TUESDAY 23 MAY 2006

AMICUS

  Q20  Mr Wright: Are you saying then that the RDA would probably be under-resourced to try to handle something of this nature?

  Mr Simpson: I think that in the course of events they cannot possibly be resourced on the basis of major plant closures so it must be that the RDAs need additional government support when they meet a crisis. If you were drawing up the budget—and the early day RDAs were the councils, and I am trying to struggle to remember their name and I sat on one and I know that we had to draw up a budget and a plan and a business plan—you certainly do not include that, that there is going to be a major plant closure, so that when you do the financing of it it is clear that those things are not factored into the finances of RDAs. So it still comes back to government intervention, whether it is directly from government or whether it is through the RDA into industry. I find that when I talk to the senior politicians, by which I mean Cabinet Ministers—no disrespect to your good selves—when you speak to these people there is a marked reluctance. Let me say that a senior minister said to me in a discussion about Peugeot when we were trying to urge involvement to help save and preserve Peugeot that the government was not going to "embark on a policy of helping lame ducks", and he was talking about a plant that is highly efficient and making a profit. I do not know how that matches up. There is an attitude which seems to suggest that government should leave everything to the market, just leave it to the market and if it cannot survive in the market that is fine. I do not know how in a global economy, if we want a manufacturing industry and some sense to prevail and we want to convince British workers that we are doing something about quality jobs and not just interested in part-time temporary and agency jobs, how you can possibly reasonably describe Peugeot to be a lame duck and to pretend that that means that you do not have to do anything about it.

  Q21  Chairman: Can I just follow up Tony's question? Obviously the Peugeot redundancies will occur in the same RDA area as the MG Rover redundancies, but the ones at Vauxhall and at TVR will occur in a different region. Have you seen the evidence that they are able to share intelligence and understanding between regions to make sure that the lessons learnt so painfully in the West Midlands are successfully applied in the northwest?

  Mr Simpson: I do not think I can answer that question because I have had not had that close dealing with either of the RDAs. I think that the noises that both make sound the same, whether they actually do the same and whether there is any cross-fertilisation, I could not answer that.

  Chairman: We will ask the RDAs that, thank you. Mick Clapham.

  Q22  Mr Clapham: Derek, could I look at some of your ideas, Amicus generally, the ideas that you feel are necessary if we are going to be able to ensure that British workers survive and that British workers have a more even chance, shall we say, of survival in an atmosphere or in conditions where global corporations are able to easily shift their plants? I know one of the things is that the government has talked about its Manufacturing Strategy and its Manufacturing Advisory Service, but what else do you feel needs to be done? Do you feel for a start that the Manufacturing Strategy and the Advisory Service are working, and if they are not working what else could we do?

  Mr Simpson: I think that the regrettable feature about that is that it is just left to volunteerism and does not deal with some of the real hard factors that companies must consider. It is one thing the government having a Manufacturing Strategy and it is one thing saying that we are supporting training and we are doing a number of other things that are all conducive to the idea, but the real problem lies in this conflict between the ideology that an unregulated labour market leads to investment being attracted easier and therefore creating jobs, and there is some evidence that that at least is partially successful. I do not think it is as successful as the advocates of that policy believe because the truth of the matter is that while it is, in effect, put in simple language, easier to set up business in the UK and there are less obstacles, problems and regulation, it is equally easier to disappear because there are less restrictions on disappearing, which goes the opposite way around. While that is a factor then whatever strategy the government has, whatever strategy anybody else has, the truth of the matter is that when it comes to investment decisions and planning for the future, including perhaps necessary redundancies, it will always be a factor that it is cheaper and easier to dismiss UK workers. So standing, if you like, on the hill with the violin watching Rome burn is effectively what we are doing because we have a wonderful strategy, a marvellous strategy, and it becomes like the Emperor's clothes—"What a suit!"—and you can put the song to this because the reality is that companies are not interested in governments' manufacturing strategies, what they are interested in is that they are going to invest billions of pounds in a competitive industry where they want the cheapest product, the best market they can obtain and any rationalisations at the cheapest price as well. That inevitably leads to the decline in the UK because we are the cheapest, easiest and quickest to dismiss, and whatever the strategy is while ever that is the case that will be an overriding factor.

