Examination of Witnesses (Questions 68-96)
MS TESS
GILL AND
MR CHARLES
SEAFORD
30 JUNE 2009
Q68 Chairman: Good morning, and welcome
to the Committee; it is our second evidence session on this new
inquiry so we are glad to have your evidence. Your submission
says[8]
that at the Windsor Consultation on low carbon skills there was
little sense of progress on the CEMEP[9]
recommendations; why do you think we are making so little progress
towards developing the skills for a low carbon economy?
Ms Gill: There has been a failure
to have ownership of the project to any significant degree. At
the Windsor Consultation the feeling was that the UK Commission
for Employment and Skills would be a suitable body to take ownership,
to look at the whole skills system, which is quite fragmented
as your Committee probably knows. We have got what was then DIUS,
now BIS, but then there are all kinds of different agencies under
that—Learning and Skills Council, funding agencies, we have
the providers, the colleges and so on and then we have got the
qualification bodies. If one is going to have to have a co-ordinated
approach to ensuring that public funding, provision of skills,
employers seeking skills, is going to be co-ordinated around the
need to transform our society in a low carbon, resource-efficient
way, then someone really has to—it was considered at the
Windsor Consultation and since—take ownership of that project
and work throughout the system to ensure it happens. At that stage
it was thought that the UK Commission would be the appropriate
body, but since then the Commission has said it has not got the
capacity to be involved in this and in fact does not participate
in the meetings on that subject. To some extent DIUS took action
but really only saw itself holding the ring because no one else
was doing it rather, it is fair to say, than because it thought
it was wholly appropriate. One needs the sector skills councils
to be fully involved; there is an Alliance for sector skills councils
and we thought perhaps that would be of assistance, but that is
newly set up and equally does not really have the capacity. We
think that in the absence of the UK CES—and that still would
be the appropriate body, it was set up specifically to advise
the Government on employment and skills and to have an overview
of what the sector skills councils are up to—if that is
not going to take the responsibility then really it is down to
the new department, BIS to take on that task.
Q69 Chairman: That is where the leadership
should come from.
Ms Gill: In the absence of anything
else, yes, it should. The buck has to stop with the Government
in this area; it does not mean that the Government is going to
regulate what kind of skills are going to be provided. It is meant
to be a demand-led system but it is also widely recognised that
there is what is called latent demand. I am not sure whether latent
demand exists really, but what it means is that there is a lack
of appropriate demand for some of the skills that we are after,
whether they are technical skills, the STEM skills, whether they
are carbon accounting, procurement, construction, the "Great
British Refurb"—it is widely recognised we do not have
the skills provision we should have and that something should
be done about it. We set that out in our paper, some of the policies
are there but the action is lacking.
Q70 Mr Caton: Looking at Government,
in your evidence you talk about pockets of resistance within Government
preventing action on skills. What parts of Government are showing
this resistance, why do you think they are and how do we overcome
it?
Ms Gill: Charles, do you want
to deal with this?
Mr Seaford: Pockets of resistance
may be putting it a little strongly, the more important point
is that there is resistance to making it a priority—perhaps
I could put it that way—within what is now BIS, a sense
that this is not something that we should put resources into,
even the quite small quantity of resources needed to drive the
policy through, and that is holding up action. It is within the
department but it is not an active resistance, it is a passive
resistance that actually means that it fails to become the priority
it needs to be, to make something happen.
Q71 Mr Caton: How do we overcome
it?
Mr Seaford: It is quite simple;
ministers have to say that it is a priority and officials have
to agree to a timetable for delivery of real results over a nine
month period.
Q72 Colin Challen: Is this because
really—let us call a spade a spade—the Government
sees green jobs to some extent as Mickey Mouse jobs? Real jobs
are in nuclear power, in CCS and all the big things, and wind
turbines and so on are a bit of a poor relation?
