Green Jobs and Skills - Environmental Audit Committee Contents

Examination of Witnesses (Questions 345-422)

KEVIN BRENNAN MP AND MR DAVID KIDNEY MP

  Q345 Joan Walley: I would like to thank both Ministers for coming along to what we hope will be a team performance on the really important subject on the vision of the green jobs, and to say how appreciative we are of you both coming along side by side because we attach great importance in this Select Committee to the joined-up integrated approach. We have quite a lot of business to get through, so we will do our best. I do not know how you are going to arrange answering questions between each of you, but the UK carbon budgets require ambitious emissions reductions and we have the Low Carbon Industrial Strategy, which is setting out the Government's vision of a low carbon economy. My first question really is: is the workforce equipped to make this transition, to make that change?

  Kevin Brennan: Thank you very much, Chairman, for inviting us along and I think we will try and deal with it as seamlessly as possible and try to do a double act rather than carve things up too much between us. As you have mentioned, the Government have made a lot of progress in this area over the last year and developed the Low Carbon Industrial Strategy; and we are also about to announce—I am sorry about the timing of this Chairman—our National Skills Strategy, which I think will say something further on this. We do need to equip our workforce for the change that you have mentioned. The estimate from the research that has been undertaken is that in the low carbon and environmental goods and services sector there are currently 800,000-900,000 jobs. We think that that is going to expand over the next few years, by the middle of the next decade, to over a million, and that raises a lot of challenges around skills both in a specific sense with the skills that will be required in those areas of the economy which are due to grow, but also in the generic sense for the fact that all jobs in one sense are going to have to become green jobs in years to come because every business enterprise and Government Department is going to have to play its part in hitting our targets. So in answer to your question, I think what we are about is planning on how we can help to equip the workforce in the future with these skills.

  Q346  Joan Walley: Is it going to be a dramatic shift?

  Kevin Brennan: I think that we are undoubtedly looking at a pretty dramatic shift in the way that the skills system can respond to the challenge of the green economy. We have set up low carbon economic areas in those areas where we want to get the skills sector bodies—the universities, the employers, government local, regional, sub-regional—working together much more effectively to identify the skills needs for the future and to make sure that we have the qualification frameworks in place in order to equip us with the skills that are needed. I do not know if David wants to add to that.

  Mr Kidney: Clearly the urgency expressed by your questions is absolutely right because what is different this time is that we have the Transition Plan; we have the first three carbon budgets and they have shown just over a decade from now that the landscape will be so different from today. So we know that there are going to be massive changes in the skills needs and so we cannot wait traditionally for employers to start to say, "We are coming up against skills shortages; we need to do more training in this area." We know that there is going to be a massive shift in a short space of time and that is why the policy that Kevin's Department is going to lead on about more activism in terms of skills is so important. We have to guide, push, cajole, encourage, incentivise people to get training, to get the right skills now because the jobs will be there then; but there is a leap of faith for individual employers and individual workers to get going, and part of our job is to reassure, to inform and to make sure that choices are there for people.

  Q347  Joan Walley: So the Department of Climate Change is basically saying that there has to be this dramatic shift and the Department of Skills is saying that that is deliverable?

  Kevin Brennan: Yes, and as David said, we signalled this earlier this year in the New Industry, New Jobs White Paper, which is all about a new industrial activism.

  Q348  Joan Walley: We will come on to that in a moment. Can I just ask as well though, you are saying that the green jobs challenge is something that needs to be addressed; what research have you done to guide Government policy in terms of the green jobs challenge?

  Mr Kidney: I think that the best starting point was the CEMEP Report, the commission between Government, trade unions, employers and academia, which led to the commissioner's report, which the Government then responded to, and I think one of the better documents that the Government have produced, although this was in the days of DIUS—DIUS took the lead anyway.[17] That was the base about what the future landscape is going to look like because at that time the Climate Change Bill that became the Act was going through Parliament. So that became the starting point. Then Defra commissioned a report on a review of the skills base at the present time, which led to the conclusion that there is latent demand out there but employers have not got to the point yet of advocating for the skills training to meet the latent demand; so that is where we realised that there is more for Government to do. So the crucial report for us was the Innovas report in March of this year, which is the one from which we quote all the figures in the two memoranda that we have submitted to your Committee about the size already of the low carbon and environmental goods and service market and its scope for expansion in the future, and from that building outwards from that one sector to across the whole of our industry so that every job in the future will have a green element to it.

  Q349 Joan Walley: We have the CEMEP Report and we have the follow-on report from Defra and so on, but how is that being interpreted amongst the regions of the country? Is it not just reports that we have? How is that being put into practice? And where it is being put into practice, which of the sectors are the most deficient in terms of their understanding of the green jobs agenda?

  Kevin Brennan: In relation to the regions there are two elements to that. First of all there is the development of the low carbon economic areas where, as the Committee will be aware, we have already started developing two of them: one in the southwest, trying to take the comparative advantage in wave and marine energy in that area and bringing together partnerships to meet the identified skills gaps in those areas for developing green jobs in the future; and in the northeast around ultra low carbon vehicles, boosted by the investment recently of Nissan.

  Q350  Joan Walley: What about in the West Midlands?

  Kevin Brennan: In the West Midlands there is an excellent example that David would like to talk about.

  Q351  Colin Challen: And Yorkshire!

  Mr Kidney: First of all, the question was have we some examples of where this is already happening on the ground, and I think that the two low carbon economic areas are really good examples because in the southwest with the marine focus we already have everybody on the same side in terms of the employers, the trade unions and academia in terms of focusing on what their skills needs are going to be in the future, and then developing a skills action plan for marine in their region already. I would not like you to think that because it is in a region it does not benefit the rest of the UK—it certainly does: for example, for the Wave Hub contracts the cabling came from JDR cable systems in Hartlepool; so the rest of the country benefits when we do well in one area.

   Also, in terms of future direct investment for this country, places like the southwest are going to be attractive for people who have either development proposals or supply chain offers in terms of marine in the future. So a lot has come of that. If you turn to the northeast I am sure it is no coincidence that Nissan decided to invest £200 million in putting their electric battery plant in the northeast because of our thinking on what we want to do for that area. On the back of what they have announced, we, as a Government, are looking at a research and development centre that will bring together all the five universities in that area. Also, because of that low carbon focus on ultra low emission vehicles that area is going to get quite a lot of that spending that we have announced for the electric car plug-in infrastructure—750 charging points throughout their region. Because they are focusing on low carbon they have big plans for bio-energy and offshore wind in the northeast as well. So that is in those areas. You say, "What about the West Midlands?" We are positively demanding of each area that they come forward with their plans for taking us to a low carbon future and what we are saying to them is, "What is your competitive edge? What is it you want to offer that we would get behind and support you in?" And the West Midlands ought to come forward with theirs. I was particularly impressed by next door, the East Midlands, where, without any help from Government, we have seen that their employers and their further education and higher education institutions all came together under a banner of skills for energy, and they now produce course materials in their colleges that they share with their employers. The employers share their intelligence with the colleges and they have the common knowledge platform between them, and their regional development agency positively promotes this outwards as being the strength of their region— that they are strong on renewable energy, on emerging technologies and, crucially, on sustainable buildings for the future as well. They have made those an identity for their region and that is what I say we should be doing in every region of the country—we should be looking at what our identity is for this new low carbon future that we all have.

  Q352  Joan Walley: Which leads me on to ask whether or not you have identified sectors which are deficient in terms of the green skills agenda?

  Mr Kidney: Sort of, is the answer. Every sector of the economy is going to change as we go forward, but there are some where we know we want to make a difference. You saw the money from Budget 2009 for offshore wind, for example, for marine energy, for nuclear low carbon aerospace for the future, the low carbon vehicles of the future, and we know that construction is going to be crucial to everything that we do. So there are some kinds of areas that we know we need to give special attention to; but we do not want to back winners or exclude anybody, we want every sector in the country to play its part in bringing our country to this low carbon future.