  Q23  Mr Clapham: When you have raised these points with the DTI what kind of response have you had?

  Mr Simpson: "We do not want to help lame ducks", I think is the response that I got from one minister, which of course is no doubt aimed to guarantee electoral success in the areas that matter.

  Q24  Mr Clapham: What about on the issue, for example, of labour relations and the situation that makes it much easier to dismiss workers in the UK than, for example, in France? Have Ministers suggested any things that they might be able to do to make it less easy to be able to dismiss British workers?

  Mr Simpson: I think the short answer to that is no. I think what I get in response to the point that I put is, "Do we want the unemployment levels of France, Germany or others here in the UK?" That is the stock response. Of course the answer to that is no, we do not want high unemployment levels. But there is a concern because what that argument ignores is the nature of the jobs we are talking about. I think any job is important but I think that we also have to strategically think about the nature of those jobs, and it is fairly clear that there is a move away from manufacturing into service industries and industries that are based on temporary, part-time contracts with lower rates of pay and the analysis—and we can supply this analysis and will do in our evidence—that demonstrates what the situation is when we monitored the Rover workforce. The problem with that is—and I am not a trained person in financial matters, so certainly economists would probably be able to knock bells out of the argument-that it seems to a simple soul like me that if you are not producing things and you are not adding value to things and you are merely consuming things eventually the wheels are going to fall off the wagon. In other words, what I am saying is that I believe most economists would share the view that you need a strong manufacturing base as a significant part of any economy. It seems to me that if we continue to exchange manufacturing jobs and lose our manufacturing industry ultimately there is a price to pay in our economy and that is what is happening. We are creating jobs, some of which are quality jobs, some of which are important jobs, and I am not going to decry that at all, but many of the jobs that have been created are not of the calibre that are either in the right sectors or provide the salient—

  Chairman: The Committee will be doing something more on the broader issues facing the manufacturing sector later, but I am quite anxious to focus on the specifics of the automotive sector at present, if you do not mind, interesting as that was.

  Q25  Mr Clapham: Taking the point that Derek has made there, Chairman, and relating it to, for example, point 4 on paragraph 13 of your submission you say, "A review of the current failure of companies to invest sufficiently in skills and innovation and to identify solutions including, where appropriate, a statutory levy to ensure skills investment from those sectors who continually fail in this vital area of investment," it seems to me that if we had that training levy then when we see a factory move on we retain skills or a skills platform that is versatile and can be adapted to the change. Is that what you are thinking in terms of the training levy?

  Mr Simpson: Yes. I think it cannot be taken in isolation from the other factors because at the end of the day if it is without the other factors it just becomes one additional reason for getting shot of UK workers because of cost, so it has to have a balance. But if I take the point in general, training in manufacturing, and particularly industries like engineering, has never been as good as when there was the ITB training levy, the levy system that supported the training of many, many apprentices. The facts are that employers, even with support, even where the government provides, as I know it does in some instances, free training courses, will not even allow some employees to take time off without pay to attend those courses. So there is a marked reluctance, that anybody who has ever worked in the industry would readily recognise, that employers are very reluctant to pay anything other than directly to the bottom line, and the short-term bottom line ignoring the fact that investment in the workforce, training and skills can generally be beneficial for a business. So I have always been a supporter of the view that there needs to be some sort of compulsory system and have been since the end of it; I have argued that across a wide range of sectors, that there should be some training levy to invest in the skills and to ensure that the skills are there that can substantiate an industry, or we are in danger of doing the other thing, which is why I say that these things go hand in glove. We could end up with a very skilled workforce and no jobs, or the other way around: they do have to go hand in glove.

