows what it requires, so there is
a need to ensure that there is an avenue where government is in
contact and engaging with that industry so we are able to work
out what really is required.
Ian Lucas: Absolutely. The purpose,
the strategic importance, of the UK Automotive Council is to provide
a forum through the Council itself and through various sub-committees
through which industry can present to government collectively
what needs to be done, as far as it is concerned, so that we can
hear a cohesive voice and work more effectively with industry.
Chairman: Lembit wants to ask some questions
before I move on.
Q355 Lembit Opik: Just one,
about the young apprenticeship scheme. Rolls Royce told us (I
think the figure was) that they achieved a 96% retention rate
in their apprenticeship scheme. Even if that figure is not exactly
right it is extremely high, and higher indeed than many universities
achieve on some courses. Also, the British aerospace industry
was a key driver in apprenticeships for many decades. Would you
consider having a more formal strategic relationship with Rolls-Royce
and similar aerospace companies to achieve the very kind of results
that the Government has now said it wants to achieve?
Ian Lucas: I think if Rolls-Royce
were achieving those levels of retention that must be something
that we need to learn from. It is always unfortunate when someone
starts off on an apprenticeship and, for whatever reason, does
not continue with it because it is bad not just from the individual's
point of view, not just from the company's point of view but from
UK industry's point of view as well. We want to up our retention
rate as much as we possibly can and I would be very interested
in looking at all models that provide the positive results you
have just described.
Q356 Chairman: We have to have a
frustratingly brief discussion about higher education now. I want
to look specifically at the aerospace and motorsport perspective,
so just a narrow focus on those issues. We all agree that there
is a need to get universities and businesses to work more closely
together, and you have reiterated that ambition as a government
in the Higher Ambition Policy document only—what was it—two
weeks ago. About two weeks ago. In practical terms, in these two
sectors, what more needs to be done in the aerospace sector that
links up, probably, quite close already, and what needs to be
done in the motorsport sector, in particular, where the links
are much more difficult to achieve, for a variety of institutional
reasons? I am told it was November, the Higher Ambition Policy!
It was three months ago. Doesn't time fly when you are enjoying
yourself! In three months' time the election will have come and
gone.
Ian Lucas: I could not possibly
comment.
Q357 Chairman: I think you probably
could, actually. It would be a Bob Ainsworth moment! Seriously,
there are issues about engagement in the SME sector and in the
motorsport sector and universities, in particular. How can that
very laudable ambition we all share be achieved better in these
two sectors?
Ian Lucas: I think, dealing with
motorsport first, we have got a very fixed 17-year period as far
as the Grand Prix is concerned now, and I think that in that stable
context it would be good to have some kind of formal link-up between
the motorsport industry and universities, maybe through a campus—something
to do with Silverstone.
Q358 Chairman: The particular issue
that concerned me from the evidence is the fact that a lot of
SMEs in the motorsport sector find it particularly difficult to
engage. They have a very different structure and way of working
to the universities, and other SMEs elsewhere in other sectors
as well might be easier to engage. That means a missed opportunity
there.
Ian Lucas: Yes. We could therefore
look at engaging them through having a kind of campus which is
dedicated to the approach of linking in SMEs with the university
sector and having them attuned. I think the larger businesses
do tend to have quite successful links already and you are absolutely
right the smaller businesses are the ones we have to work on.
If we could create some kind of centre where they could interact
with each other, that would be very positive. The other thing
that I think would be of assistance is something that I draw on
in my own constituency, which is the development of foundation
degrees, which can carry people on apprenticeships through to
degree level and, thereby, use an alternative way of linking in,
perhaps, individuals who would not have thought of going to university
themselves at 16 but who would then go through to university by
the route of the foundation degree and develop the link between
their particular business, which might be a smaller business,
and a university through that route. I am a great believer in
foundation degrees which can take forward the skills of people
who, perhaps, do not see themselves as academic but actually develop
in a distinct way at a different pace.
Q359 Chairman: Let us look at courses
in a moment in just a little more detail. You are saying you are
looking at ways of improving the SME engagement with universities,
which is encouraging. Are we broadly content with the engagement
in the aerospace sector with the universities? It can always be
better but in the great scheme of things.
Ian Lucas: It can always be better.
I tend to raise this subject when I go and visit places, and one
hears constantly of links between particular universities and
aerospace companies.
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