Ms Gill: I agree that to start
with, it might have been seen that they were channelling green
jobs into environmental industries but more recent statements
have accepted that what we are talking about is a transformation
of our whole economy and that the public sector, for example,
should give a lead. What you are talking about there is, for example,
procurement and having the right procurement skills. This is not
training apprentices, this is upskilling the current workforce
in managerial levels but also engaging the whole of the workforce,
and it is also accepted that it is important to bring in the trade
unions, the union learning representatives, in this task. We see
the need for skills and the Government, certainly in some of their
statements, accept it as being a very wide term. It is not just
technical and skills and it is not just managerial soft skills,
it is engaging the whole workforce, but within that there are
specific technical and knowledge issues that have to be tackled.
It is not so much that individual ministers do not see that, it
is that they do not have a joined-up ownership of how to progress
it, and in fact you could take the Prime Minister's document yesterday,
Building Britain's Future as an example because if you
look at that the issue of investing for a return to full employment
is dealt with, skills is mentioned, but not at all in the context
of low carbon. In fact you have to go well through the document
before you get to the low carbon skills for the future, and there
it says: "Our skills policy has two central priorities. First,
it will focus on the immediate priority of getting people back
into work, ensuring that they can get on and make progress in
their careers. Second, in the long term, skills policy and the
resources we devote to skills training need to be properly strategic
and responsive both to the demands of business and to global trends."
That still, at that stage, has not addressed the issue of specific
skills or indeed general skills for transforming society to low
carbon. That comes towards the end of the document, not joined
up with the earlier parts, under the heading "The shift to
a low carbon economy" where they do talk about the "Great
British Refurb". It is just one example, and one could find
it in most of these documents, that there is not a joined-up approach,
they do not start with thinking when we talk about skills, if
we are serious about transforming our economy, we talk about skills
in that context and we ensure that the different bits of Government
and the different agencies are joined up in this venture.
Q73 Colin Challen: Looking at the
£2.3 billion that we are pumping into the car industry to
save it from bankruptcy, would you expect to see more conditionality
there on developing these skills that you are talking about?
Ms Gill: Certainly the Sustainable
Development Commission thought that there should be conditionality
as to the cars that had to be purchased being environmentally-sound
low carbon vehicles, which there was not. Obviously if that was
done that would then stimulate the market, would it not, for developing
the skills to provide those vehicles, so it is quite a good example
of policy not being joined-up in our view.
Q74 Mr Chaytor: In the annex to your
submission[10]
you set out a timetable, which is quite a short timetable of about
six months, but you say that by January 2010 the Department and
the Commission should have published estimates of the size and
nature of the market that government interventions will create.
My question is to what extent do you think the source of the problem
is that really in Government there is a nervousness about the
capacity of intervention to create markets. Is there an ideological
legacy here about the role of Government that is the root cause
of this lack of co-ordination and fragmentation that you have
referred to?
Mr Seaford: Yes, I think there
is. We get some signals that there is a reluctance to push ahead—it
is a mixture of reluctance and nervousness because people have
not done this for quite a long time. If you are going to do industrial
strategy there is no one around who has done it since the 1970s,
they have all gone, so it is partly an ideological thing but it
is also a sense of can we really do this and a lack of confidence.
We would encourage the Government to bite the bullet and work
with industry obviously—it is something that can only be
done in partnership with industry—so that a shared view
is developed. It was striking the other day, Tony Hayward of BP
saying that he did not think that renewables were going to be
viable and that they were pulling back in that area. At the same
time we are talking about 30 per cent of electricity generation
in this country coming from renewables in the next ten years,
so there is a sort of disconnect here and there needs to be a
much more active collaboration with industry to pull those things
together again.
Q75 Chairman: You have called for
a plan to be published in the autumn but do you see anything in
the Prime Minister's statement yesterday that would form the nucleus
of that plan?
Mr Seaford: There are two things
that are going to happen in the autumn anyway, the White Paper
on getting Britain back to work and the skills strategy, but we
were a bit concerned that the skills strategy was talking about
an approach to developing skills and what we are talking about
is, this is what is going to happen. Really, the time has gone
for developing approaches, we really need to get on to the next
stage. We have been talking about approaches for two years now.
Q76 Mr Chaytor: In terms of the Government's
levers over either industry as a whole or individual companies
or other public agencies, what are the most effective means that
could be introduced to hold public agencies and private companies
to account and incentivise them to get them to take this issue
more seriously?
Ms Gill: In the public sector
it should not really be difficult, should it, if there were strong
calls for leadership. There have been some calls but not sufficient—it
should be built into everyone's performance.