  Chairman: We are going to run on for an extra ten minutes but we have a lot of ground to cover in the remaining quarter of an hour or so.

  Q26  Mr Clapham: In terms of the research that has been undertaken by the union are there any examples of good practice in the world where the kind of things that we have just talked about are actually applied, and in their application do we see the kind of improvements that we would like to, or you would like to see in the UK?

  Mr Simpson: Tim has just mentioned France and Germany and other parts of Europe, and if you look at some of the statistics you do not have them because I have a piece of paper in front of me asking if these had been submitted, and they have not but they will be in the document. What they actually show on the question of car production, I mentioned that the UK car production had fallen but the car production in Germany has increased, so in spite of the fact that Germany is on the employment record to be held up as a bad example—do you want the employment rates in Germany?—the truth is that in this important industry they have risen by more than what we have fallen, and it has to be down to their investment, the government support and the training that contributes to that. In fact if you take this other point, the fact is that the Germans will probably look after the German industry better than most. If I could widen that a little bit—and I take your point, Chairman—I would make this point in argument. Our trade with China has gone the wrong way, the German trade deficit with China has bettered in favour of the Germans, and the reason is that they are selling machine tools to China and that is shoring their economy; but we gave up our machine tool industry some time ago. That example is a fairly common one: when you support your industries and maintain the industries then you can even get benefit out of what to everybody else apparently is a fearsome thing. Everybody is afraid of China; it is sucking in mountains of manufacturing, mountains of production, its economy is on overdrive, everybody is frightened of losing jobs, losing trade, and there are the Germans actually increasing their trade with China on the back of it.

  Q27  Chairman: We will be producing a report quite shortly on our trade relations with India, where very similar issues occur. You have mentioned a document. Is it your intention to submit some additional evidence to the Committee?

  Mr Simpson: The answer to that is yes.

  Q28  Chairman: Excellent.

  Mr Simpson: I have been given as briefing note a lot of statistics and I took the view that I could sit here and read statistics but if anybody did it to me it would drive me daft. It is better to get what you feel and what the flavour and what the picture is. These charts and statistics and matters we will put together in a document and supply it.

  Chairman: That is very helpful. Roger Berry.

  Q29 Roger Berry: On MG Rover, could I ask what Amicus did to help its members who were obviously made redundant as a result of that, so that I can get a view as to the role of the trade union in this?

  Mr Simpson: I have a brief on this but Tim is an officer who dealt directly with the situation and it would be best for Tim to address it.

  Mr Parker: There were a number of items that we pursued, not only in terms of trade union sponsored training initiatives and hardship funds but the more practical issues in terms of pursuing employment tribunal cases in regard to protective awards, making sure that the various agencies were there to provide support and to make sure that redundancy payments were processed. But more importantly than that, all of the trade unions attempted to lobby government and the DTI to try and conclude and finalise the discussion with the various Chinese companies that were interested in purchasing MG Rover. We were also in daily contact with the administrators in terms of trying to find out what the expressions of interest were. The trade unions as a whole were trying to produce a business case to encourage people to bid for the company with the assets of the company, the remnants of the company, to try and ensure that large-scale vehicle production would continue at Longbridge. So on a daily basis there is hardly anything that we did not do or attempt to do in terms of every avenue that was pursued. I think that there is a general myth—I am trying to broaden the question and I do apologise—in the UK amongst some economists and, dare I say it, some areas of the political arena, that in some way, shape or form the car industry has run its course in the UK and it is an old industry in effect, a worldwide old industry. Nothing could be further from the truth. If you look at the car industry not only in the UK but globally it is at the cutting edge of technology—in terms of electronics, in terms of emissions, computer aided systems in cars, engine emissions, materials that are used in terms of carbon fibre, et cetera—right at the cutting edge. I suppose if you put it next to the aerospace industry and the defence industry it is on that kind of level. So it is not old hat, it has not run its course and it is a major opportunity for the UK to take a strategic position in terms of where we want to be in terms of the manufacturing world and what we want to do. If we let it go to the wall it is a sad loss and a sad demise and it is something we will never get back.

