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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 281-iii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE WELSH AFFAIRS COMMITTEE
Globalisation and its impact on Wales
Tuesday 20 February 2007 MS ANN BEYNON, MR JOHN THORNHILL and MR ANDREW PROBERT Evidence heard in Public Questions 139 - 235
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Welsh Affairs Committee on Tuesday 20 February 2007 Members present Dr Hywel Francis, in the Chair Nia Griffiths Mrs Siān C James Mr David Jones Hywel Williams Mark Williams ________________ Memoranda submitted by BT and Admiral Group plc
Examination of Witnesses
Witnesses: Ms Ann Beynon, Director, BT Wales, Mr John Thornhill, Regional Director, BT Wales (Openreach) and Mr Andrew Probert, International Director of the Admiral Group, gave evidence. Q139 Chairman: Good morning, welcome to the Welsh Affairs Committee. Could you please introduce yourselves for the record? Mr Probert: I am Andrew Probert, international manager for the Admiral Group, formerly finance director of the Admiral Group. Ms Beynon: I am Ann Beynon, director for BT Wales. Mr Thornhill: I am John Thornhill; I am the director for Openreach in Wales which is the part of BT that employs all of the engineers and the network personnel. Q140 Chairman: Thank you for that. Could I ask you to raise your voices; the acoustics in this room are not particularly good and there is also some background noise. Some of the questions we will be posing to you will be for both organisations; some will be specifically to a particular organisation. Could I begin by addressing a question to all of you? Thank you very much for your memoranda; both your memoranda emphasise the importance of the communications infrastructure to the Welsh economy. How well served, in your view, is Wales in terms of its communications infrastructure? Ms Beynon: Currently there is a massive investment going on in Wales in the telecommunications infrastructure. BT has an investment programme and its 21st century network plan which means that we will be investing £460 million in our core network in Wales, so obviously there is going to be a major uplift of the network which will make parts of South-east Wales where this investment is initially targeted very, very competitive indeed in terms of the global marketplace. South-east Wales will be the first part of the world to have this kind of network, so in other words the future is being planned but obviously we also have fibre across the whole of Wales. In terms of broadband deployment, we are looking now at very high figures in terms of availability of broadband at well over 99% and also we are very encouraged with the take-up of broadband services where we see that Wales' figure is 32% compared to the UK average of 30.9%. Only three years ago Wales was languishing at the bottom of the list in terms of broadband availability and take-up and now we see Wales clearly in its table, edging slightly ahead of Scotland. I would say that in terms of availability it is there and in terms of the impact on the economy it is massive. There is an Atkins report that suggests that broadband will add around £14 billion to Welsh GVA between 2000 and 2015. There are similar reports I could quote for Scotland, and London Economics again also has a report saying that ICT contributed 0.8% to the UK's economic output in 1992-2000. I do not think there is any doubt that the telecommunications infrastructure is fundamental to economic success. Mr Probert: Admiral is very much a user of telecommunications infrastructure, both in call centre activities and internet access. Provision for us in Cardiff and Swansea, the South Wales area, has always been very good and not a restricting factor, and has enabled us to grow quicker than most other car insurers in the UK. 85% of our new business today starts on the internet and that is growing more and more. Currently the provision for us in South Wales is fine, but as you go up through the Wales the smaller population centres have less provision, which holds them back somewhat and keeps us in the main centres of population where the infrastructure is good. Q141 Mark Williams: Notwithstanding the investment you have told us about and the rollout of exchanges being enabled is now 99.9% - an admirable figure by anybody's standards - there are some particular problems in certain parts of Wales, particularly in rural Wales. How confident are you that they are being addressed? I am thinking particularly about the DAX lines and the investment required to upgrade those and particularly in rural areas, the distance from the exchanges that have been enabled. Mr Thornhill: There are three layers to that. There are some specific geographical challenges in parts of Wales: we have three national parks, so we are different from some other parts of the UK, and there are three levels to it. We have been working closely with the Welsh Assembly where we do have hotspots of exchange capability, to upgrade those, jointly working together; on top of that we have enabled a number of exchanges and we are now looking at specific community areas, as Ann points out, where there might be a particular conurbation of demand for services that in some cases we might not be totally economically driven to provide, so how do we work jointly in partnership with regional government and central government to potentially provide those services, and we have a number of pilots happening now. Separate to that in terms of the creation of our business for BT, which is the Openreach business created from the TSR undertakings from the Ofcom review, we have created a specific organisation in our business which just focuses on Wales; it is not Wales with a bit of England, it is physically the Welsh border and everybody who works in that part of our organisation is focused on delivering for Wales. As part of that we have embarked on a separate investment programme and this year we have invested just over £10 million in uplifting local elements of the rural network, and that is about three times what we did last year. On top of that we have also started to recruit several hundred over the last 18 months of what will amount to nearly 300 new technical engineers who are capable of supporting broadband in rural areas. There are challenges, therefore, but we have got three or four planks of investment programmes to deal with it. Q142 Mark Williams: Do you envisage that trend in investment in rural areas increasing? Mr Thornhill: It is increasing now; 60% of the new technical recruitment we are doing is in North, Mid and West Wales. Q143 Hywel Williams: I am thinking about the 1%; how do you prioritise between, say, a