Q77 Mr Chaytor: Are there some mechanisms,
performance management indicators for public agencies for example?
Ms Gill: There should be mechanisms,
indeed. I was saying to Charles as we came in that I noticed that
President Putin in Russia had told the leading bankers that they
could not take a holiday unless they increased lending; perhaps
that is going a little far but at least it shows the leadership
that possibly we need. In the public sector it really should not
be difficult if there was sufficient determination. In the private
sector some of the leading employers, of course, are doing quite
well on this agenda. The more difficult area is the SMEs, so if
you take the Great British Refurb it is quite hard to get at those
employers and get them to think that they are going to spend money
and effort having their workforce—and many of them are individual
traders—upskilled. At the moment they probably do need some
funding assistance—that is the feedback we have had—that
even if they go for the brokers under the Train for Gain system
they in fact have to pay and, equally, they are not prepared to
put up the money very often. There was talk at the last Windsor
Consultation of trying to use supply chains to get down to the
SMEs, and there is something in that, but I think its own it would
not be nearly sufficient and one actually has to look at how you
can assist. If we are serious—taking the example of the
Great British Refurb—we want our construction industry,
our electricians, our plumbers not just to do the minimum but
to understand why they are doing it, because the other point that
was made was you actually have to educate householders, because
it is no good refurbing their house if they keep their central
heating on high, open the window and buy lots of electrical appliances,
so it has to be part of a general project. Ideally the plumber
and the electrician would go in as missionaries, understanding
why they are doing this, and engaging the householder in the project.
We have some way to go to get that far.
Mr Seaford: It is an absolutely
key point that Tess made earlier about things being joined-up.
The nature of this project is such that you have to have a joined-up
approach otherwise it just does not work, so it has got to work
firstly at the broad level. This is the direction we are going
in, we have got to get these very clear signals coming out from
Government that this is the nature of the demand in the future.
Then you have to provide, at the next level down, help to the
small and medium size enterprises so that they can actually respond
to those broad signals, whether it is through Train to Gain, advising
people on the nature of the skills that are going to be needed
or helping with funding. Then you have to work at the level of
the consumer and then you have to work at the level of the skills
provision itself, and these different layers have got to be managed
in synch and held together as part of one project. The danger,
as Tess has already said, is that that is not happening.
Q78 Joan Walley: You have given an
example of the way in which things are not working in a joined-up,
integrated way, but just going back we have had the Government's
Commission on Environmental Markets and Economic Performance,
so that set out what was going to be a clear approach back in
2007. Then we get to the stage whereby Government has been really
firm about the commitments it is making to carbon reduction, so
we know that in industry and public sector services at some stage,
if we are going to reach that reduced amount of carbon emissions,
things are going to have to change. Then in your evidence, particularly
following the Windsor meeting that was held, you talked about
how industry and public services need to get clear signals from
Government as to what needs to be done, but I am still not clear
what you are actually saying needs to be done. I would have thought
that the regulations need to be put in place so that there is
a fair signal to industry that you have got to have fiscal packages
within the Treasury, and every single government investment programme
that there is—and you just referred to the Prime Minister's
statement yesterday—needs to show how each and every new
policy or new spending commitment is embracing this green agenda.
How is that going to happen, where are the action plans, what
does the Government need to do to make sure that industry and
public services, rather than face uncertainty as to how this is
going to happen, know very clearly what they have got to do and
what the time frame is?
Ms Gill: It is obviously a complex
question and there is not a short, simple answer because there
are a lot of levers that can be used, and I am sure you have already
had people talk to you about the role that regulation has, the
role that fiscal stimulus has and where things could go wrong.
For example, if you take funding for renewables, there are widespread
complaints that it is stop start, no sooner have they given some
funding to help people put up their solar panels than they run
out of funds, and this of course does not help industry. That
is an example where it does not work; equally the planning system
holding up wind farms. So there is no one simple mechanism because
we are dealing with the whole economy.
Q79 Joan Walley: But meanwhile industry
is uncertain, it is not getting clear signals, so all the time
investment decisions are being made which are locking different
industries into spending over the next 15 years. Similarly, private
finance initiatives are going ahead which could be doubly expensive,
so where is that clear line of direction coming from and what
does the Government need to do to make sure that it is there?