  Q30  Roger Berry: Some of the things that you have mentioned there I would have expected the Task Force to be in the driving seat on, for example training and so on and so forth. Could you say a bit about whether there was any overlap or how closely you work with the Task Force and perhaps, more importantly, how successful you think that the Task Force was? Were there particularly good things they were doing that you welcomed and supported and were there any things they were doing that were unhelpful?

  Mr Parker: I think in the National Audit Office Report there are a couple of paragraphs which I think are the basis for the majority of the questions that are being asked today. Certainly my view—and our view—is that too often the DTI plan for failure. If you look at the Audit Commission's Report it is quite apparent that from 2000 that the DTI were planning for the demise of MG Rover even when it passed over to the Phoenix Group. So rather than plan for failure we believe that they should take a much more structured approach in terms of using the RDA rather than delivering the band aid to a severed artery in terms of job losses. The RDA should actually be working with the DTI, the trade unions and the company to intervene and to look at what is needed to make the industry a success far earlier on. If we had had those detailed discussions, if MG Rover in effect had been more forthcoming, if the DTI had pressed harder and if the RDA were more involved we could have tried together to look at what the company needed in terms of trying to secure future partners, to secure the manufacturing site, to secure the company on a much earlier date. We actually deal with the repercussions rather than trying to plan for success, and I think if you are being critical of the RDA and critical of the DTI, every time we have the DTI, every time we have met, for want of a better word, the senior bureaucrats that advise ministers, the single advice they seem to give is, "We cannot do that because it takes us out of the European competition rules." I have the greatest respect for rules; I only wish that our competitors in Europe and the rest of the world did as well, because that does not seem to be the case.

  Q31  Roger Berry: I absolutely understand the point you make about investing in success and therefore trying to prevent, as it were, failure, but given the situation of the emergency measures that the Task Force were working on, which of those measures were successful in those terms, and which were less successful?

  Mr Parker: If you look at the training money that was provided—and I think you have to first take into account that there is a bit of hoo-ha about the amount of government money, taxpayers' money that was put into MG Rover in terms of the repercussions, something in the region of £150 million, £170 million—on training the package that was provided was underspent by £5 million. I think one of the biggest industries that grew out of MG Rover collapsing was the training industry because money was thrown at it, and in certain circumstances the courses that were provided were extensions and short-term courses rather than long term courses—the money was provided for 12 months—and there were significant gaps in the area of training in terms of what people wanted to do and what was provided for them. After the first initial weeks in terms of the Job Centre Plus area at Northfield trying to coordinate training with the RDA, everybody at MG Rover comes from a wide catchment area, it was not just areas of Birmingham it was all around the West Midlands, and when they dispersed back into their own local areas and tried to seek that further assistance from their own Job Centre Pluses they found that there was no coordination whatsoever. What we were trying to do was to try and fill the holes, to identify holes and actually assist with that process. We even brought back some of the agencies together to meet our members so that our members could raise directly with them the problems that they were experiencing.

  Mr Simpson: Just to supplement that and maybe to pick up a point, is that provided positive action is taken early enough it can be helpful, because whilst the Task Force success with the direct MG workforce might have been limited, the statistics we have is that they were better in the supply chain because in the supply chain there were many more thousands of jobs, not directly from Rover. One statistic here I think tells its own story, that of the 150 companies that could have gone down with Rover they limited that loss to 11 and there were a number of measures that followed on that were hopefully sustained as well, more successful. I think that makes the point about the level of support and when you can get in there. Tackling the problem upfront rather than waiting for the companies to close, there was a measure put in place that anticipated what was going to happen and action taken.