  Q353  Joan Walley: Is there a figure that you have of the number of low carbon jobs that would need to be created before we had a green low carbon economy?

  Kevin Brennan: I do not think there is.

  Q354  Joan Walley: How can we measure it then?

  Kevin Brennan: I do not think there is for this reason: obviously you can look at what the Government's policies are around low carbon and around renewables and so on, and you can make an estimate of the numbers of jobs that could emerge as a result of that. On the other hand, the strategy is not to create a certain number of jobs and have a command economy approach, a five-year plan that will result in X number of jobs because actually Government are not very good at doing that—the `predict and provide' idea of jobs is really not what we are about here. What we are about is having a much more industrial activist approach to low carbon, about having good intelligence and evidence of what is on the horizon and using the evidence out there and using bodies like the United Kingdom Commission on Employment and Skills to give us high quality intelligence, and then incentivising the system in order to be able to provide the skills support needed to develop jobs in the areas where we think that there will be growth. So we do not have targets for jobs in particular areas, although we have an idea about the sorts of jobs and the numbers of the sorts of jobs we think will be created on the horizon. I am afraid that economic forecasting and skills prediction is not an exact science. Policy and past experience show that governments are not very good at that; but what we can be good at is incentivising the system and trying to be smart about what is on the horizon.

  Q355  Joan Walley: Finally from me now, is it a question of greening existing jobs or is it a question of creating new jobs?

  Kevin Brennan: I think the answer is both.

  Mr Kidney: Absolutely both.

  Q356  Colin Challen: I am not entirely clear what our approach actually is. Is it a demand side approach or is it a supply side approach? Do we anticipate that our market signals will encourage the private sector to develop these jobs, or do we anticipate that something is going to change and help provide them ourselves? Because it is a bit of a chicken and egg situation where we are hoping that the signals will be sufficient to create the demand for the jobs; but just to contrast that with our energy policy, when the Government have repeatedly said that they will not predict the mix of our energy supply it does mean that private companies find it very difficult to plan—they need something a bit more certain than that. So you do not know whether you are going to have nuclear jobs or renewable energy jobs and that kind of confusion has caused problems. So are we just waiting for the market signals to work their way through and then just hope that private sector employers will start training people to meet the demand, and is that going to have a timeline as well?

  Kevin Brennan: David will kick off.

  Mr Kidney: First of all this business about is it demand or supply side? If you go back to the CEMEP Report, it is clear that there is going to be some of each—there has to be the pull and there has to be the push. I think the word that you have missed and what we have already said is that for Government the approach is activism. We have to alert everybody about the huge shift in our economy that is going to happen in the next decade and how we have to be ready for it. We then have to give the signals and the incentives for people to get training early, which means right from the courses that are available, the curriculum, the qualifications, right through to what the jobs will look like. But we cannot today say that it will be X-thousand jobs in this sector and Y-thousand jobs in that sector, and that actually brings me to your point about the energy of the future. The Renewable Energy Strategy and the Transition Plan show that we are going to need lots of renewable energy, lots of nuclear energy and lots of clean fossil fuel energy. We do not know precisely how the investment will pan out, how the speed of development of each will pan out, and that is why we will not say the mix is 30-30-30 or whatever because we do not precisely know how it will turn out to be yet. But we do know that we have to press our foot to the floor on the accelerator for all of them because they are all going to be needed. It is just the same—every sector is going to need these kinds of skills and we need to be encouraging people and providing the signals and the incentives for people to be able to make the shift.

  Kevin Brennan: In answer to the broader and to the philosophical point you were making in your question, Colin. Ultimately, our view is that it is successful businesses that are good at job creation rather than command and control from central Government; but on the other hand, particularly in this sort of area, there are elements of market failure that mean if you leave it simply, entirely, to the market it is not always going to produce the optimum outcome. So what we have signalled in the last year, as David said, is a greater activism around this in trying to give (a) clear steers of direction from the Government about what shape we think there is to come in the economy and what the future is for a low carbon economy; and (b) to incentivise the system and invest in helping to kick-start that process that we hope will produce the businesses of the future that are going to create the jobs that we are talking about. Ultimately, though, governments are not particularly good at accurately and entirely predicting what is going to happen in the future—we would probably all be millionaires if we knew what was going to happen in five years' time—but what we can do is to try to read the evidence as clearly as possible and set out a strategy and a framework to help businesses towards creating those jobs that we think will be created with that support.

  Q357  Colin Challen: I am just wondering how bumpy a ride this is going to be. We have these targets for 2020, and it is only ten years away, and a great deal of work to be done. We have had one or two high profile cases recently, like the Vestas' Isle of Wight example where I know that DECC was very active in trying to save those jobs. Do we have some sort of crisis management? It is a great shame to lose those talents and skills when it is just left entirely to the private sector to decide. You have talked about industrial activism but does it extend to state intervention to protect jobs and build on those skills?

  Kevin Brennan: I think there has been some state intervention or some state support around that area, but David might want to talk about the detail on the Vestas' case of what happened and what the Government's involvement was.

  Mr Kidney: I think the starting point is that the normal rules of business have not been suspended because we are going into a low carbon future—businesses will still succeed or fail on their marketing, their research, the quality of their services and that they do have a market for what they are offering. In the case of Vestas this was a Danish company building blades for onshore turbines in the Isle of Wight for the United States market and on a review of their business they decided to move their manufacturing facility nearer to their market. So, there is quite an interesting message there for us for the future: for example, as we get bigger and bigger on offshore wind and marine technology, we will suck in manufacturers and supply chains to this country because they will want to be where the market is. It is interesting that when Vestas said, "Could we use our facility in the Isle of Wight to do blades for onshore wind turbines in the UK?" they decided against it, not because of any obstacle from the British Government. I heard their Chief Executive on the radio one morning giving an interview on this and he said that the British Government could not have been more helpful in money, expertise and advice; but he said, "Our problem was we did not see that there was a sufficiently reliable market in the UK because of the planning system holding up so many of the onshore wind farm developments." That is something to which we have had to give attention in terms of the planning system and we are doing, but that is beyond our control. But there will be companies who fail along the way and it is not our job to tell you that we are going to jump in and bail more out because we think that low carbon is a good thing. We want successful businesses and those are the ones that we are going to be encouraging, supporting and giving advice to in the future.

  Kevin Brennan: We have invested in the ongoing research facilities as well.

  Mr Kidney: People like Colin will know that they have retained a research and development capacity on the Isle of Wight because they are looking at moving into providing the blades for offshore wind turbines, which is a very different beast as Colin well knows. And we have with SEEDA given a grant for them to maintain and establish their research and development facility, which has saved over 100 jobs; but I do not minimise the 424 redundancies that happened.

  Kevin Brennan: There were significant redundancies back in Denmark as well in their home patch.

  Q358  Colin Challen: These things obviously move around to different countries for different reasons, different market conditions. But we are faced with this big challenge. The Climate Change Committee published its first report to Parliament a couple of weeks ago and the title of that included the phrase a "step change". Is there anything at all in what you are doing? Could you give me an example of how the two Departments are actually putting into terms this step change? I know that the ministerial response to the CCC report is not until early next year but can you give me one concrete example of the step change that has happened in each of your Departments?

