Select Committee on European Union Minutes of Evidence

Examination of Witnesses (Questions 60-79)

MONDAY 12 MAY 2003


  60. We also have a question about what lessons this programme has for other Member States in the EU? I find I do not know whether other Member States in the EU actually do this.
  (Mr Perryman) They do not. It is quite unique in Europe, although there is a measure of interest from other countries. Singapore and the Republic of Ireland have already taken up the standard and some of the countries are quite interested in doing so. I guess the other model which is used very extensively in Europe would be the EFQM model, which is the framework for quality management, which is somewhat different; it comes from a slightly different focus, from a quality focus and a whole organisation performance focus. Nevertheless I guess it has a reasonably close fit with Investors in People. I was struggling really with trying to answer your question about European comparisons.

Lord Cavendish of Furness

  61. Perhaps I should say that I have a series of small businesses and specifically on Investors in People—I hope you will not take this amiss when I say—I have just decided for the time being not to go for it, but it was a narrow decision. The two reasons really were a difficulty in persuading my colleagues that this was a justifiable and very considerable expense in terms of management time and money. Second, with a track record—forgive my saying so; not your own—of previous government initiatives not measuring up, like quality assurance was going to mean that government would only use quality assured products and they went away and did exactly the opposite, there is a certain cynicism around that. I do not want to be too heavy-handed about this: we like the principle of Investors in People, but there is a resistance, would you accept, along the lines I have pointed out?
  (Mr Perryman) Yes, you are right and I am just rather glad that you made that decision rather than the other one and for very understandable reasons. It is a very large commitment for a company to make and we very well understand that companies on a day-to-day basis have to make very tough decisions about the market in which they are operating and they inevitably tend to make, quite logically and understandably, relatively short-term decisions. It is quite necessary for them to do so and to adopt a process like Investors in People is certainly time consuming for the management of the company and for all concerned. We believe the pay-off is there and is demonstrated by the effectiveness of many organisations which have gone through the process. It is a fine balance.

  62. Could more measurement and evaluation of the scheme not be made public?
  (Mr Perryman) I am not sure. I would need to check how much is now made available. I should be surprised if there were not extensive evaluation made available now, but I am very happy to go back and offer you more later.


  63. You said that one of the methods of evaluation was to ask companies whether they felt it had made any difference to them. Has there been any evaluation based on more formal external evaluation rather than asking the companies themselves whether they thought they were any better as a consequence?
  (Mr Perryman) I would need to come back to you with some specifics on that.

  Chairman: Could you? Fine. We are entirely relaxed that you are not going to have answers to all this wide range of questions. If you could, that would be enormously helpful.

Lord Fearn

  64. Could you tell us more about two of the new Sector Skills Councils, ESkills UK and SEMTA? How do they operate? What do they achieve? What do they do? Who is responsible for these bodies?
  (Mr Perryman) Absolutely; I shall be very pleased to do that. I am certainly more comfortable in this area since it is one I am responsible for personally. SEMTA and ESkills are the first two Sector Skills Councils which have been formally licensed by the government. We have five trailblazer bodies which were agreed last December, but these are the first two which have come through the new process we have established. They are both in areas which I hope are very much of interest to you as a Committee. It may just be worth me saying a word about the policy in general for the Sector Skills Councils as a whole. The purpose of developing Sector Skills Councils is to try to make a step change in the effectiveness of what we call the demandside of our work in the sense that we have been worried for some while that employers have not been able to voice their skills needs very effectively in many cases, because the organisations which were previously representing them, called the national training organisations, were very patchy in terms of their size and performance, in fact actually the two which have come through first to be licensed, SEMTA and ESkills, were both previously national training organisations, but they were some of the best of the previous organisations and we were very pleased to adopt them into our new network. Really we are trying to make a fundamental change in the quality of the work in this area, trying to move from having rather small organisations with only a limited amount of capability and not frankly very well connected to the employers in their sector, to a new arrangement where we ask employers from each sector to come forward if they are prepared to have a Sector Skills Council which they really want to drive forward and make a powerful organisation. We are asking each of those organisations to focus on reducing skills gaps and shortages in their sector, thinking really hard about the relationship between productivity and skills, thinking about how we can develop greater opportunities for everyone for the workforce in each sector and then how we can connect that sectoral analysis of skills into a wider debate about how we develop provision across the economy as a whole, further education provision, university provision, private training provision and so on. There has been a disconnect frankly between what employers are looking for in terms of skills development and what is sometimes being delivered by the public education system at the post-16 level. There is a real challenge as to how organisations are to become robust enough and powerful enough to be able to push through those kinds of reforms. I should also say that we are looking to develop a network of about 23 Sector Skills Councils. We had previously something over 70 national training organisations, so we are looking for a far smaller number of much more powerful and strategic organisations.