  Q32  Chairman: Following on from Tony Wright, my impression from my constituency is that my suppliers there have woken up and smelt the coffee and were actually diversifying away from Rover well before, so it was not the Task Force achievement, but actually a commercial decision.

  Mr Parker: I think many companies got their fingers burned in 2000 and they took the decision then to try to re-deploy, to reinvest elsewhere, to take away their reliance on MG Rover. There is a great opportunity for the industry in the UK, there is an opportunity for it worldwide. If you take environmental concerns and how to adjust to those and how to meet that challenge that challenge is a massive one for the motor industry in terms of the emissions and the blame that it gets for environmental damage. If the DTI, if this government decided to invest in companies that actually produced and were looking to produce hybrid engines, to produce new models to meet those emissions, to meet the challenges of environmental challenges all across the world then you could actually see an extension of manufacturing in the automotive industry in the UK. How we do that would be by support and investment because it will happen elsewhere if we do not do it, and we should take up the challenge.

  Chairman: I am sorry to drag you back and I agree with what you were saying then, personally, but we have some other questions about the aftermath of MG Rover from Tony Wright.

  Q33  Mr Wright: Returning to the question of what happened to the workforce and obviously trying to look at lessons that were learnt from that, what statistics do you actually have in terms of what happened to the workforce? I think you mentioned earlier that about a third of the workforce are still unemployed at the present time. How many of them found new employment and what sort of employment was it in general? Do you have those statistics, Derek?

  Mr Simpson: The detail we will leave to the document, but the broad position is that we have monitored our membership which tended to be amongst the more skilled of the workforce. We reckoned that 50% of the workforce is still unemployed; of the 50% that are employed as many as 80% of those are in temporary, part-time or agency work, and invariably on a significantly lower income. We also have information that as a result of the nature of the employment some of those who gained work have subsequently lost work. That might be matched against a wider survey of the whole workforce, which is suggestive that perhaps two-thirds have gained work, but again substantiates the "at lower income and in temporary, part-time and agency work". The reason why that is important is because one of the responses in Ellesmere Port was that whilst there are 900 jobs in round figures being lost off that shift we are being told, I think the figure that was given was that there are 4000 skilled vacancies in the area. A similar argument presented around Rover, that there were jobs available, but the truth of the matter is that that very often proves not to be the case and not relevant and does not seem to match up, and I wonder sometimes whether people are looking through rose-tinted spectacles or saying things that sound very nice in difficult circumstances because I am pretty certain that those people out of work are not the sort of people that want to be on the dole, the sort of people who do not want to work, but they are people with commitments, they are people with families and they are used to an income and, quite frankly, they are not going to match that income on benefits and they are going to need employment and reasonable employment. The truth of the matter is that if that were available I am pretty certain they would have got it because they were not a bad workforce; they were not an unskilled workforce. So it seems to suggest to me that there is a slight element of propaganda in the way we portray vacancies because it does not actually match. I am almost at the point of saying let us monitor what happens to those 900 people in Ellesmere Port because I would not be at all surprised if we did not come back a year or so later and say that half of those people do not have jobs and those who have jobs are not in these supposed jobs that were available at the time.

  Q34  Mr Wright: We have also touched on the question of the training courses and obviously some of that work was ineffectual in the amount of money that the government tried to retrain. How did they actually meet the needs of the individuals who needed to be retrained, and in terms of numbers what figure would you put on the numbers of people that were actually on training courses and what was the average period of time that they would be on the retraining courses?

  Mr Simpson: I will defer to Tim on this, he has more of the on-the-ground knowledge. In fact he is smiling because he can answer the question!