  Mr Kidney: I am not sure about a step change but I think that that report is very exciting because it does show the scale of the challenge in the future, to which the Transition Plan points. So that helps to stir us on and wake everybody else up to the scale of the challenge, that is for sure. But in terms of the renewable energy side, which obviously I have a close interest in, what has been encouraging to me is to see the individual Sector Skills Councils and sector bodies actually coming together in collaboration in order to say that across our sectors—not in one particular silo—we need a renewable energy skills strategy, and together these eight sector bodies are developing that themselves. So I think that is quite good. I am not sure how keen you are on nuclear, Colin, but in the nuclear sector there is a very, very good example of the Sector Skills Council, Cogent, and the National Skills Academy for Nuclear, plus our Office for Nuclear Development all working together in getting the research base right in terms of what the future needs for skills will be, and then the skills strategy to fit those needs. I think that is quite exciting and does show certainly a step change when we are talking about more nuclear capacity in the future than we have at the present time.

  Kevin Brennan: David and I are working very closely together and the two Departments are working very closely together, for example on the development of a National Skills Academy for Power, on which we are waiting for the detailed business plan. We are absolutely working together on developing that, and those National Skills Academies, together with the investment in the budget in this area, do represent a significant step change by Government just in the last period.

  Q359  Colin Challen: The Climate Change Committee and the Government accepted its recommended budgets. Obviously it is working to a lower level of expectation in terms of low carbon economy. Pending a satisfactory agreement in Copenhagen of course those budgets will be much tighter. Are you conducting any contingency planning for the higher budgets which, of course, are still based on the period 2020—still only ten years? So if we did adopt those higher budgets, what will people delivering skills and capacity have to do and how will they have to respond to that?

  Mr Kidney: The answer to your question is of course that we are and let us get to Copenhagen; let us get the deal in the bag and then we will come and talk to you about what our thinking is and see if you agree with it.

  Q360  Colin Challen: So you have two plans: one plan for the existing level of budgets, and you are working on a plan B at the same time for the higher level of budgets in terms of delivering skills and capacity?

  Mr Kidney: That is putting words in my mouth that I did not say. You say: "Have we contingency plans for if the targets that we have already set out in the Transition Plan get moved up another notch because of a deal at Copenhagen?" The answer is "Yes, we have." That is the answer to your question—"Yes, we have." I get very nervous about a plan-B. There is no plan-B for Copenhagen. But we understand that if the scale of the challenge becomes even greater, there is even more that we will need to do and we are working on how we will achieve that even more.

  Kevin Brennan: In terms of budgets, we know that we are in a tighter fiscal situation and we are going to have to prioritise according to what comes out of that really, but at the moment clearly we are working on a National Skills Strategy which will be published quite shortly and that will be followed by a skills investment strategy, which will indicate how we are going to use our resources to try to make sure that we have a system that is producing the right sorts of skills and qualifications at the right level.

  Q361  Colin Challen: Finally from me, there is a lot of work involved here in preparing it and perhaps banging heads together. Within your Departments are you actually employing any more people yourselves to deliver this strategy, or are people being taken off other work? Or is it simply an extra file in the in-tray? To what extent is this whole thing being prioritised and supported?

  Kevin Brennan: Of course we are a new Department and have brought skills and business and industrial policy together in the Department of Business, Innovations and Skills this year to try and bring all the leaders and expertise together in one place, including the delivery of new industry, new jobs and the low carbon ambitions within that. So, I think that has been a radical reorganisation within Government, part of which is aimed at achieving these goals.

  Q362  Colin Challen: Is this work ring-fenced against future public spending cuts?

  Kevin Brennan: I do not think anything is ring-fenced, to my knowledge.

  Mr Kidney: The reassurance I want to give is that Kevin's Department has the lead across the whole of economy in terms of skills, but there are lots of Departments that have an interest in this subject, so I am the Rottweiler on behalf of DECC for the low carbon economy that we are all moving towards; but then there is just as big an interest in transport in terms of low carbon strategy for transport in the future. There is big interest in schools in terms of the curriculum of the future and that emphasis on STEM skills, for example. DWP with its jobs advice and job search for people, at the moment they have the Future Jobs Fund as well. So every Department has an interest but in terms of a focus and a coherence to Government policy Kevin is your man.

  Kevin Brennan: We did try to signal that coherence and working together in July when we published the Low Carbon Industrial Strategy, the Low Carbon Transport Plan, the Renewable Energies Plan, the Low Carbon Transition Plan all on the same day to signal that we were trying to join everything up within Government.

  Q363  Mr Chaytor: Could I pick up a point that David mentioned earlier about skills and nuclear because you said that in the future nuclear will be making a bigger contribution to the electricity generation than it currently is? Is that absolutely Government policy and at what point in the future will that be the case?

  Mr Kidney: That is the immediate position in terms of the nuclear White Paper and the work we have done in terms of giving reassurance to the industry that there is going to be future development in this country— so, the infrastructure planning commission, the work that we have done on de-commissioning, the work that we have done on the long-term storage of the historic waste.[18] The investment plans that have come forward from the consortia who now say they are going to bid for licences to build new nuclear plants in this country,[19] have put forward an investment programme that produces over 12 gigawatts of power from nuclear in that round,[20] so that is the first round of new build in this country. That 12-plus gigawatts is more than the whole of the nuclear industry is providing today in this country.

  Q364 Mr Chaytor: More than the 80% of the electricity generation?

  Mr Kidney: I do not want to suggest it is some super shift—I think it is about ten gigawatts at the moment, ten point something, and the investment plan is for 12 point something.[21]

  Q365 Mr Chaytor: But the 12 gigawatts, how many stations is that?

  Mr Kidney: It is about eight stations.[22]

  Q366 Mr Chaytor: So at what point in the future would there be eight stations, because all the documentation I have seen talks about perhaps one by the end of the next decade and perhaps two or three?

  Mr Kidney: In this round that we are talking about they speak optimistically of 2017-2018 for the first completed new build, and then others coming on stream from 2018 onwards.

  Q367  Mr Chaytor: The other seven, this is what I am trying to get at.

  Mr Kidney: When the first one is built, yes.

  Q368  Mr Chaytor: What is the projected timescale for the completion of the first eight, then?

  Mr Kidney: By the middle of the 2020s we would have those.[23]

  Q369 Mr Chaytor: So one a year. Sorry, this is a slight digression, Chairman, but it is quite important.

  Mr Kidney: You are keen on this subject.

  Q370  Mr Chaytor: It is quite important in terms of the economic realism of this, but also in terms of the skills strategy.

  Mr Kidney: Exactly.

  Q371  Mr Chaytor: Because, if the Government strategy is now eight nuclear power stations by 2025, in terms of the jobs required and the skills in construction and in physics and chemistry, this is quite important.

  Mr Kidney: Yes, it is.

  Q372  Mr Chaytor: I want to see on the record, this is the plan: eight new nuclear power stations by 2025. So my next question is to Kevin—

  Mr Kidney: Can I just finish? The estimate is that with the construction and then the running of the new power station you are talking about 9,000 jobs a time, so it shows you the scale of ambition and of need. Westinghouse, one of the consortia leaders, has given its estimate of how many more new skilled nuclear engineers it will need—about 10,000 for its programme.[24] Areva has said 10,000 to 15,000 for its. We are talking big numbers and that is why I am so impressed with the work of Cogent, the Academy and our own Office for Nuclear Development because they have got to grips with those numbers and they are planning the strategy to meet them.

  Q373 Mr Chaytor: My next question is to Kevin in terms of these figures of 10,000 to 15,000 engineers, and whether that includes physicists and chemists we are not clear; but what are the implications of that for your Department's work in skills development and, particularly, in science in universities given the aging profile of new physicist as a profession?

  Kevin Brennan: Indeed. I think we are absolutely clear that we need an expansion in the STEM areas and not just at graduate level but at technician level as well. Without being too coy about it, I think we will have something more to say about that in the forthcoming National Skills Strategy which will be out very shortly, but clearly the implications of that are that we need to step up.