  65. Do you mean you are changing them altogether?
  (Mr Perryman) Yes, we are fundamentally changing them.

  66. You say they are trailblazers. Are they completely new systems?
  (Mr Perryman) Yes. We have asked people to bid to be a new Sector Skills Council. In some cases the previous national training organisations are putting forward proposals to be a new Sector Skills Council, but in order to do so, they are having to reshape their thinking and structure fundamentally. For example, on average about three national training organisations are becoming one new Sector Skills Council, because we are trying to have organisations of much greater significance and mass than we had previously. In the case of SEMTA, which is the Engineering Sector Skills Council, it actually covers a wide range of areas. It has 12 groups that sit under its board effectively and they range from electrical engineering, electronics and semi-conductors, metals, mechanical engineering, motor vehicles, ship building, biotechnology, mathematics, forensic science, a whole variety of different sub-sectors, aerospace as well. For each of those there is a sector strategy group and those strategy groups then report into a board, which is chaired by Lord Trefgarne with a chief executive called Michael Sanderson. It is an organisation of about 150 people basically, which is pretty substantial.

  67. What do they actually do?
  (Mr Perryman) Their responsibility is for each sector to draw together an analysis of the skills needs of that sector and how those skills needs connect to the productivity debate and competitiveness of that sector. Perhaps I could just take an example. We are currently working with the chief executives of the various automotive companies, Nissan, Toyota and so on, who are saying to us that they want to establish an automotive academy for the country, which will be in something like six or seven sites across the country and SEMTA will be very active in helping them to shape the structure of that organisation and help them to design the qualifications that they need for the future of that organisation and to do the analysis of the skills needs. For example, in the automotive sector, what they are saying there is that fundamentally changes are taking place in the sector which require a completely new thinking about how people get developed and trained for flexibility and for future skills needs. So SEMTA is the voice of employers in a sense, in trying to make sure that we first of all get that analysis of skills right and then we make sure that we deliver proper training skills on the back of that.

  68. To whom are they responsible? It sounds as though they were not very efficient before.
  (Mr Perryman) The old models were variable in quality and that is why we have now brought in these new organisations, Sector Skills Councils, to replace them. They are responsible firstly to an agency which we have set up, called the Sector Skills Development Agency, which acts as a co-ordinating and good practice sharing body effectively, helping the Sector Skills Councils to develop, making judgements about whether the Sector Skills Council is ready to be licensed by government and then supporting them in terms of doing their work. That responsibility then comes through to our Minister for Adult Skills, and the Secretary of State to make decisions on exactly who gets a licence and when.

  69. Will the development agency actually evaluate the work?
  (Mr Perryman) Yes indeed; yes. We have been developing this fairly new programme and we only have two licensed so far and are expecting the rest of the network to be licensed over the next 12 or 15 months. We are just developing quite a sophisticated performance measurement framework which tries to look at a whole variety of different ways of assessing the performance of these new bodies, at the bottom end thinking about how well they are known, how much engagement they have with employers, what effect they are having on the numbers of apprentices going through their sector, those sorts of measures. At the top end over time we shall be wanting to look at the impact these approaches have on productivity in a more substantial way. If you are interested, we could let you have a copy of that emerging framework to give you a feel for the specific measures which are being undertaken.