Ms Gill: I do not think it is
at the moment. It presumably rests with Lord Mandelson, he is
now in charge of the major department that is involved here, together
with DECC, in looking at long term planning, and this as you rightly
say is a matter of long term planning; short term will not help.
If you look at Germany there has been long term planning there,
there has been far closer collaboration between the banks and
industry over a long period of time and therefore industry has
felt secure in the knowledge that if they invest in renewables
there will be a market for renewables, and we need those kind
of long term signals by this Government. It can be done, it is
just that it has not been done.
Q80 Joan Walley: When you say it
can be done, what is "it"? When you say it can be done
what is it exactly that Government needs to be doing to give that
certainty to industry?
Ms Gill: For example, on the funding
for renewables, instead of having stop start systems so that they
run out of funding they ought to ensure that there will be funding—and
some of this they say they are going to do more on, do they not,
like feed-in tariffs that they are going to be introducing. But
every time they introduce an initiative, instead of just being
an initiative for a six-month or a nine-month period or a year,
but it runs out after six months, each of those initiatives needs
to take a longer term view; that needs to be built into their
planning.
Q81 Joan Walley: That presupposes
then that whatever the political persuasion of the government
in power there needs to be buy-in from all the political parties;
do you see evidence of that?
Ms Gill: That is a difficult one
to answer, is it not? I do not think I am going to attempt to.
Charles.
Mr Seaford: No.
Q82 Chairman: But on that point,
if we are looking for more, longer term, predictable, guaranteed
incentives for renewable energy, that means higher consumer prices
does it not?
Ms Gill: It may do but then there
needs to be subsidy, does there not, to deal with those that are
on the poverty side of the equation.
Q83 Chairman: I am not aware that
any political party is now advocating more public spending in
this area, so if there are to be more incentives they are going
to have to come from the consumers. I mean, the ROs are ultimately
funded by consumers, feed-in tariffs presumably will also be asked
were they funded by consumers; it would be moire honest I think
if people who are calling for more effort to be made to create
green jobs accepted publicly that there is a better chance of
getting bipartisan support if you lay on the line a high amount
of investment in renewables creating jobs in that area means higher
consumer prices.
Ms Gill: We have said that in
our Green New Deal document.[11]
I am not being evasive here, it is just not my particular area,
but I think that is indeed what we have said.
Q84 Chairman: Those people who come to
committees like this and say you need a bipartisan approach need
to face up to the consequences; we have to educate the public
that more green energy means higher energy prices, everyone pays
more for their electricity.
Ms Gill: You also have to put
it in the context of the alternatives, do you not, that oil is
an exhaustible supply, we need security in our energy industry,
that there are ways of financing some of this by leasing from
the energy supply companies—which are under consideration
certainly. You have to put it in the wider context but at the
end of the day we all are going to have to pay if we are going
to combat climate change to some extent, but the longer term inter-generational
consequences of not doing that are so severe that we have to educate
and persuade and mobilise.
Q85 Chairman: Yes, you do not need
to persuade this Committee of that point but we do need to be
very clear that when we are calling for more investment in these
areas that means higher prices. It is very important to be honest
with the public about this. We had a toy with a White Paper in
2003 about having secure energy, green energy and cheap energy:
you cannot and it is important that people who are now calling
for more investment should face up to the consequence.
Mr Seaford: Absolutely.
Q86 Colin Challen: I absolutely agree
with that and it certainly applies to the nuclear power industry
which had its own secret tax back in the 1980s called NOFO—everybody
paid it. My question really is continuing this line because our
international competitiveness is very important and green skills
will be a very important part of that. You have mentioned the
German example and the feed-in tariffs and that long term stable
approach which has given the signals for a long time ahead, and
that is what I would describe as an interventionist measure; it
is a pushing measure rather than pulling. You cited cars: if you
make green cars then you will inevitably have green skills but
that sort of leaves a lot to chance, does it not, so you would
be doing more interventionist things to improve our competitive
position rather than simply saying as we do at the moment that
the market will decide the mix and therefore the market will decide
on the skills mix as well which is the inevitable consequence
of a choose no winners policy.