small company (?) in my constituency and a small company (?) elsewhere, both of which are small innovative businesses who do not have broadband access at the moment and you might even say they both have taken a visionary view of this and have village websites et cetera et cetera. How do you decide which one you go for first? Ms Beynon: We have a programme where we discuss with the Assembly Government what we call "not spots" and we have to benchmark them and work out what level of unavailability there is and compare one with the other to come up with a list of the top ten. It is interesting that one of them happens to be in Cardiff, so it is not necessarily rural areas. We would then look at those and see whether under the RIBS programme - what that means is that our investment is match-funded 50% by the Welsh Assembly Government, but even then it is not always commercially viable to invest, so we have to be sensible with both our money and with the taxpayers' money. If we can see that a 50% match-funded investment can be done in a specifically identified area under the programme, then we would invest through John's organisation. Mr Thornhill: We are doing that now. We have five schemes planned in rural areas that we are looking to pilot the first two of in April to see how we can together make it more economically viable and prioritise those rural areas that have most need. One of the ways that we try and do that is through the observatory. Ms Beynon: Yes, the Assembly's observatory. Mr Thornhill: The Assembly has an observatory where people can register the fact that they have demand for broadband but cannot readily access it, and we prioritise that by the number of hits that that website has and where the demand is coming from. Q144 Chairman: Could I ask you a specific question about how the UK Government and the Welsh Assembly Government could accelerate these developments, particularly the use of the internet? Ms Beynon: In terms of usage there is a huge amount that can be done, particularly in areas where we can see that take-up is not as high - I would suggest that in Gwynedd, for example, as compared to Monmouthshire, there is a huge disparity. I would say that there needs to be a lot of education on application and usage of internet so that we can see the take-up increasing. There have been two very large programmes that have been undertaken between the Welsh Assembly Government and private sector and voluntary sector partners, one of which is called Opportunity Wales. That is an £18 million programme to explain to SMEs how to use e.Commerce and BT was a founding partner of that programme. That rolls out those services across the whole of Objective 1 and Objective 2 parts of Wales, so in terms of the business marketplace that is happening and we can demonstrate some very detailed statistics that that delivered not only an increase in the take-up of e-commerce but there were 2,500 jobs as well, which is important. The second one is a programme targeted at communities so we are working with the social justice department of the Assembly Government on a programme called Communities @One. That is an £8 million programme, again funded by Objective 1 funding and Assembly money, and that is very much about community engagement with technology and the use of technology to improve quality of life within targeted wards and small projects. There are some larger ones; there is a disability programme for example under that, and one of the programmes which we as BT will be involved with through that programme will be a project on Anglesey where we will be working with the community of Holyhead and in Llangefni, again looking at disabled people in Llangefni and looking at a council housing estate in Holyhead. We will have a community worker based there to help people use technology. There is not a quick fix, these programmes are large, they are labour-intensive, you need a lot of face-to-face tuition and discussion and support, but that is the only way, it is a hard graft answer. Q145 Mr Jones: Mr Probert, your memorandum makes fairly extensive mention of your difficulty in recruiting staff and you say in your memo: "We perceive the key reasons that we cannot get enough staff to be the low level of economic activity in Wales amongst the potential workforce, and strong competition for people who do want to work from other businesses". Mr Probert: Yes. Q146 Mr Jones: What sort of skills are you actually looking for? Mr Probert: A whole range of skills. Some of our staff are call centre-based and, frankly, we would rather train them ourselves. We want keyboard skills and enthusiasm in that area. We will train ourselves but we still have problems getting people. Q147 Mr Jones: You do not particularly need already-trained staff. Mr Probert: Not particularly, no; in fact our predilection is not to take ready-trained staff because they may have been taught bad habits that we do not want. Q148 Mr Jones: Can you explain what appears to be a paradox, that you are finding it difficult to recruit in areas of low economic activity where one would have thought there would be a ready pool of people who wanted to work? Mr Probert: One would have thought that would have been easy, but if you look at the statistics there are quite a lot of people in Wales who live on low incomes and seem to be content to do so. It is an acknowledged problem that economic activity is lower than in the vast majority of the UK and therefore it is difficult to get people sometimes; they wonder is it worth turning up five days a week, perhaps doing shift systems, it is better to live on benefits or whatever they live on now. I do think there are a lot of people there who could be put to work in a more productive way. Q149 Mr Jones: What do you think both the national and the Welsh Assembly Governments could do to address this? Mr Probert: It is a difficult problem; it is traditional to a degree in some parts of Wales. Clearly, education and getting people out to work, telling them a bit more about it would be worthwhile; perhaps the benefits system is too easy. Q150 Nia Griffith: Your paper is quite unusual in that you actually talk about having a shortage of labour whereas so often our story is about people losing jobs. Do you think that there are specific reasons? You have mentioned that you have got rid of some of the antisocial hours by getting those out to India; do you think there is a bit of a mismatch possibly between older workers who have lost jobs in traditional manufacturing areas and do not see themselves as IT people and therefore they may not come to you, or do you think there are other factors in your workplace that make people leave very quickly - you mentioned high turnover. What do