  Q374  Mr Chaytor: Will the Skills Strategy actually be using the figures of 10,000 to 15,000 engineers that David has quoted, and will it be setting out how are we going to train these people from technician level to PhD and nuclear physics level?

  Kevin Brennan: Without saying exactly what is in it, the Skills Strategy will be a very high level document that talks very, very broadly about the direction of travel we are looking for and will talk about some numbers in or around how many people we need and in what area, and so on. Obviously it would be wrong of me to go too far at this point. It is more of a high level document but clearly that kind of horizon-scanning and understanding of what the needs are going to be around nuclear and other low carbon areas informs what we are going to say in the Skills Strategy, which will be a document at a high level which will have a strong economic focus.

  Q375  Joan Walley: Before Mr Chaytor moves on, for the purposes of this inquiry, can I ask if it might be possible to have a detailed paper or submission to our inquiry just on the amount and the funding that is being put into the different aspects of skills in respect of the nuclear agenda and in respect of renewables as well? I do not know when your high level vision statement is coming out but it would be really helpful to know whether or not it would be coming out within the duration of this inquiry.

  Kevin Brennan: When does your inquiry go on until, Chairman?

  Q376  Joan Walley: The end of the year.

  Kevin Brennan: I think I can safely say that our document will be able to inform your conclusions and then any other detail that you would like, we would obviously be happy to supply.

  Q377  Joan Walley: Having a breakdown of the funding that is going towards the skills training for a breakdown of the different sectors in terms of energy would be helpful in terms of Mr Chaytor's questions.

  Kevin Brennan: We would be happy to submit some more detail following the hearing, Chairman.

  Mr Kidney: Can I just supplement Kevin's answer to David? These are not big numbers. If you go back to the Innovas study that I mentioned earlier—this is in our memorandum—we are talking in low carbon and environmental goods and services today of about 880,000 jobs in this country, and with the kind of trajectory we are talking about by the middle of the next decade another 400,000; so you put those nuclear ones into the context of overall 400,000. Then if you want to look further at the sector estimates, the Carbon Trust has done estimates for offshore wind, for marine. There is a construction sector estimate already for their additional need and this is sector by sector something that everybody is facing up to right now.

  Q378  Mr Chaytor: My next question is, which Cabinet Minister has responsibility for green jobs?

  Kevin Brennan: We see it in terms of green jobs as such as a shared responsibility across government because BIS has overall responsibility around the economy and around employment and industry and so on. However, there are always two approaches in Government that you can take to these things. You can put something into a silo, which can have its advantages in the sense that there appear to be clear lines of accountability and somebody is responsible to answer questions on a subject; but will that effectively drive the response that you need right across Government around low carbon and around the green economy? So we take responsibility around skills and around looking at what the scanning is on the horizon for the future, getting the right intelligence and trying to develop the skills system that will produce the requirements. However, we think that this needs to be driven right across Government and David and I work together around the agenda we are talking about today, that each Department has a responsibility and a part to play in it. I do not know if David wants to add anything to that.

  Mr Kidney: I think that is right. Peter Mandelson is the lead for skills; Ed Miliband is the lead for low carbon transition and the Prime Minister in charge of the Government.

  Q379  Mr Chaytor: When we get to April next year the carbon budgets which are currently attached to your Departments for the public sector will be devolved to all Government departments. What are the implications of that in terms of drafting the low carbon transition programme across Government? Is each individual Secretary of State going to have personal responsibility? Do we still have the system of green Ministers, which we used to have and which appears to have disappeared?

  Mr Kidney: No, it is still there. With my Department now we have charged every Government Department with producing a delivery plan for the budget for which they are responsible for next year and we make clear that part of that will be to consider the consequences in terms of jobs and skills needs and we expect to see those as part of their delivery plan.

  Q380  Mr Chaytor: In terms of the specific industries that have been identified for green jobs growth, the Low Carbon Industrial Strategy identifies renewably energy, obviously, but it does not say quite as much about transport and construction and is that not running away from the real difficult choices? Renewable energy is an obvious sector but transport and, to a lesser extent, construction, perhaps, are where the big savings in emissions can be made.

  Kevin Brennan: I think that is a fair point. Obviously in a document like the Low Carbon Industrial Strategy you are going to focus on particular areas, but there are huge steps forward to be made in construction and not just in new build but in retro-fit and in existing build, and so on, around the need to move towards a low carbon economy. We have done a lot, as we have said already, through the low carbon economic areas to start looking at some of the issues around transport, in particular about ultra low carbon vehicles and providing incentives and support and bringing people together in order to progress around that, but the priorities that were identified out of the evidence that we had in front of us for what are the future areas where there could also be high productivity gains and comparative advantage for the UK in particular are areas that we want to support, without picking individual winners but as a general way of trying to take advantage of an existing comparative advantage in an area where high levels of growth for the future have been identified.

  Mr Kidney: I just want to challenge the use of words that you used there about us picking out areas of the economy for low carbon investment or retention, whichever you said. Every sector is going to change and all our public documents, including the Low Carbon Industrial Strategy, do mention our automotive industry, do mention our construction industry, do mention advanced manufacturing for the future, all of which must be close to the heart of members of this Committee and are all going to play a big part in shifting us to that low carbon future.

  Q381  Mr Chaytor: On automotives, for example, last week our evidence session heard quite a bit about the plans for electric vehicles and the infrastructure. Do you think it is Government's responsibility to finance the infrastructure to kick-start a programme of electric vehicles?

  Mr Kidney: I think I had better say that there is some Government responsibility since the budget allocated some money for this, and I have recently boasted about the 750 points we are going to pay for in the north-east.

  Q382  Mr Chaytor: All pilot schemes. But in terms of the national infrastructure, whose responsibility is it to get that in place, because without that infrastructure, electric vehicles will never take off?

  Mr Kidney: Exactly. The industry in the end is going to take this up, just as there are service stations all round the country. They are not there because the Government have put them there; they are there because the industry has determined that they can make some money out of them in the right places to get their customers to, so that is going to be the industry's responsibility eventually.

  Q383  Mr Chaytor: So you do not think that there is a case for any more Government investment in infrastructure for electric vehicles?

  Mr Kidney: We are doing the kick-starting; we have made a first assessment of what that means in terms of the £10 million Budget 2009. As we always do, we will listen to representations if people think that is not the right figure or the right amount of effort.

  Kevin Brennan: I think the judgment always has to be made about when you have reached the critical mass where the market can then provide, so you can never entirely rule it out, and the difficult choice to make always in Government is to try and make sure that you are not investing simply in dead weight in providing something that could be provided through the markets. If you did that you would use your entire resources on things that could otherwise be provided, but it is getting to that critical mass and I think this very significant investment in the north-east will help to prove the concept.

  Q384  Joan Walley: The Cabinet cost-cutting green Ministers' meetings that were set up, do they still meet and does the work of each of your Departments feed into that or are they no longer there?

  Mr Kidney: I am new since June; I am our Department's green Minister and I have not been to a meeting of the green Ministers.

  Q385  Joan Walley: So you have not?

  Mr Kidney: I have not been to the green Ministers' meeting yet, but other aspects—I mentioned that we all have apprenticeship champions, too, now and Kevin recently chaired a meeting of that group, which is kind of similar, and I was able to make points like the ones we are making around this table today at that meeting. So, I think the network is still in place and is still working.

  Kevin Brennan: Similarly, I have not attended any green Ministers' meetings since taking up this post in June, although I have chaired two apprenticeship meetings where we have talked about increasing the numbers of apprentices and how we can do that across Government in the context, as David rightly said, of the low carbon as well.

  Q386  Jo Swinson: We heard evidence on the need for a street-by-street retro-fitting programme of building homes with energy measures. What would the impact on green jobs be on that kind of programme?

