MONDAY 22 JANUARY 2007

SSDA, IMPROVE, SEMTA

  Q226  Chairman: Welcome to this slightly delayed session. I apologise for the delay; there are a number of rival parliamentary attractions which are detaining some of my colleagues, so I am grateful for your indulgence. Thank you very much. Can I begin, as I always do, by thanking you for your written evidence and asking you to introduce yourselves?

Mr Fisher: Thank you. I am Chief Executive of the Sector Skills Development Agency. We are responsible for 25 sector skills councils of whom five have a prime interest in manufacturing, two of whom are here today: Lynn Tomkins from SEMTA and Jack Matthews, Chief Executive of Improve. I have just one or two words by way of introduction, Chairman, if you do not mind. Our perspective is that manufacturing still represents 14% of our GDP; it represents 50% of our exports; and in many aspects of manufacturing we are almost the world's best. Our food and drink manufacturing sector is the second most productive in the world, our aerospace sector is the second largest in the world, so we do not come with the perspective that this is a sector in decline. However, we do come with a perspective that this is a sector that needs to prosper going forward, and to prosper going forward we believe we must invest more in skills, and that will require two things to happen. One is for the publicly-funded skills system to align itself behind employers in the manufacturing sector, and, secondly, for employers in the manufacturing sector to invest more in skills. If those two happen, which is the kernel of what Lord Leitch has to say about skills in general, then manufacturing in this country will prosper and deserves to prosper, and we can talk about how we think that might be allowed to happen.

  Q227  Chairman: Could you explain briefly, I know, Mr Matthews, your organisation does food and drink, and that is quite simple to understand, but SEMTA, the other manufacturing sector skills council, is a little more difficult to understand. Are you happy with the division between yours and the other manufacturing-based councils?

  Ms Tomkins: Yes. SEMTA stands for Science Engineering Manufacturing Technologies, about 40% of the total manufacturing, and I think it is probably best explained as engineering manufacture, and obviously the science, so it is a clearly defined sector.

  Q228  Chairman: Thank you. Let's begin with a question that you obviously could answer for the whole of the rest of the session, if we are not very careful, so it is an opening theme for the rest of the session rather than a subject for a thesis. I am trying to get a handle on what skill shortages are most acute—it may be "all of them", is the answer. The CBI have emphasised to us basic skills, literacy and numeracy, as being the real problem; others have said, "No, it is technical skills, soft skills, leadership and communication that are the real problem." So where does your concern, looking particularly at manufacturing industries, primarily rest? What are you worried about in terms of skill shortages?

  Mr Fisher: If I can start, different sectors have a different perspective on that question. A sector skills council's primary task is to identify skill gaps and skill shortages in sectors, and you will find, as my colleagues will say, that they have a very different perspective on what those skill gaps and shortages are at quite a detailed level—different sorts of qualifications, different levels of skill. I think there are some common themes, if you like. One is in a sense the theme for the whole economy: which is that there are gaps at all levels in terms of qualifications in attainment—not just basic skills and certainly not just soft skills but fundamental points about higher education, further education—there are skill gaps at all levels, and one point Lord Leitch makes, of course, is that when you address those skill gaps at all levels it builds up across the economy. But in the manufacturing sector, there are common issues: manufacturing and leadership would be one common across manufacturing; technical skills at level 3 is probably another across all manufacturing, but within that there are specific issues sector by sector which I might ask my colleagues to comment on?

  Q229  Chairman: Briefly, please.

  Mr Matthews: Within food and drink manufacturing, for example, and managing a leadership it is first-line supervisors we really have to focus on to give the skills for people coming through from the technical and from process rules into first-line supervisors, and our graduate intake at the top, particularly for large branded companies, is excellent but getting that throughput on the factory floor is an issue for us, and we have to invest much more thoroughly in that process.

  Q230  Chairman: I should say I am particularly glad to see you here because my constituency has a large amount of food manufacturing in it, and people do not always think of food as being a manufacturing business, but it is, and I am glad to see you here.

  Ms Tomkins: Certainly for science and engineering manufacture, in their sector skills agreement employers broke their skills down into four key headings: management leadership; productivity and competitiveness, (which is key because they are competing in a global market; technical workforce development) and manpower planning and recruitment. Those were the four key areas mainly at level 3 and above.

  Q231  Chairman: So what goals are the various councils setting themselves, and how do they measure themselves?

  Mr Fisher: Each sector skills council has as one of its key products a sector skills agreement, which I have mentioned, which is a systematic identification of the skill gaps and skill shortages in a sector, and in a sense a requirement to the supply side of the Learning and Skills Council in England and the higher education system to go away and fill it, if you like, and quite often employ themselves to do the same, so that in a sense is the customer need. That is what a sector skills council is then wanting to see happen. The whole point of doing that is to increase productivity in the sector. That is ultimately what a sector skills council is for, working through skills investment to increase productivity, but the detail of how that is done sector by sector is all about a sector skills agreement and what it says and the sort of things it contains and how that is to be worked through.