you see as the downside of your work, if you like? Mr Probert: The downside is the flexibility; it is still seven days a week although we have outsourced some of the antisocial hours. It is seven days a week and it is changing shift patterns. Consequently, most of our workforce is relatively young, in their mid 20s, and you see that in any sort of call centre activity because you need that flexibility. Q151 Nia Griffith: Can I just ask there, do you have any on-site childcare facilities? Mr Probert: No, we do not. Q152 Nia Griffith: Do you think that might also be a factor, given your hours? Mr Probert: It is something we have looked at in the past, but it is difficult, particularly in the building we are in in Cardiff where we have 1000 people; it is not possible to have childcare there. Yes, we have looked at it; yes, we give childcare vouchers and we have whole schemes around that, but we do not do it on-site because it is physically impossible, particularly in the Cardiff office, to do it. Because people are relatively young, because we need flexibility because that is what our customers want, they are also relatively mobile and we do get large numbers who leave us in September to go back into secondary education and people also leave in August and September, having been on holiday and met somebody who lives in Newcastle. It is a fact of life and it is a fact of life in most call centre operations. Half our staff are not call centre operations, they are more technical, they may be IT people, they may be people dealing with motor claims which requires reasonable legal knowledge, and that is a much more stable workforce - once they are with us that is more stable. Q153 Mr Jones: Your business you say was established in Cardiff and you have expanded in Swansea. Mr Probert: Yes. Q154 Mr Jones: Do you have any thoughts of maybe relocating to other parts of Wales, for example the A55 corridor and North Wales? Mr Probert: We do have other thoughts of expanding elsewhere. It is very difficult to get between South Wales and North Wales. Q155 Mr Jones: Is that a problem in these days of broadband technology? Mr Probert: It is a problem in terms of management. Why did we go to Swansea? One, to operate in a different area of employment so we had a different pool; two, it is 40 miles down the road and we can get there in three-quarters of an hour and you can establish the management controls, the style of the company, very easily. If you go to North Wales - I live halfway between them so for me I either turn right or turn left, it is exactly the same distance. To go to North Wales and establish the same sort of style, company culture, is very, very difficult to do. We are currently looking at Newport, which of course is 25 minutes the other way and what we are likely to do there if we do start in Newport is take a dozen people from Cardiff, who already live in Newport, and start it up based on that so the culture stays the same. It is one of the problems of employing overseas; we do not do it lightly; it is even worse getting overseas than it is to North Wales. Q156 Mr Jones: That is a point I was just about to make; you appear to have no difficulty in establishing yourself in India and Nova Scotia but Colwyn Bay appears to be problematic. Mr Probert: We have looked throughout Wales. As you move out of South Wales, because we prefer centres of 500 or 600 people you have got to have 20% attrition because of the things we just talked about, you have to have a big area of population just to keep a 200 or 300 call centre operation going, because you are going to be employing 100 just to stand still, so you have to have a wide area. I have looked particularly at Pembrokeshire, which has high unemployment, but if you look at the numbers you are talking about a few thousand people spread over quite a wide area and it does not particularly work. You need big centres of population which is why Cardiff first, Swansea and now perhaps Newport. There are relatively few big areas of population in Mid- and North Wales. Q157 Mark Williams: If I could specifically ask BT, in your memorandum you talked of the range of skills that BT employees have across all sorts of disciplines. Have you had any particular difficulties in recruiting suitable staff in Wales? Ms Beynon: Not generally, but we do pay 31% above the Welsh average wage so we pay quite well and we pay a Welsh language supplement, for example, for our call centre operators in Bangor where we have a call centre, which is actually very, very good and the churn is very low. One of the advantages we find in North Wales is that the churn is low and we do attract very good quality people who stay with us for a long time; that is an advantage. There are two specific areas I might just mention; I will deal with the first and then I will pass over to John for the other. We are finding that getting Welsh speakers in Cardiff is difficult and we are advertising currently for people to work in our customer service centre for small businesses. We would really like to employ more Welsh speakers in that area but we are finding it extremely difficult. Q158 Mark Williams: Can you quantify that problem? Ms Beynon: No applicants at all, but we do not have a problem in Bangor. The other one is recruiting women into the engineering side. John, do you want to talk about that? Mr Thornhill: Specifically we have tried a very targeted approach to recruitment over the last 18 months and we have had good success in targeting people who are ex-Forces personnel in technical or IT or communications areas, who are coming out of the Forces and want to return to Wales. We have had some good success there, particularly from the Army and the Navy. Where we have struggled a little is in attracting as many female recruits as we would want into what is a technical discipline and can be quite a tough work area, so we are trying again to do some very targeted recruitment in specific magazines that are outdoors-biased where we know that 50% of the readership is female. Other than that specific area where we have a focus we do not perceive there are any huge differences between Wales and other parts of the UK. At the moment we have a very active recruitment campaign and since January we have offered contracts to 82 people and we are trying to take that, including apprentices, to closer to 200. As I said to you, 60% of that will be in West, Mid and North Wales. There are some early signs that we might have to work a bit harder in some of the rural areas to get the right skills mix, but other than that we are generally getting the people we want. Q159 Mark Williams: My next question is to you both: how can the knowledge and expertise of Welsh-based companies and