  Mr Kidney: That is a cracking idea that you have heard representations for and I am pleased to say that it is one that we have adopted. We did announce last month—September—the Community Energy Saving Programme, CESP, which is exactly that: house-by-house, street-by-street renovation, starting in the most deprived areas in England, Wales and Scotland. Clearly, as we move beyond the straightforward loft insulation and cavity wall insulation to the hard-to-treat properties, for example, those with walls that do not have a cavity and so you need to do something to their solid walls to improve the energy efficiency of the home, it is going to be more expensive. I am not convinced that we have entirely the right technologies at our disposal yet, but eventually they are going to make a huge impact in terms of the energy efficiency of people's homes, so reduce bills—less fuel poverty and fewer carbon emissions from their homes. Clearly, as we ramp that up, so that is going on all around the country. It is lots of jobs and so I think people in the insulation and building construction sectors ought to be very excited about this and be thinking about possibly the changes in their skill sets that they need for this work.

  Q387  Jo Swinson: Is there any chance of something more precise than "lots of jobs"?

  Mr Kidney: In terms of the numbers? We gave an estimate in one of Kevin's Department's documents. I think it was the consultation before the Low Carbon Industrial Strategy,[25] about 230,000 more construction jobs with these kinds of skills by 2010. I think it is fair to say that that was given before the economic recession hit home, so that is not on track at the present time. In terms of asking me what sort of numbers are we talking about for this kind of work, over 200,000 new jobs in construction with the kind of skills that we are talking about are needed now.

  Q388 Jo Swinson: You say that this is what is being implemented but the evidence we heard last week from the Committee on Climate Change, obviously following on from their recent progress report, seemed to suggest that the current trajectory was actually not going to be enough. Do you think that the Government strategy on this does need to change to reflect the Committee on Climate Change's most recent progress report?

  Mr Kidney: It is quite exciting that they show us there has to be a step change up and so we need to meet that challenge. I think that they give a little less credit than they ought to for six million homes with energy efficiency measures under CERT already, two million under Warm Front and one million under Decent Homes Standards. Our target for six million homes insulated between 2008 and 2011 and every loft and every cavity wall that is available to be filled, filled by 2015, these to me are all stretching targets and achievements already. But I accept that they say we have to go further, and as we learn the lessons of CESP, which were only commenced in September of 2009, there is a little way to go to learn the lessons of it. If we find that that is the best method for the future I would expect that to be racked up post-2012 to the kind of scale that the Climate Change Committee was talking about.

  Q389  Jo Swinson: Another opportunity to create green jobs would come from behavioural change programmes such as the "smarter choices" transport programme. Why is more not being done to encourage those types of jobs?

  Mr Kidney: In terms of green skills, we know there are gaps in terms of information, management and procurement-type decisions and demand managements, and those have been identified by us as requiring attention. I do not quite understand the question as to why have we not promoted it. I think transport is very important in reducing carbon emissions as part of our low carbon future and as a Government we positively promote that solution.

  Q390  Jo Swinson: But in terms of the behavioural changes, so things like the smarter choices and encouraging people to make differences, there does not seem to have been a big push on encouraging those kinds of green jobs even though they are actually fairly low cost and can deliver a significant benefit.

  Kevin Brennan: I think we have identified a need on the specific side in terms of green skills, in terms of being able more effectively to communicate information to try to bring about behavioural change and other more specific skills that are identified in the strategy, as well as recognising the generic ones, so I do not entirely accept the premise of your question that nothing has been done on that.

  Q391  Jo Swinson: How many jobs have been created through these programmes, then?

  Kevin Brennan: I think we are talking about identifying the particular gaps that there are, which we have been doing in the last year, and then the investment in the budget around trying to identify where we can invest further around green jobs. It is impossible to say at this stage what number of jobs have been created around it, but what we have done is identified that these are skills needs and that we are going to have to incentivise a system to provide more training qualifications and so on in conjunction with employers around better information to bring about behavioural change of the kind you are talking about.

  Q392  Jo Swinson: But it is not just going to be up to business; it is not just about creating the skills so that these people can go into jobs created by business. Surely there is also a role for government programmes to encourage that behavioural change and that would create a number of jobs so that even if you do not have the numbers at the moment perhaps you might be able to get back in touch with us about the numbers that would have been created so far by the government's promotion of those types of programmes creating jobs.

  Mr Kidney: This is the first time, I have to admit to you, after all those wonderful estimates I have produced sector after sector for you, that I do not have one for transport in terms of sustainable transport estimates and I will have to have another look at the Eddington Report and talk to my colleagues at the Department for Transport. My own Department's attempts at behavioural change are all focused through Act on CO2. We sponsor the Energy Saving Trust which has advice centres in every region of the country to give advice to householders on their homes and their travel arrangements and we sponsor the Carbon Trust to advise businesses on reducing their overheads as well as becoming more efficient and cutting their carbon emissions, both in their business processes and in their travel arrangements. So I can see that there are quite a lot of jobs in the Energy Saving Trust and the Carbon Trust from my managers of Act on CO2 that already exist. But you are asking me beyond that in terms of sustainable transport and that is one thing that I am afraid I do not have today.

  Q393  Jo Swinson: We look forward to receiving that. Finally, there is obviously a requirement to match up these new jobs with people who are out of work or perhaps who do not have the skills to make sure they have the skills. What are you doing to try to make sure that that matching up happens to encourage the people who are out of work and make sure that they are therefore able to be employed in these low carbon industries?

  Kevin Brennan: We are putting together a forum around Just Transition to a low carbon economy because clearly this kind of economic change when it goes on can often leave behind the kind of people you are talking about. I am working very closely with the Department for Work and Pensions to try and integrate more effectively our employment and skills services. They also have a White Paper coming out shortly, which we have been contributing to and working very closely with, to see how we can better integrate employment and skills to make sure that people who are out of work get the opportunity and the skills they will need to get these kinds of jobs. Clearly, through things like the Future Jobs Fund, which has a significant green element to it, the hope is that we can create 10,000 jobs with the Future Jobs Fund that are identified as green and low carbon jobs, so I think that Just Transition forum will be an important part. It will have representations from the trade unions, representations from the community groups, from business, from Government and from local government, and so on, to make sure that we are planning so that people do not get left behind in this economic transition that we are going through.

  Mr Kidney: It is worth mentioning the Real Help Now work that has been done because of the problems of the global recession and the Future Leaders Programme. For example, in the south-west, where they have their low carbon economic area for marine energy, they are taking STEM graduates who do not have a job and placing them with the marine industry in the south-west, which I think is a really good example of here and now doing something that helps with the problem of unemployed graduates and helps with the problem of stimulating demand and skills in an area in which we know we are going to be big in in the future.

  Q394  Joan Walley: Can I ask two follow-up questions? You mentioned just now about the replacement to the CERT programme and the street-by-street programmes for areas of high deprivation to upgrade homes. Could you just give the Committee details of when the closing date for applications is or what decisions have already been made as to which areas will benefit from that, and what you are doing to make sure that applications come in? I am sure that we all have an interest to declare in this in the Committee.

  Mr Kidney: We are absolutely mad keen for local authorities and energy companies and electricity generators to come forward with their schemes for areas in those most deprived estates in the country for programmes under CESP. We expect about 90,000 households to benefit eventually. The scheme is not closed in the sense that we are still waiting for proposals from people.

  Q395  Joan Walley: Is there a closing date?

  Mr Kidney: No, not until we have filled our 90,000 household ambition, and we are not there yet.

  Q396  Joan Walley: Has it already been rolled out in parts of the country?