  70. On that last point, who is drawing up the evaluation framework? Is that the Department for Education and Skills? Do you have any discussions with Treasury on evaluation techniques? Do Treasury concern themselves whether you are getting value for money or impacting on productivity?
  (Mr Perryman) Yes; absolutely. It is quite a complex process. In developing the policy in the first place, we developed, as we do for all our programmes, a thing with a ghastly title called a ROAMEF statement. I am not sure I would like you to ask me exactly what that stands for but it is about setting out the objectives and measurement and the key performance measures we are going to have for the policy and how we are going to run the policy. We agree that with the Treasury and we use that fact as the basis for our discussions about funding as well. In our bidding process with the Treasury we would use those frameworks because they specify really quite specifically our expectations from the policy in terms of value for money and the key objectives and so on and so forth. We can let you have details about how that works if you would find that helpful, but the framework is about the rationale, the programme, the objectives, the comparisons of likely costs and benefits, the monitoring procedures and the evaluation process we are going to adopt for policy. That sets out the framework in broad terms. We are then discussing with the Sector Skills Development Agency, our small agency, exactly how we translate that into action on the ground. They have now developed this performance framework, in consultation with the forthcoming Sector Skills Councils, and we shall then agree that with them as part of agreeing their corporate plan. They are about to put together for us a three-year corporate plan and we will agree that corporate plan with them. We will then actually write, as we would on an annual basis, a remit letter to them which sets out the government's priorities for their work over the next 12 months and in that we will state the most important things we are expecting them to achieve in this next year.

  Chairman: It would be useful if afterwards you could let us have a copy of that particular framework you are developing with the Treasury, just as an example to us.

Lord Cavendish of Furness

  71. Question 3, which is in two parts really. In paragraph 4 of your written evidence, you refer to the Higher Education Innovation Fund (HEIF), jointly funded by your Department and the DTI. When is the next round of the higher education programme? Will the Higher Education Reach-out Organisation (HEROBC), University Challenge and Science Enterprise Challenge schemes then cease and be subsumed under the HEIF? Would you deal with that first?
  (Mr Perryman) We are expecting to issue shortly the guidance for the next round and that round begins in the summer 2004. The guidance will be issued for consultation initially. You are right that yes, the funding previously allocated to University Challenge and Science Enterprise Challenge is being combined into the new HEIF budget. That is really for simplification purposes and to make sure that Higher Education institutions only really need to apply once for funding rather than on several occasions.

  72. You tell us that the Higher Education Innovation Fund will "explicitly focus on broadening funding to less research intensive" institutions. What will be the balance of funding between research intensive and less research intensive institutions? What is the rationale of that policy, what are the objectives to be set for HEIF for each of the two sectors of higher education and how will the results be measured and evaluated? Can you deal with that?
  (Mr Perryman) Yes. We are currently working with the Office of Science and Technology on the guidance and unfortunately I am not now in a position to be able to tell you the exact balance because that will come out as part of the guidance process and that is still under negotiation. There are two main objectives. The first is to build on achievements which have already taken place in the programme, demonstrating knowledge transfer, including three successful deployments of earlier rounds of funding, really trying to build on the successes of the first round. The second is to broaden the extent of knowledge transfer activities through support for non research intensive university departments working in partnership with others to engage smaller businesses, less technologically sophisticated business in stimulating innovation. What we are saying about that is that we think it is very important to try to work between those higher education institutions which have perhaps more of a regional focus and smaller companies in each region to build closer linkages. This process is not just about the most prestigious research institutions, but about other organisations which are closer to the ground in terms of some small businesses and small business support, for example.

  73. I must press this a little further. Is this suggestion that new research intensive institutions are being too well funded at the expense of those with less, or redressing a balance?
  (Mr Perryman) No, no. I am not saying that at all. We are not trying to divert funds from research intensive institutions. We simply are trying to strike the right balance between knowledge transfer based on research within an institution and a different kind of knowledge transfer based on stimulating regional, local economies through real life industrial problems and support for local small businesses, for example.