their workforces contribute to technological or service industry developments abroad? Mr Probert: I have very relevant experience of that because Admiral is now looking to expand its business model into Europe and one of the things we are doing is we are bringing in European MBAs or graduates, they stay with us for a year and spend time going around all the elements of the organisation and, if you like, being taught what our business model is and the culture, and then they are going out to set up operations within Europe. Our first one is in Spain, it was set up last November, and that was the very way it was done, with a few people being trained here, and they are supported from Wales because the company in Spain will take some time to build so there is quite a lot of support for the knowledge gained in Wales being used to develop that. We will go on and develop in other countries in exactly the same way. Ms Beynon: BT is a global company so we have 30,000 people out of a workforce of just over 100,000 based across the globe in 170 countries. A lot of the work that happens in Wales is relevant to our global business; for example, we have a data centre in Cardiff which is the best in the world and we host there data for people like Microsoft, for example, so the expertise in Wales is very much available to global companies and we will be targeting blue chip global businesses for that data centre. Obviously, we are also developing software engineers in Wales; we have 400 plus software engineers based in Cardiff. They are servicing contracts of a global nature, and particularly they have been working on the English NHS contract, for example. What we would like to see would be more Wales-based contracts coming into that software resource, but we are actually training and developing people in Wales for a global business so they have an understanding of the global marketplace. Another example would be the 21CN project I mentioned earlier on; because it is being developed in Wales, Wales is a pathfinder region, that is in itself a global venture for BT so we are taking that product as it were and looking to sell it across the globe. We were in Hong Kong recently - accompanied by the way, by a representative from the Welsh Assembly Government department of enterprise, innovation and transport, so we are seeking to bring them along with us when we go to these international conferences and talk about our global capabilities. Q160 Mr Jones: Mr Probert, could I just ask you a few more questions about your expansion into Europe; how is that structured, is that a franchise or are you setting up subsidiary companies in Europe? Mr Probert: We are setting up subsidiary companies in Europe. There is a particular structure under the Financial Services Act and European regulations; some of them may be branches or subsidiaries, but for all intents and purposes they are overseas subsidiaries. Q161 Mr Jones: For example, how many members of staff would you be hoping to engage in your Spanish subsidiary? Mr Probert: Currently there are around 50, who are local, based in Seville. It depends how well it goes; at the moment it is in pilot mode, we are relatively cautious and we have to prove that our business model works in Spain. Q162 Mr Jones: How long have you been trading in Spain? Mr Probert: Since last November. Q163 Mr Jones: What impression have you formed of the local labour pool in Spain as compared with that in South Wales in terms of trainability and willingness to work? Mr Probert: We have had problems getting enough good enough staff, to be fair. We thought we would pick Seville because it has relatively high unemployment, it is not Madrid - it is cheaper, the very reason the company started in South Wales - but I must admit recruitment has been slower than we would want. Q164 Mr Jones: This appears to be an international phenomenon and not just isolated to Wales. Mr Probert: It may well be, yes, absolutely. Q165 Hywel Williams: Can I just ask a question of Ann Beynon specifically about the employment of Welsh speakers, arising out of your previous comments. Just to get this clear, you were trying to recruit Welsh speakers in Cardiff for a helpline and you got no recruits at all, but you have a similar provision in Bangor. Ms Beynon: Yes. Q166 Hywel Williams: What would be your advice if someone was setting up a new standalone helpline operation through the medium of Welsh, it would presumably not be Cardiff but would probably be Pembrokeshire or Aberystwyth. Ms Beynon: It depends on the nature of the service being provided because there are Welsh language customer service centres outside of Wales even and if you can depend upon students, for example, to work in them - if it is the kind of work that allows students to work on a shift basis okay, but for some of the services on the business side, for example, they have to work within business hours so we could not have just people on shifts and so that makes the recruits we are looking for different. We would want to keep the business service in Cardiff because that is where we have the other SME support business services and so to move that elsewhere would be complicated, it needs to be in one place. There is a very good call centre forum in Wales which has a significant number of companies in membership and they are very, very good at actually providing data on attractive locations for call centre investment in Wales and I certainly got them to do a piece of work for me recently, just so that we at BT know what the situation is like across Wales. I was very impressed, I have to say, with the kind of information that they had at their fingertips and were able to give me; it was very helpful indeed. Q167 Hywel Williams: Thank you. That was rather more a domestic concern for myself, but rather more broadly to both Admiral and BT does the education and training provision in Wales meet the needs of industry and how could it be improved? Ms Beynon: We do not perceive there to be any difference between Wales and the rest of the UK, but that does not mean to say that there could not be improvement in the UK and if you look at the fact that we are in a global marketplace what we have to come to terms with is that people are competing for jobs in the UK now, not just against other UK citizens but against people from other countries, and therefore the more that can be invested in education and training the better. We would not say that Wales has a particular problem, but we all need to be very conscious of the fact that the world is becoming much more competitive and therefore we need to make sure that all our young people have the best training and qualifications. Mr Probert: I would echo that. The better educated they are, the