  Mr Kidney: Yes. Last week British Gas announced their first ten areas where they are in partnerships with local authorities and with voluntary organisations and community groups in the areas. On the day of the announcement, 21 October, I went to Peckham, which is one of the areas in which British Gas are working; yesterday I went to Harrogate, which is another one. However, do not let me persuade you that that means they are all in London—there is one in Dundee, one in Glasgow, one in Swansea, one in Preston, one in Knowsley, one in Walsall, one in Birmingham. Those are all the British Gas ones. There are five more major energy companies—there is the Electricity and Generators, there are local authorities up and down the country. I am waiting for your call.

  Q397  Joan Walley: I shall work on that. Perhaps I should declare an interest. Can I move on as well in terms of the Treasury? What I want to ask is about the recession. I have heard the Chancellor speak about all that has been done to get us through the recession and I have to admit that I have heard speeches whereby there has been no mention of the green jobs agenda, so I attach great importance to the role of the Treasury in terms of making sure that work to get us through the recession is linked to this green jobs agenda as well. I would like to know in your view, from where you sit in your respective Departments, how you are working with the Treasury to make sure that some of the most deprived areas are benefiting from the new green jobs technologies, but I would also like to ask an additional question, which is perhaps the perversely called Green Book of the Treasury. I would like your comments on what needs to be done to the Green Book, which sits there at the heart of the Treasury, to perhaps influence where spending should be and whether or not that needs to be revised and, if so, urgently.

  Kevin Brennan: In relation to Treasury policy and dealing with the Department, obviously if you want to probe in detail around Treasury policy it might be a good idea to ask a Treasury Minister, but certainly from our point of view, in the last year I think there has been support from the Treasury around this agenda. There was significant investment in the budget.

  Q398  Joan Walley: How much, where, and what sort of investment?

  Kevin Brennan: £405 million in the Budget around the creation of a low carbon economy and green jobs— that was there in the Budget. As David mentioned, in a lot of the recession, with Real Help Now, particularly in relation to the Future Jobs Fund, there is quite a strong emphasis on green jobs and, in particular, on helping people who are out of work now get into jobs with a green element to them to signal that way forward for the future.

  Q399  Joan Walley: Could you just give us an example of those jobs on the ground, please? Do they actually exist?

  Kevin Brennan: I think Groundwork is a good example of a sector organisation in this case that is creating a large number of environmental jobs in the community. I do not know if David has any particular examples of them.

  Mr Kidney: I cannot give examples of the individuals, but when you say: "Do they really exist?", in the figures for round two of the future jobs allocations over 580 of them were directly green jobs through the Groundwork programme—part of the 10,000 that we are going to produce under the Future Jobs Fund. Then, when you say: "How many in round one?", they did not keep figures—they rushed the money out the door so quickly that they did not keep statistics on individual details—but they will in future rounds beyond that. So, there are definitely hundreds of jobs today that are green because of that particular programme.

  Kevin Brennan: The target overall is for 10,000, I think. In relation to the Green Book and reform of that, it is not something that I have particularly cogitated upon or have any particular advice upon—it may be a question for a Treasury Minister.

  Mr Kidney: I would like to put in a good work for the Chancellor. In Budget 2009, in the teeth of the worst global recession in living memory, he found lots of new money for our priorities. Kevin mentioned the specific fund, the £405 million, and that is the one where I keep mentioning to you the offshore wind and marine, the automotives. I ought to mention the manufacturing advice and the extra venture capital that was provided from that £405 million, but in addition to that there is also the Strategic Investment Fund of over £750 million and, although I do not want to be accused of double-counting, some of that is part of the £405 million.

  Q400  Joan Walley: So who would benefit from the Strategic Investment Fund?

  Mr Kidney: Lots of sectors would benefit from the Strategic Investment Fund. I have some examples here in terms of energy efficiency, renewables, technology support, waste, transmission of electricity, distribution infrastructure, public transport and low carbon and the electric vehicles. All of those areas would benefit from the Strategic Investment Fund. What I wanted to mention is the determination in finding all of that money for us in that budget, as well as the £405 million, as well as the Strategic Investment Fund. Remember that he found another £100 million for the Carbon Trust for making interest-free loans to small and medium-sized enterprises to improve their efficiency and go low carbon, and he found over £64 million of extra money for the public sector—again, interest-free loans to the public sector to make energy efficiency savings and go low carbon.[26]

  Q401 Mark Lazarowicz: Given the discussion about the Community Energy Savings Programme—and I should at this stage mention that I am an unpaid board member of Edinburgh Community Energy Co-operative, and although I have no pecuniary interest and we have currently no applications to assist for future funding under a Government scheme, I should declare an interest in case at some stage in the future that does happen—I want to ask you something about the skills issue in a bit more detail. We have a new skills framework being established in England and Wales and also in Scotland. How far will we be able to tackle and identify a shortage of green skills and how far is the need for green skills being integrated right at the centre of development policy on the green skills framework? Can you help us on that?

  Mr Kidney: In terms of the intelligence-gathering and feeding into the planning, it would be the UK Commission on Employment on Skills, the Government's adviser on this. Then in terms of the strategy, that would be the Sector Skills Councils in each sector, or collaboratively where it makes sense, like those eight sector bodies I mentioned. Then in each region I would expect the Regional Development Agencies to be pushing this home at the regional level so that eventually I hope that every region earns this low carbon economic area status or branding because of the work they are doing at the regional level.

  Kevin Brennan: I think that is exactly right, the way that David has described it. On top of that I think we would also like—because it is a common complaint—to try to simplify the skills system at the same time in order to, perhaps, make it more responsive and more effective in identifying or using the intelligence that comes from the UK Commission on Employment and Skills, in order to make sure that that is happening down at the regional and sub-regional level.

  Q402  Mark Lazarowicz: Can you give us more of an idea how that would be taken up by the sector specific skills of delivering the framework, for example? Can you give us examples of how this might apply in particular sectors?

  Kevin Brennan: Do you mean with sectors working together?

  Q403  Mark Lazarowicz: Yes.

  Kevin Brennan: I think we have one very good example that David has mentioned already where we have eight different sector skills bodies working together around the renewable energies area on a sector basis; and the eight bodies are Asset Skills, Cogent Skills, Construction Skills, Cogent, Lantra, SEMTA, SummitSkills, and ECITB, which have worked together with the British Wind Energy Association in order to develop resources to help the industry identify the kinds of qualifications it needs and design the right sort of apprenticeship frameworks that are needed to take forward progress on renewable energy and also guidance around the development of STEM. Also, they have signed a Sector Skills Accord with the British Wind Energy Association towards the end of last month and they will be launching their first apprenticeship programmes in September 2010. So I think there is real progress being made sectorally around these approaches and making sure that we are designing qualifications and apprenticeship frameworks that are ones that are going to be in demand in these particular areas, and that is an example from renewable energy.

   That kind of working together of sector bodies, perhaps sometimes on a task and finish basis but also on a long term basis, looking to simplify a thing and the sector skills landscape within an employer-led way—because they are employer-led bodies—is going to be very important.

  Mr Kidney: If you ask for one sector skills example I would say Cogent and nuclear. Cogent did drive all that work that has been done with the Academy, with the Office for Nuclear Development and the skills research that they did to get their basis and now the strategy that they are working on, that is a good example of one sector.

   The example I gave you about the East Midlands is a good example of all the sectors in a region being brought together by the Regional Development Agency and working with employers and with academia to get one agreed approach for skills for energy. My statistic is 100 industry participants in three sectors, seven FE colleges signed up and 14 more colleges wanting to join, all led by the universities of Loughborough and Nottingham, so there is a good example there of the whole lot.

   Then, just going back to the low carbon economic area in the north-east, Gateshead College and Sunderland University are doing work on the curriculum changes that they need in terms of getting the right numbers of apprenticeships, of foundation degrees and degree graduates in order to fill the needs of their area for those low carbon economic activities that they intend to undertake. I think those are all really good examples of people who are on the ground already making things happen.