  74. So if a service is required for less sophistication as well as the more research intensive.
  (Mr Perryman) Yes. I am not from the higher education directorate, but by my understanding—and if I am incorrect about this I shall come back in writing—is that it is about also trying to ensure that we really do have close linkages between higher education institutions which are not top of the tree in terms of research and the small business community, where there are some very important linkages to be made.

  75. You are not dumbing down.
  (Mr Perryman) Certainly not.

Lord Faulkner of Worcester

  76. Sticking with paragraph 4 of your written evidence, can you tell us a bit more about the Higher Education Reach-Out to Business and the Community fund, which I must confess is not something I have come across before and would like to know more about? What are the objectives and how would you measure its results and what has it achieved so far?
  (Mr Perryman) The first of the objectives for HEROBC is—my apologies to the Committee for these ghastly names—to initiate a third stream of funding, complementing existing grants for teaching and research. The second is to reward and encourage higher education institutions to enhance their interaction with business. The third is to provide a platform of core funding to help higher education institutions put into practice their support in this area. It is really about encouraging them to interact with business and helping to make sure they have the core funding to allow them to step out and do that kind of work properly. The results are measured primarily by an annual monitoring statement by the higher education institution itself to HEFCE, which is our Higher Education Funding Council in England. Those reports are on progress against agreed targets from their initial plan. We also gather data from an annual higher education business interaction survey. Our view is that whilst this work is still pretty new for our higher education institutions, we are making some quite encouraging progress. What we have found so far is that to date people have tended to focus on developing their internal capacity to do this work and to set up things like one-stop-shops internally inside the university or higher education institution so that they have a single place for business to come to when they are trying to approach the organisation. That is important because historically it has been quite difficult for businesses to find their way into universities with confidence and know quite whom to approach and how to make connections. Putting in place a one-stop-shop in the university to allow that is very helpful. They have also done work on things like intellectual property audits. What we are now hoping to see is an increasing focus on outcomes such as number of spin-off companies, amount of consultancy income being generated from the private sector and then really to get people to think harder over time about impact. I suppose that we are at the start of the journey really and we are getting the basics in place and we are hoping to move on to more sophisticated measures later.

  77. Would you say the results have matched the objectives?
  (Mr Perryman) Yes, but it is early days. We are quite encouraged by the way that universities and higher education institutions have picked up this work and some quite encouraging projects have emerged.

  78. Could you give us one or two examples?
  (Mr Perryman) I can indeed, yes. Some examples from spin-out companies. University of Oxford has a spin-out with Celoxia, which is about accelerating the process of software design, which sounds rather worrying to me, but I am sure this is correct, and by cutting out the end stage of hardware function programming. I am sorry, I do not know what that means, but it is a new company which is about software design and it comes from Oxford University. Segmentis is a spin-out from the University of East Anglia and that is about transforming images and graphics on PCs, a graphic design company. There is a company called Newland Scientific started at Hull University which has a fascinating product called Sound Bug, which apparently allows any surface to be used as a loudspeaker; so you can turn anything—I do not know whether that really means anything—into a loudspeaker. It means you do not have to have loudspeakers in a dimensional sense. There are some interesting examples there of the spin-out companies which have emerged. What I am saying is that it is early days, some encouraging developments, but a long way to go. I have some figures here which might also help. Early analysis we have shows that there are now 20 per cent more spin-off companies than in a 2001 survey—this is a survey in 2002, so in a year—that there is a 15 per cent increase in businesses taking up particular services from HEIs, 80 per cent of HEIs now provide an effective enquiry service to small firms, 37 per cent of business contracts are now with smaller firms and a 25 per cent growth in income from courses to business as well. We are seeing some encouraging developments.


  79. How long has HEROBC been going? I thought it had been going four or five years.
  (Mr Perryman) Yes, it started in November 1998 and is now effectively being wrapped up into wider HEIs.

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