easier they are to train to do specifics, the better they treat customers and it shows. The better educated they are the better. Q168 Hywel Williams: How do the standards of education and training in Wales compare with that in other countries where you operate? Ms Beynon: I do not think there is a difference particularly. Mr Thornhill: I am specifically focused on Wales anyway. Mr Probert: We have experienced call centre activity out of India and exclusively all the operatives there are graduates, on average they are much more educated than are people in South Wales, but the down side of course is language skills, the culture and everything else which does not make it very easy but education-wise they are way above the average that we see in South Wales. Our forays into Nova Scotia - we have not really started there yet - again I would say the people we are seeing there are better-educated than the people we see in South Wales on the whole. Q169 Nia Griffith: Is that in relation to other opportunities for graduates? You probably do not attract many graduates, do you, in South Wales? Are your salary levels such that you would? Mr Probert: I suppose our salary levels are relatively lower, although half our people are not in call centre activity; they are IT, they are technical people, they are claims managers which are very much higher paying jobs and again we have quite a high level of graduates in those jobs for us. Even those, when we take them in fresh, the level of education is not as high as you would expect it to be. Q170 Mark Williams: What particular shortcomings have you identified? Mr Probert: It is writing letters to customers, which is a simple one to understand. We have 1.2 million customers and sometimes things go wrong, there is a need for communication - it is not all over the phone - and to get them to sit down and write a letter seems to be quite difficult. I am an accountant so my grammar is not great, but it is not just grammar it is construction of the thing. We have to do a lot of work teaching people to write basic letters that are easily understandable by the customer and just make commonsense. You would expect the education system to turn out people who could write a letter, yet we do a lot of training on it. Q171 Mr Jones: I would like to pursue that point, Mr Probert. You are telling the Committee that you have graduates who are applying for work with you who are unable to write a business letter; it is as simple as that? Mr Probert: It is as simple as that, yes. Q172 Mr Jones: Do you find that difficulty in India? Mr Probert: We do not let them do it in India. Q173 Mr Jones: They do not do any business correspondence there. Mr Probert: No. Q174 Mr Jones: What do they do in India? Mr Probert: It is call centre activity; it is on the telephone. Q175 Mr Jones: At the most basic level. Mr Probert: Yes. Q176 Mr Jones: In India you are employing graduates to do the sort of work that you would be expecting, frankly, very lowly qualified people in Wales to do. Mr Probert: I would not say very lowly qualified people in Wales to do it. It is not easy taking 70 phone calls a day and dealing with 70 different people. Q177 Mr Jones: I am not in any sense being disparaging, but it seems to me that you would not be employing a Welsh graduate to do that sort of work, you would expect a Welsh graduate to do a higher level of work, is that right? Mr Probert: We employ them to do both, but in the more technical areas of letter-writing we have more graduates and I would expect a higher degree of literacy. Q178 Mr Jones: Do you have to run in-house training courses on how to write a straightforward business letter? Mr Probert: Yes, we do, and we have to run quite a lot of what we call quality control people to look at the letters a second time to get feedback and keep feeding back, to keep on training people to do it. Q179 Mrs James: Following that, it is a sad state of affairs when you do get letters from Oxbridge graduates - I have recently had one - with eight spelling mistakes in it and a confusion between the word "where" and "were". Surely you have opportunities through the union learning funds and Welsh Assembly funding to work with local schools and local trade unions, making sure that people have the skills that you need to utilise these opportunities. Mr Probert: Yes, the opportunity is there and we do engage with them on times, but our job is to run our business and we would expect the raw material - the people - to be coming in --- Q180 Mrs James: More work is needed in that area to make sure that people are skilled up. Mr Probert: Are skilled up, yes. Ms Beynon: Can I just say that we do work with the CWU, one of our trade unions, and we have work-based learning centres in Cardiff and Swansea. It is very interesting because we then asked staff working in the buildings where we have these centres what they wanted to learn and the two things that came top of the list were computer skills and Welsh. The union is now dealing with those. Q181 Mr Jones: Does BT experience the same sort of difficulties that Mr Probert has just outlined in finding recruits who are able to write straightforward business letters? Ms Beynon: I am not aware of it. We have a system within BT of dealing with correspondence and my office will deal with a lot of correspondence coming from yourselves, but we have the support of a high level complaints department who do a lot of drafting and for Welsh language correspondence a professional translator provides very good Welsh language translation services, for which we tender on a commercial basis. That is how we deal with the correspondence; we have a special unit. Obviously, it all comes back to me after the person has seen the letter to check, but we deal with it in that way. Q182 Mr Jones: I was really more interested in the raw material if you like; are you finding that people are arriving at BT who are unable to write a business letter and have to be trained in how to do so? Ms Beynon: We would not be employing the call centre staff to do that kind of work. Q183 Mr Jones: I do not mean the call centre staff. I am talking about recruits generally. Ms Beynon: I have no evidence for that. Mr Thornhill: Bearing in mind I caveat my comments by saying that most of my recruits and employees are technical, field-based engineering staff ---- Q184 Mr Jones: The question does not arise in that case. Mr Thornhill: It does not arise in terms of written skills but it does arise in terms of interpersonal skills, knocking on a business premises and talking to a customer. Q185 Mr Jones: I appreciate that. Mr Thornhill: There is an element of training that we have to do there. The nearest example I could possibly give you is we