  Q404  Mark Lazarowicz: We had evidence in a previous session from the representative from the Renewable Energy Skills Group who said that his group had not been involved in developing any part of the new skills strategy for green skills. I take it that other organisations have been involved and consulted in relation to the strategy as well as in particular sectoral issues. Is that so?

  Mr Kidney: I must admit that I do not immediately recognise the name of the group. Can you tell me any members of the group?

  Q405  Mark Lazarowicz: The gentleman was Tim Balcon from Energy and Utility Skills.

  Mr Kidney: We work very closely with Energy and Utility Skills. This whole thing that Kevin mentioned about the National Skills Academy for Power—the EU Sector Skills Council has been a great advocate for the Academy, and even when we faced difficulties when their business plan cost miles more than their expression of interest, we worked really hard with them to make it work. That is an unfair comment that you had in that evidence and I would like to challenge that and say that we do involve them.

  Q406  Joan Walley: We did have them before us the week before last.

  Mr Kidney: I wish I had been here to ask them questions then!

  Q407  Joan Walley: Perhaps it might be helpful if we could get some liaison between yourselves and them and get something on the record.

  Kevin Brennan: I think it is fair to say—and I do not think this is a state secret—there is a large number of bodies in the skills landscape and different alliances coming together, so it is important sometimes to try and get some clarity and simplification and that will be a theme of the Skills Strategy, to try and hide some of this wiring, which does complicate matters.

  Q408  Joan Walley: If we can just move on, and it follows on from that set of questions, it is not exactly clear as to who should be taking the lead when it comes to industry and the green skills that are needed, and the research bodies that there are and the universities. How does the government deal with, if you like, prescribing where the training is actually needed? Perhaps just to give you an example—and perhaps declaring an interest—I chair the All-Party Lighting Group and I met recently with a Government Minister and there was a lot of concern that there should be energy efficiency in terms of lighting. Our meeting was concerned to learn that, for example, energy efficient lighting is not in the new programme— the new upgrading of homes, and so on. I wonder where the lead for what should be done is actually taken. Where is the leadership role in all of this?

  Kevin Brennan: I think the first part of the question is within the Department for Business, Innovation and Skills.

  Q409  Joan Walley: Is that within you?

  Kevin Brennan: Yes. I am sorry?

  Q410  Joan Walley: Is that within your part of that?

  Kevin Brennan: Obviously the Department for Business, Innovation and Skills includes the university sector, which is not part of my ministerial responsibility—that would be David Lammy—I do FE and skills and apprenticeships. However, yes, the first part of your questions is undoubtedly our responsibility as a Department. When it comes down to the details of the requirements around the energy efficiency of homes, that would not come under our remit, but, more broadly speaking— and I cannot remember exactly the word you used about requiring or directing the skills that are to be delivered— the skills system, I think, has to be a little bit more subtle than that for the very reason I said at the outset: that the whole idea of predict-and-provide is not a very good way to run a skills system. What we are trying to do is to incentivise the system so that it can remain demand-led, both from the point of view of people who are embarking upon skills-training as individuals, but also from the point of view of employers being able to feed into the system to signal the kind of skills that are required, together with a Government role. We will set that out in the Skills Strategy, with this new industrial activism of being a bit clearer and a bit more directional about the areas of the economy where there are going to be new industries and new jobs developing. Low carbon is, obviously, a particularly strong part of that. So it is our job to do that and that is what we are going to be doing in the National Skills Strategy to be produced shortly. The detail around the regulation with regard to lighting, perhaps David can shed some light on.

  Mr Kidney: Very amusing! Just listening to Kevin, it reminds me of a Government Department that I missed out with a key interest in all this: that is Communities and Local Government, that sets the building standards, the building regulations and the enforcement of them. So there is another key Department that we should not lose sight of.

  Q411  Joan Walley: I am not clear how we are really helping industry to articulate their skills needs more effectively. How does what you have just said about the Business Department feed down at the regional level? For example, through the regional development agencies, so many small companies are probably fighting to keep their heads above water that this is perhaps just not on their radar at the moment because they have so many other things to deal with? What support are we giving to industry?

  Kevin Brennan: I think we have to do it at two levels: at the sector level, through the sector skills councils, which are employer-led bodies supported by Government, to give us the information and the intelligence, the qualifications and the sorts of skills that are needed across sectors in the economy; but you may be aware, Chairman, that we also, over the summer, have looked at a regional level at this issue of how we should be developing our skills strategies and— in the pursuit of simplification— try to provide a bit more clarity around that so that the new Skills Funding Agency will not be in charge of developing regional skill strategies but, in conjunction with some of the lead local authorities, through devolution, the RDAs will take the lead on regional skill strategies, working with local authorities, with employers and with educational institutions, in order to provide that sort of support at regional level.

   Then there is a whole variety of other business support available to people, including through Business Link, and so on, and advice to small and medium enterprises, particularly around the green agenda. So the idea in the system is that, yes, there is a sectoral element to it through the sector skills councils, which are employer-led, but in terms of the regional skill strategies, the RDAs have an important role to play, and we have tried to take out one level of complexity there. The Learning and Skills Council used to have a role in that, but the new Skills Funding Agency will not, it will have a more national strategic role around funding skills.

  Mr Kidney: When I said that the UK Commission for Employment Skills will provide the Government with intelligence, obviously a key part of that intelligence is that employers are saying that there is a shortage here or there, and that is the kind of intelligence we will want to pick up.

  Q412  Joan Walley: So you are satisfied that there are sufficient plans in place to be able to forecast future skills needs across this green agenda.

  Kevin Brennan: That is the role that we have charged the UK Commission on Employment and Skills with carrying out. In doing that, it is its job— and it does have employers as part of the Commission— to work closely with employers to get the sort of information about that and to use the research and evidence available to make those sorts of predictions. I think it is also its job to get employers to step up to the plate a bit more themselves on skills. We do sometimes, I think, over-focus on the Government's role in this, important as it is, but obviously it is in the interests of employers themselves that they should be investing in the skills of their workforce, and part of our Skills Strategy, encouraged by the UK Commission on Employment and Skills that recently issued a report, is to make sure that we get employers to make their contribution as well.

  Mr Kidney: When Kevin says "employers", we mean the world of employment, and so trade unions are also very important partners.

  Q413  Joan Walley: Yes, we have had evidence from the trade unions as well. What about the lead times? These new skills do not just come about overnight. You have to synchronise putting in place the qualifications, the capital bill programme to provide the training to link it to industry and the new business that they will be doing. Are you satisfied that you have got the lead times synchronised with the employment needs of people whose work will be in these new green jobs?

  Kevin Brennan: We are working very hard to try and reduce those lean times as well, Chairman. I think it is generally accepted it has taken too long in the past to develop new apprenticeship frameworks and new qualifications. We are putting together a new qualifications framework that will bring greater coherence and greater unitisation of qualifications to make them more useful to employers. As I said earlier, for example, in the renewable energy area there will be a new apprenticeship framework in place by September of next year, which is a much quicker lead in time perhaps than we have seen in the past.

  Q414  Joan Walley: What about where there will be jobs created, perhaps as a result of Government funding, where it is for a set period of time? There is a huge increase in the number of people who will need to be taken on to do a certain job, say, to retro-fit homes but, once that is finished, that work will not be there, and, therefore, those people who have been employed will not be in work in that way. What has been done to look at the long-term skill set of people to be able to adjust, if you like, to times of great change in terms of adaptation to different work needs?