  Mr Parker: I think the RDA figures in terms of the number of people that have actually taken part in training courses and what those courses were are obviously the actual source material. I think one of the problems with the way that that was delivered, if you looked at the actual situation and the collapse, which happened very quickly at the end of the day, in something like a week, ten days, when the various agencies, including the various training agencies, Job Centre Plus came in on to the site over a period of about a week people who were leaving in batches and were getting advice on redundancy payments, et cetera, allowances and benefits, were being asked at that time to express preferences in terms of what they wanted to do. The reality of it is that they were still in shellshock and trauma in terms of what they wanted to do, and it should have been on a much more prolonged basis in terms of that help and support, in terms of developing what training courses they wanted to go on. Of course the problem now is that that funding is running out after 12 months and some of those people have only done introductory courses and if they are in work they want to further their career, and that money just is not available any more. So that is one of the major failings. But the source material is the RDA for numbers and what they actually did.

  Q35  Mr Wright: In terms of what the government attempted to at the time—and obviously we are faced with Ellesmere Port—what lessons do you think that the government should learn from what happened with MG that they should put into play to do the same or do differently with something such as Ellesmere, or any other event?

  Mr Simpson: I think it is always easy to say that more money matters. It is clearly not possible to have an unlimited supply of money but there is an argument that more support would be given. But the big problem is, let us assume that we have large sums of money to put into retraining people, the reality is that we are not actually solving the problems, and the reason why we have to retrain people is that we are failing to support the industry in the first instance. So the answer to this is not how much resource you put in to try and heal the patient—it is a brilliant operation but the patient is still dead—the truth of the matter is that it has to come at the other end. We have to have the frameworks of support into industry, support into training—not training as a result of closure but training for the future—and we have to have legislative measures that mean that employers, as well as being encouraged to stay by support grants, investment grants and all the ways in which you can encourage investment and support business, also have measures that help to mitigate against them going, for example like stopping it being cheaper and easier and quicker to dismiss workers. That would encourage the traditional companies, the ones with the large-scale investment, to ensure that they understood that they were not to benefit in moving manufacturing to elsewhere.

  Q36  Mr Wright: Finally, in terms of the proposed closure of Ryton and obviously the reduction of the workforce at Ellesmere Port, do you think that we are well prepared or better prepared now than we were before, or is there a lot of work still to be done?

  Mr Simpson: I do not think we are any different now than we have been for some time because nothing has changed. All the factors that are leading to the closure at Ryton and the decisions at Ellesmere Port are still the same factors that applied in previous examples of the decline in the industry, so I do not think we are any better prepared at all.

  Q37  Mr Wright: So what do you think the government should do now, immediately?

  Mr Simpson: I think it should seriously consider the level playing field argument and change its course, and that is a big ask because nobody in the positions of power wants to do that. That leaves us dealing with the aftermath, whether it is trying to train people after the event, support families that have had their income destroyed as a consequence, supporting people with measures that prop up low paid economy because of the temporary and agency part-time work, and it leaves trade unions with a very difficult position because the traditional response, in trying to persuade an employer if negotiation fails, is that you resort to some form of industrial action, and the reality of that is—taking Ryton, for example—what would be the point of advocating the most extreme industrial action when the plant is faced with closure? One response could well be an extension of the argument that Mr Hoyle made about procurement. The British people procure things when they buy them. It would be very interesting to see what effect it would have on Peugeot if anything like one in ten people decided not to buy a Peugeot. That would be twice the value of the gain that they have got by going to Slovakia. The economic impact on the company's marketshare might have a salutary effect on its decision regarding whether it is going to produce in Britain.

  Q38  Chairman: We are going to have to close there, we are well over our time, but you have been very interesting witnesses, can I say, particularly in relation to your analysis, Mr Parker, your passion and commitment to the fact and the idea that there is a future for the whole car sector in the UK. I know our terms of reference to which you responded in writing were drawn up at a different time, as it were, with different purposes so if you want to submit further written evidence about what you see as the prospects of a car manufacturer and component manufacturer, we would welcome that further evidence. Thank you very much for giving us your time.

  Mr Simpson: Thank you for your questions and your time.