wanted to put some fairly senior managers into some of our more rural areas - Haverfordwest is one locality, Wylfa is another. These sort of salary ranges are £45,000-£60,000 a year and, eventually, most of the applications we got were from outside of Wales despite us advertising in the Western Mail and those kinds of publications. The recruits we did bring in were people returning home to Wales from working outside of Wales. That is the only indication I can give. Q186 Mr Jones: What do you glean from that? Mr Thornhill: For us that was the first time in a few years that we had advertised externally for people of that grade and that salary banding in, as Ann says, some areas where that is quite a good salary. My initial reaction was that the number of applications from within Wales was probably a little lower than we would have expected. Q187 Mr Jones: What was the quality of the applications from within Wales? Mr Thornhill: Reasonable, but there did not appear to be a lot that were at the top end of what you would expect the market expectation to bring when you are paying a pretty good salary for the location. Q188 Nia Griffith: If we could turn to the issue of research and development; does Wales have the right kind of support for research and development in order to attract high tech companies and are there any ways that you think this could be improved? Ms Beynon: There is a lot of effort being put in by the Assembly Government to improve the performance on research and development, and it is a clear target on the list and agenda because both the UK and Wales need to do better on research and development. Part of the problem sometimes is that when you are looking at knowledge-based businesses the standard business model which you would have had that is capital intensive does not work, and therefore what you need is a revenue-based business model, and we are seeing that increasingly when we talk about on-line businesses, IT-based businesses. The kind of funding support that has been available in the past is very much orientated towards capital support and we had an example a few years ago of a start-up company that we at BT wanted to see developed in the area of downloading music from the web. What they needed was revenue to generate marketing to create an awareness of their existence, not capital, and it is very, very difficult to find money for that from public sector sources - not because the public sector did not want to do it, but they were constrained by European regulations. It is an issue generally that needs to be understood as we move into this knowledge-driven economy, the kind of business model is changing and therefore support mechanisms need to change accordingly. To go back to research and development, we as BT obviously do a huge amount of research and development; much of it happens in our labs at Martlesham but we do try and ensure that we bridge between our research and development and the universities in Wales. We recently had a meeting where we had Cardiff, Bangor and Swansea universities present, meeting with our university liaison programme, and I hope that there will be a follow-up meeting with Bangor coming out of that because we need a dialogue to see what our capabilities in Wales are and what our requirements are as well. Our requirements are very extensive, they are not just about technology, they can be about the psychology of purchasing, for example, that could be an area where research and development is needed so it is quite a wide-ranging portfolio and also it is the time one needs to explain the needs of both sides. We are also finding in computing science that we do need people who are specialised as undergraduates; there is a demand for specialisation early on at degree level that would help. There needs to be more, but we do a lot of it and we are trying as best we can to create links between what BT is doing for our business purposes and what Wales is doing. Q189 Mrs James: You have already outlined, both in your memoranda and in the evidence that you have given, the work that you are doing offshore and the reasons why you have gone offshore but I wanted to explore it a little bit further, certainly about advantages, the key advantages that you see working offshore and going offshore, and what are the disadvantages (if any) that are there. Really do we, as a Government, and does the Welsh Assembly give you enough incentive and support to remain in this country. It is your thoughts on those really. Mr Probert: Most of our experience is based on being in Bangalore for the last five or six years. When we went there it was an idea, could we reduce our attrition, which was about 25% in the call centres, because invariably when people leave us you ask them why they leave and it is "I am fed up of working until 10 o'clock at night, I do not want to work Saturdays and I do not want to work Sundays." We were probably the first in India to do call centre operations, although everybody is there now, and that was the idea. It is difficult, there are great difficulties, we do not want to do it because it is difficult to manage. We talked about North Wales and managing from South Wales; managing Bangalore from South Wales is very, very difficult. I am not convinced the cost savings, which are all to do with differentials in salary, are worth it at the end of the day, but it has reduced our attrition, we have been able to build up there very quickly and there are certain times when we have not been able to take enough people on in South Wales that we have been glad that we have been out there, we have been able to scale up much more quickly than we could in South Wales. But it is not an easy process and I am not convinced - I am an accountant and finance director - that it is wholly worth it on a cost savings aspect alone because it is difficult to manage, it is difficult to get the right culture, you know from the feedback the UK public does not particularly like it and I am not sure it is all that less costly either by the time you send people over there. When you want to change something in the UK you can do it easily in a few centres; to change the approach out in Bangalore takes a long time. Q190 Mrs James: Just to build on that, what are the things that you think we need to be doing in Swansea, for example - you are in my constituency there in SA1 - what do we need to be doing to make sure that you have got the quality and you have got the flexibility? Mr Probert: Swansea is a good demonstration - we were also in South Africa, we had about 40 people in South Africa. The opportunity came in Swansea to set up a new building in SA1, which you will know, and we did have a grant for it. We were either going to build up South