  Kevin Brennan: Clearly, from time to time there are going to be Government programmes, some of which will be around the need to make a structural change. I think back to when I was growing up, the Natural Gas change-over programme happened, which would be a programme of this kind, but also programmes that are designed— which is the Government's first priority— to get us back into economic growth and to get the economy moving again. Clearly the purpose of some of the programmes the Government are running is to make sure we are stimulating the economy and providing employment now as a bridge to the future, for when we get greater economic growth and prosperity, when there should be more jobs in construction anyway because the economy is picking up. In the meantime, we are helping people become employed and providing the skills that will be useful to them in the future when the economy picks up.

  Mr Kidney: I think it is a really good question, because it challenges what we say about our government activism. I suppose, one day, hopefully, we will retro-fit all 24 million houses in this country. Although, obviously, we will be building new ones zero carbon by then, too, and commercial buildings zero carbon by then. Equally, we are going to fit smart meters into every home and business over a decade. So they will come to an end, and the importance of our activism is that we will be seeing this coming. We will be able to survey the market to see where those skills will be needed next and what changes to the skill sets will be needed to be able to move from one programme to another and to put in place the new training to link those changes in needs in good time. Those kinds of programmes will be a good test that the activism that we are talking about now works.

  Joan Walley: I hope that message gets out.

  Q415  Mr Chaytor: I have two questions, one to David. Which business sectors and industries do you think are most recalcitrant in their attitudes to the low carbon transition?

  Mr Kidney: I do not think recalcitrant is a good word. I think where there is a preponderance of small and medium-sized businesses, where they are busy with their day job, it is actually sometimes quite difficult to engage with them and that is quite a challenge for us. The new Skills Strategy, hopefully, is going to be the start of a better relationship with them. I think it started to unlock with Train to Gain, which has proved to be so flexible and successful with employers and we want to continue that so that we can get to these long tails. For example, Jo asked about retro-fit. We have got quite a lot of small businesses in the insulation sector. They are small businesses and they are very busy at their work and maybe skills has not had the priority in their businesses that I would like, and so we would like to engage more closely with them. However, I recognise that it is difficult for them to give us the time to engage with them and for us to identify them and get to meet them, but we want to.

  Q416  Mr Chaytor: But there are some sectors that are absolutely locked into a fossil fuel economy.

  Mr Kidney: I see.

  Q417  Mr Chaytor: Almost by definition they are going to be the least co-operative about making this change. I am just curious as to how the Department for Energy and Climate Change is dealing with these sectors and trying to enthuse them and encourage them to believe that there is something for them in this as well.

  Mr Kidney: If we move over to, say, oil and gas as an example of what you are talking about, clearly oil is going to be with us for a little while yet, but the expertise that we have developed in this country off-shore getting in the oil and gas is great for carbon capture and storage in the future. So, again, with some help, there should be transferable skills there with a long-term future for their skills and their jobs in a slightly different sector. Again, I would not call it recalcitrant. They do have a day job, a venture, in that the lights are on today and tomorrow in this country and, therefore, we still need that oil and we still need that gas, but I think they are up for the discussion that we are having with them. In fact, there was a debate in Westminster Hall last week when I was pressed by several MPs about getting on with carbon capture and storage under the North Sea. So I think the industry is up for those kinds of discussions.

  Q418  Mr Chaytor: Finally, a question to Kevin on apprenticeships. In terms of the development of skills at a technical level, apprenticeships are key to this. The Government has had some significant success in influencing the number of apprenticeships and increasing the completion of apprenticeships, but is there more to be done and are you looking at ways of making apprenticeships more flexible and more transferable in order really to develop them as a vehicle for low carbon skills?

  Kevin Brennan: Yes. I think a lot has been done. As you quite rightly point out, the number of apprenticeships has increased threefold, I think, since 1997— more than threefold. The concept of the apprenticeship was almost, I think, withering on the vine at that time and was in danger of dying out altogether. I think we have rescued it and brought it back in. I was at Number 10 Downing Street last night at a TUC-organised event with apprenticeships, and it is very inspiring to see the kind of transformational effect it can have on people having that kind of job-based quality training that leads to a real skill. We know from the evidence how much better the employment and earning prospects are and the quality of skills that we get through delivering apprenticeships. So we want to carry on developing that. We want to make sure that we can get many more apprenticeships through procurement, using Government procurement to get another 20,000 apprentices over the next few years. The Prime Minister earlier this year announced additional funding for 35,000 extra apprentices across the economy with 21,000 of those to be created in the public sector; that is a significant challenge but we have to meet up to it. As David mentioned earlier, we both sit, I Chair, and David is on the Apprentices Champions Group that is working across Government and with Government suppliers, and so on, to make sure that we drive through that delivery of more apprentices. But I think we also need to look at the more technical and stem-based subjects and Level III apprentices as well and see if we cannot, in our National Skills Strategy, do something about taking it on to the next stage in terms of that level of apprentices and also developing a pathway through into higher education, where that is appropriate, as well.

  Q419  Mr Chaytor: On this particular point, will this be a theme in the strategy that you are about to publish before Christmas?

  Kevin Brennan: I cannot tell you that. I think you can assume that apprentices are very central to government policy around skills and, yes, we need to increase numbers, we need to raise quality and we need to make sure that they are flexible enough to meet the needs of individuals in the economy.

  Q420  Joan Walley: I think we have come to the end of the session. We started out by talking about the step-change that was needed. Given what you have just said about new apprenticeships, et cetera, do you think, in the light of the 10:10 Campaign and Copenhagen in a couple of weeks time, that the message about the step-change and all that is being done is actually getting out there?

  Kevin Brennan: Yes, I do. I think that Government have actually quite a strong story to tell about what they have done in the last 12 months or so around this area. There has been a step-change in the Government's approach to this, both in terms of awareness across Government, in terms of it becoming an integral part of our industrial and skills strategy and also in terms of practical investment— resource investment— in this area at a time when we know that fiscal constraints are very tight. Copenhagen, I think, serves as an additional impetus for us to take it on to the next stage.

  Q421  Joan Walley: Last word, Mr Kidney.

  Mr Kidney: My experiences say, yes, the country is aware of the need and is up for it. I went to talk to learning reps of trade unions in the south-west and they were absolutely up for it. I went to talk to a conference of the CBI last week and they are up for it. I mentioned that visit to Haringey which was all about going house-to-house, street by street, retro-fitting properties—

  Kevin Brennan: Did you do that yourself?

  Mr Kidney:— to make them more energy efficient, and the local community there, as well as the local council were absolutely up for it. So I think the message has got home. We have got a brilliant transition plan to lead the way; we have got the carbon budgets to make us go in the right direction. David reminded us about the responsibility of individual Government Departments with those responsibilities for budgets starting from next year, and I think everybody understands the scale of the challenge and I think most people are up for the challenge.

  Q422  Joan Walley: Okay. Before I end this session can I thank you both very much?

  Mr Kidney: Thank you.

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17   Note from witness: The government response to the CEMEP report was published in May 2008. This was a joint document produced by Defra, BERR and DIUS. Back

18   See note from witness, Ev 125 Back

19   Note from witness: Industry will apply for both consents and licenses for new build. Back

20   Note from witness: This figure may go up to 16GW. Back

21   Note from witness: This figure is up to 16GW. Back

22   Note from witness: 8-10 stations. Back

23   Note from witness: It will be for industry to determine when proposals are brought forward and builds completed. Back

24   Note from witness: Westinghouse has estimated that 10,000 highly skilled jobs would be created if its reactor is built. Back

25   Note from witness: This figure was included in the Sustainable Construction Strategy, with a target of a net increase of 230,000 qualified people recruited and trained in the industry by 2010 compared with 2006. Back

26   Note from: Budget 2009 announced £100m for low cost energy efficiency loans for small businesses. Of this, £83.9m goes to the Carbon Trust for delivery in England, with the remainder going to the Devolved Administrations on the Barnett formula. Back

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Prepared 16 December 2009