Ms Gill: It has to be a mix of
the two, does it not? Government must take the lead, it must provide
the framework, it must provide the regulatory regime, it must
give the right indicators as in the example of cars in saying
we will provide funds provided that they go towards certain green
products or environmentally sound products; that would stimulate
the market. It has a huge weapon in public procurement, which
is probably a bit under-utilised at the moment, and if we had
environmental requirements built in more than they are currently,
right down supply chains for the public sector, that would be
a very powerful market stimulus. It would not leave matters to
chance but should not have any adverse consequences in terms of
being stop-start or any other disadvantages that one can see.
Q87 Colin Challen: The market-based
approach does seem to have failed us and if you look back to the
privatisation of electricity generation the investment in research
and development just plummeted to practically zero. Should we
be taking really strong interventionist measures, should we move
away from giving hints and signals as we are at the moment? As
you say, they all seem to run out of steam after about six months.
What more could be done on that front if that is to be the successful
approach?
Ms Gill: It has to be a mixture.
Some parts of the private sector are undertaking quite good measures
so we are not talking about changing to a command and control
economy, but we are talking about Government through the public
sector and through giving the right support and indication to
the private sector being able to move forward. I am not sure whether
you are prompting me to say that we should fundamentally change
the basis of the economy because I do not think we would go that
far.
Q88 Colin Challen: It might mean
directing a lot more to happen. If climate change is as serious
as our leaders tell us it is and the science certainly does, surely
we should be taking more of an interventionist approach with a
lot more planning and a lot more direction from the centre to
say right, we are going to have to exceed our targets on insulation
therefore we will have to train X number of people to do it rather
than simply saying we will have a target with some financial support
mechanisms and then we will just throw it all into the air and
see how it lands.
Mr Seaford: I would agree that
we need to be rather clear that we need so many thousands of people
to do this and so many thousands of people to do that, but that
is not something Government should do in a sort of ministry of
planning in Victoria Street, it is something that has to be done
with industry, we would suggest, and the people who actually are
doing this already. You say should we not move over to a much
stronger interventionist system, we would say that the intermediate
model has not really been tried yet, we have not actually got
a proper system of indicative planning working at the moment,
and I go back to the point I was making about Tony Hayward. We
do not actually have at the moment a way of working with industry
that allows us to map out how things are going to be, and until
we have done I do not think we should go straight over to more
command and control personally; that would be our view.
Ms Gill: To take an example where
more regulation probably would assist, if you take the Great British
Refurb at the moment we have got standards for new build and we
have said all along well actually 90 per cent of our buildings
are existing buildings. We would like to see the process of regulation
to upgrade existing buildings together with some form of finance
for those who could not afford it, either by lending—that
might be quite a good mechanism—or the upfront costs to
be recouped through saving money through energy efficiency and
so on, with perhaps some imaginative programme to speed up that
whole process, because that would be a big step forward in moving
towards our overall targets. Government could certainly move faster
on that than they are and it would then be a mixture of providing
the regulatory framework and would enable the construction industry
to know funds were available, so they would be stimulated to do
something about upskilling their work force.
Q89 Dr Turner: You want the Government
to have a green skills policy, you want to see a pull-through
of green jobs. Probably one of the most effective connections
we can make is to ensure that there are companies crying out for
people with green skills, but that is simply not happening at
the moment because although the Government has paid lip service
to a green industrial strategy it has not set out any ways of
actually bringing it into being. Can you tell us the sort of things
you would like to see the Government doing to achieve that?
Mr Seaford: There are certain
areas of activity which the Government can influence and that
industry cannot. Government could say right, we are committed
to ensuring that there will be a higher carbon price, a properly-formulated
indicative carbon price going forward.
Q90 Dr Turner: But we are not committed
to any such thing are we?
Mr Seaford: I know we are not,
but you asked me what we should be doing.
Q91 Dr Turner: Sorry, I thought you
were indicating the Government were.