Africa or do we build up in Swansea. Early last year, before we moved to the new building, we had about 650 people, we had a grant to move and we have subsidised rental with a target of 850 staff in three years time. In fact, today I can tell you there are 825 staff there already, we have increased employment by 175 in the last month and I suspect we will go through the 850 mark within three months time. Something has been done, therefore. Swansea has been something of a problem in terms of office space, which is being addressed with SA1. Mrs James: Yes, definitely. Q191 Mr Jones: Mr Probert, Direct Line, which must be one of your principal competitors. Mr Probert: It is indeed. Q192 Mr Jones: Actually makes a virtue in its advertising of using only UK-based call centres, is that not right? Mr Probert: It does. Q193 Mr Jones: You have mentioned briefly when you were replying to Mrs James that customers prefer to deal with UK call centres. Mr Probert: Not all customers. I said there is some feedback, some customers do not like it but I would not say all customers do not like it. Mr Jones: Is it not a fairly widespread feeling and, frankly, the proof of that is that Direct Line regards it as very much an advertising plus point that it employs only UK call centres? Q194 Mrs James: As does NatWest. Mr Probert: I can tell you that of the organisations under Direct Line, one called Churchill has 300 software developers in India. Q195 Mr Jones: That may be the case, but in terms of call centre staff would you not agree that by and large people do prefer to deal with a UK call centre? Mr Probert: By and large they do and, as I said to you before, why were we out there? It was not cost savings, we were not looking for cost savings by going out there, we were looking for people because we could not get enough people in South Wales. That was the point of doing that. Q196 Nia Griffith: You mentioned having 180 workers out there, is there a danger that for companies that have far more workers it would become more cost-effective because presumably you have got all the overheads for a relatively small workforce and therefore it is probably potentially more of a danger to our jobs if it is big companies rather than smaller developing companies. Mr Probert: Possibly. BT have thousands in overseas operations. Ms Beynon: We have 34 call centres. Just to put it in context, in retail we have 34 call centres and 32 are in the UK. In terms of our investment in our call centres in BT Retail we have £105 million invested in the UK as opposed to £3 million in India, so we need to get that context and the balance clear. We would always give callers a choice and if they want to be answered by a UK call centre they can be transferred, that choice is always made available. In order to provide enhanced services, that was one of the drivers for looking at Indian locations and the business case did stack up very strongly when that decision was taken, but what I would like to emphasise is that there is no intention at all for any of that outsourcing to happen from the Welsh call centres; those are remaining in Wales and are flourishing. Mr Thornhill: The other thing to say about BT, as Ann highlighted, is that we are operating in dozens of countries around the world, so there is an expectation that some of our support functions will be in other countries as well. Q197 Mrs James: Do you feel that you get the support and the backing from Government? Ms Beynon: I mentioned earlier on the call centre forum; the core funding comes from the Assembly Government and that is an excellent organisation and there is a huge amount of knowledge about indigenous call centres and how to attract new call centres into Wales. That is a very good support mechanism in itself and what that does is it gives market knowledge to inform commercial decisions. We had support from the Welsh Assembly Government when we set up our data centre, which was a £90 million investment but we did get an RSA grant of £10 million. We have not drawn down the full sum but that certainly was helpful because it was a very expensive investment for us, it was a very high quality investment and getting that money was indeed helpful because we had to choose between Cardiff and Amsterdam and that really helped us to flick the decision towards Cardiff. Certainly in the past, therefore, we have benefited from support but what we need to get to is a situation where it is not just the financial support that is important, it is the business environment, and that is why I like the call centre forum approach because they can talk market language and commercial language to companies and, at the end of the day, that is going to be the key driver. Q198 Hywel Williams: This is a question for BT: you have put lots of emphasis on corporate social responsibility and you mentioned the amount of money that you spend in Wales. What are the benefits for BT and what are the benefits for Wales of your corporate social responsibility policy? Ms Beynon: Corporate social responsibility (or CSR as it is known) is drilled through BT, a bit like Llandudno is drilled through Welsh rock; we live and breathe it and it is part of what we are as a company, it is part of our culture as a company, it is not an add-on, yet we do spend a million pounds on it in Wales. What I would like to emphasise is that we do not do CSR in Wales, we do CSR with Wales, so we would be choosing to work with communities and with local authorities and voluntary groups in order to deliver a CSR agenda that is very often, in our terms, to do with technology as well. We have various schemes like Community Connections which some of you will be aware of - Llanberis Mountain Rescue Team got some money from us to buy a computer and a broadband line; Pontardawe Air Cadets was another one and also in Porthcawl with the lifeboat two years ago, they got a sum of money. It is a very simple mechanism where people can apply on-line for support, so we do that and we also do education awards as well. Llanllechid School in Bethesda, for example, got an award for a fantastic scheme about racial tolerance and racial understanding where they twinned with a school in Jamaica, and the link between Jamaica and Llanllechid was Lord Penbryn, who of course made a lot of his money out of the slave trade in Jamaica. The two schools twinned under a scheme which BT funded and it was very liberating to see. We can do that but we also try and look at the communities in Wales and think about digital divide in particular, so the way we developed our digital divide programme was we have a programme called Citizen Online where we work with a community - we did this in Rhyl, we have done it in Newport and we have done it in the