  Chairman: We will go into greater detail, but that is fine to begin with.

  Q232  Mr Weir: I think you have answered some of the questions but given that the term "manufacturing" covers a whole range of industries, as you have demonstrated already, is it reasonable to say that manufacturing skills are common across industry? Give us examples of what is needed. You say lack of skills but is it lack of the same skills across industries or does it vary from sector to sector?

  Mr Matthews: The situation is we have very common generic skills needs, whether that be in terms of production management and the basic tenets of production management, or whether it be management and leadership, but we have also differentials and it is the differentials based on where the demand is taking each of the different sectors. For example, within food and drink and manufacturing, for food scientists and technologists one in four vacancies are permanently vacant, we cannot fill them. Neither do we have the throughput in general science we are looking for for conversion programmes. Our growth pattern is forecast by 2014 to demand level 3 based skills at an absolute minimum of level 2 qualifications across the sector.

  Q233  Mr Weir: Other witnesses stress deficiencies in literacy and numeracy as a problem but from what you are saying it seems to be your problems in the food industry are at a higher level than that, scientific and research problems rather than basic literacy and numeracy problems. Is that correct?

  Mr Matthews: We have 28% within the food and drink sector who have no qualifications, and 52% have below a level 2, so basic numeracy and literacy is an issue, basic skills is an issue, employability skills are an issue, but the trend in the sector overall is to move the skills base into much more added value areas.

  Ms Tomkins: Certainly I can confirm for science and engineering manufacture it is at the high levels. Obviously literacy and numeracy are key cornerstones to skills but one of the key areas for our sector skills agreement was productivity. Also competitiveness skills and business improvement techniques was a key skill area for our sector.

  Q234  Mr Weir: You are talking about competitive skills and business improvement skills. Are these skills that are required, if you like, on the shop floor, or is it further up the chain that you are finding difficulty?

  Ms Tomkins: It is at all levels. They are required on the shop floor and right up to senior management level.

  Q235  Mr Weir: We talk about sectors but can you tell us, is there a difference, or how important are regional and national differences within the UK by sector?

  Mr Fisher: We think both sectors and regions are important and there is a regional perspective on skills and skills issues which is important and sector perspective on skills and skills issues which is important, and we are working with the RDAs and the LSC at regional level in England to try and sort out how that works better together, because we are one of the very few countries that has both a sectoral approach and a regional approach to skills and we have lots of work to do to try and make that fit properly together so that employers can talk to sector skills councils in the knowledge that what they want to get done happens in the nine regions of England, and also that regional economic priorities and local priorities are very much put into that mix. I think we have a bit of work to do to get that absolutely right.

  Q236  Chairman: Just coming in for a second there, I was interested that you say that we are one of the very few countries that has both approaches. Should we? Are the other countries getting it right or getting it wrong?

  Mr Fisher: International evidence says that a sectoral approach to skills is the one that is most likely to work, so obviously as the sector skills councils we firmly support that.

  Q237  Chairman: And Leitch says that, does he not? This is your own summary of the review: "Current regionally based skill strategies do not address UK-wide needs: those are your words."

  Mr Fisher: Yes, so we think sectoral view is really important and there are really important sectoral differences at national and regional level that have to be exposed. We also agree very much that you cannot sort everything out nationally. In regions there are very important local perspectives and in cities and towns and in geographies there are very important perspectives.

  Q238  Chairman: But regions are awkward. I have got an FE college being merged at present with other FE colleges in Warwickshire because it is the same region, and there is a very strong case for saying it should be merged with an FE college in Gloucestershire which is a different region, but that would not even be considered because of the regional structure, when actually the fit may be better.

  Mr Fisher: There is certainly an argument about regional boundaries and how they work, clearly, but generally speaking we would agree that it is absolutely right that for what I would call the geographical perspective there is a view about local economic priorities that government skills need a particular geography, whether it is a city, a county or a region, and we need to find some better way of getting a sectoral perspective and a geographical perspective to work together.

  Q239  Mr Weir: I am interested in what you are saying but it possibly does not apply in Scotland so much because it is more devolved, but on the question of the interplay between the regional and the sectoral approach, like the Chairman, my area has a lot of food manufacturing based on agriculture but there is also, or used to be, a lot of engineering as well. So how do you divide up the approach in an area with a mixed economy, if you like? You cannot say, for example, that it is purely a food manufacturing, a regional area. It is an area with a mixed economy, as many will be on a regional basis. So how do you approach that difference?

  Mr Fisher: My own view is it is absolutely right at a regional level or a local level for the public authorities to decide the allocation of money across the skills system, to decide the various local priorities. I think it is fundamentally the role of the sector skills council to influence all of that and to ensure that what is funded is what the sectors say should be funded, and the nature of the qualification and the products and programmes that get funded and what employers want.