Mr Seaford: That is the problem,
if there is not a clear indicative carbon price for the future
then obviously businesses cannot plan and businesses themselves
are crying out for some sort of clearer signals about what a target
carbon price might be. That is the first point and that applies
across the economy. Then you have got the specific programmes
that Tess has been talking about—refurbishment, the Great
British Refurb and so on and so forth—and those could be
made much stronger and the targets made much stronger and harder:
these things are going to happen by this date and that is going
to require the following kind of industrial investment. The point
I was making earlier was that by working with the relevant industries
we can work out some form of industrial plan in key sectors like
the building industry where real progress can be made. Then you
have renewables, which we have touched on, and as the Chairman
said a little bit of honesty about the consequences of that, but
in the context of a higher carbon price that may become easier
to do. There are then programmes like electric cars, which are
already underway, with a clear commitment to investment in the
infrastructure, and any other sectors where infrastructure investment
is going to be important. You can see there is a combination of
measures, a general commitment to an indicative carbon price and
then a commitment to a set of regulatory and fiscal incentives
in specific sectors and investment which will drive industry to
do what it needs to do. It is not rocket science.
Q92 Dr Turner: We know it is not
rocket science and, as you have already referred to, the Germans
have shown us for the last few years quite clearly how to do this.
It is quite simple, it is certainly not rocket science, and although
it costs it does not cost any more than, for instance, our own
renewable obligation does to deliver far less. Do you see any
sign of the Government carrying out measures as clear and effective
as the Germans have in creating the market conditions to create
success? Germany's wind industry and solar power industry between
them must be worth about 250,000 jobs but we have nothing comparable
in this country at the moment, although we have the opportunities
surprisingly enough. Have you seen any sign of the Government
doing this and how would you want it to do it if you did?
Ms Gill: We have set out that
we would want them to start off with some kind of timetabled plan
in the context of skills, which is our particular area, to drive
this forward. It is not in our area of expertise to lay down everything
they should do so that we should rival Germany, although it would
be delightful if we could. We can all see examples around us where
they plainly are not doing that, not just in the area of renewables
and the Great British Refurb, you can look at our transport system
where, certainly in the Sustainable Development Commission, we
are keen they move forward on the electrification of the railways,
but if they are going to do that then they obviously have to make
sure that the grid supports that and that we have green electricity.
There are therefore many areas where one would want to see—and
we have produced detailed policies in some of these areas which
we are very happy to share with this Committee on steps we think
they should take.
Q93 Dr Turner: I am beginning to
understand the difficulties that the Government has in seeing
a clear way forward if bodies like the TUC cannot.
Ms Gill: We are not the TUC.
Q94 Dr Turner: Frankly, you have
not come up with anything tangible.
Ms Gill: We are not the TUC.
Q95 Chairman: This is the Sustainable
Development Commission.
Ms Gill: You are going to hear
from the TUC and perhaps they will satisfy you more but it is
a little unfair to say that we have not come up with anything
tangible.
Q96 Martin Horwood: Can I just come
back to Charles. You have just now, very rightly, identified the
indicative carbon price as a really key driver of green jobs that
would drive investment but if you are not in favour of a command
and control economy what exactly should Government or even the
European Union do to intervene to support the carbon price if
it drops too low, as it has done in the past.
Mr Seaford: I am not an expert
in managing the carbon market so I do not have a proposal up my
sleeve to present to you. I was merely asked what would drive
an effective low carbon industrial strategy and I mentioned a
clear indicative carbon price as something that is necessary for
that to happen, but in terms of how it would actually operate
I assume that there would have to be some market intervention
in the way that you have an indicative price for sterling, but
I am not an expert in that, sorry.
Ms Gill: It is generally recognised
that the Government as part of the EU system is setting the carbon
price and so far it has not worked, has it, but it is hoped that
it will work in the future.
Martin Horwood: That is probably something
we will have to explore with other witnesses I guess.
Chairman: Thank you very much indeed
and also thank you to your colleagues in the SDC as well for the
work that has been drawn on from time to time.
8 See Ev 25 Back
9
Note: Commission on Environmental Markets and Economic
Performance (CEMP) Back
10
See Ev 27 Back
11
Note: Sustainable Development Commission, A Sustainable New
Deal,7 April 2009.-http://www.sd-commission.org.uk/publications/downloads/SND-booklet-w.pdf Back
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