Rhondda - where we would find a local person to lead a community project to introduce ICT to the community to enhance local life. That is a fulltime worker who spends all their time with community groups, going with the grain of the community. The work that we did in those three places then informed the programme that is now Communities @One where there are - brokers they are called now - community workers in the same kind of pattern but with a broader geographical spread, and the lady who ran the Rhyl project for us is now working for that scheme. That was where we were having a dialogue with the Assembly Government, with the Scarman Trust, with other organisations in this space to say how can we now leverage together better investment in the digital divide. That is another piece of work that we do and hopefully we can take this forward because it is something we are continually looking at. The next area I suppose that everybody is focusing on is your carbon footprint; as a company BT is the largest purchaser of green energy and we have an understanding with npower and British Gas that we buy green energy. We are also promoting very, very hard the whole concept of flexible working; as a company, 75% of our people are allowed to work flexibly, which is hugely beneficial, particularly for women returning to work, and indeed the scheme started in Cardiff where a group of women working on the 2YK so-called bug had to work very long hours and so we evolved this method of working flexibly and that has been enshrined in the way we work. What is very interesting is that as many men as women choose to work in that way. What that means is that you do not travel as much, you save on travelling costs, you can balance your work and life better and you can allow women with childcare responsibilities to work from home and they can choose to work whatever hours they like as long as they deliver the output. It is a more humane way of working as well because you actually then measure people and what they do, not when they do it, so output measures are much more commercially focused as well. All those things are key to the whole idea of CSR being a fundamental part of the way we work and the way we live and not just being as an add-on. Mr Thornhill: In terms of the carbon footprint that Ann talked about, in my business we have promoted internally specific targets because I have over 1000 vehicles on the roads of Wales every day; how do we minimise travel time, how do we potentially look at vehicles of the future that might run on different fuels, different technologies, and things like the hidden things that you would not normally expect. When we take old poles down and put new ones up, clearly we have to dispose of them responsibly and in an environmentally friendly way because they have been treated with preservatives. There are lots of things like that where we work with companies in and around Wales for safe disposal of those kinds of things. It is not only an explicit agenda for us, but it works through in terms of the internal targets we run our business by. Ms Beynon: Could I just mention that the CSR policy of BT is championed by our chairman, through his very high profile activity. You may have heard the news; we have a new chairman coming to BT, Mr Mike Rake, who is currently at KPMG, and he happens to be the chairman of Business in the Community in the UK. Again, we can guarantee that the continuum of CSR within BT will be there. Mr Probert: Any large employer - and I count Admiral as a large employer in South Wales - is part and parcel of the community because your staff are. We have something nowhere near as formal as BT, which is called "Henry's Pot" - Henry is our CEO. Anybody in the company can apply to Henry's Pot to have some money to support something, be it rugby shirts for the Under-5s rugby team, absolutely anything at all. This has direct feedback because we are seen as a good employer in South Wales, we get good headlines for it and we get more people coming who want to work for us because they know we are somebody who cares. Q199 Hywel Williams: I was going to ask you about that; virtue is its own reward, as they say. Mr Probert: It is. Q200 Hywel Williams: I suppose there is something on the bottom line as well, is there? Mr Probert: Yes, but you do get rewarded very directly for it, it is a natural thing to do. Your staff live in the community, I live in the community, I want to be seen as somebody who works for a company that is well-regarded. Ms Beynon: It is actually quite important in the global market because if you want to recruit the best people these days, young people - particularly those coming out of universities - want to work for a socially responsible company. I have been at receptions in BT Centre with graduates looking at where they would like to work, and they actually say, "What is your green policy?" It is now a question being asked of us by talented people globally, so yes it is bottom line-related but it is hugely important to talent-retention and attracting the best talent. Companies like ourselves are expected to have those credentials; it is fundamental. Q201 Hywel Williams: You have already said that it is not an add-on, but it is a tough old world; can you sustain your CSR programme in the face of global competition? Ms Beynon: It is a business-critical thing we should do; it is not a nice-to-do, it is a must-do. Yes, there are principles behind it, of course there are, but it is also business-critical. CSR, equality and diversity policies are business-critical because the better we treat our people the more we respect people's diversity, the more we respect people of different genders, different ethnicity, different faiths, different sexual orientation, the better we will be as businesses. This is now deeply understood and there is research going on at Columbia University which BT is involved with which demonstrates very, very clearly that if you do not have these policies you do not attract talent. Of the global talent pool in the executive bracket 17% only are white men, so if you do not look at the other part of the 100% you are not going to attract the best people. It is absolutely fundamental; it is not a nice-to-have it is a must-have. Chairman: That is a good point on which to end. Could I thank you for your evidence today and thank you also for your earlier memoranda. If you feel in the light of questions that have been put to you today that you would like to add a further memorandum we would be very pleased to receive it. Two issues have emerged which you might wish to consider reflecting on in such a memorandum: firstly, the way in which you interface with education and training at all levels; secondly, inevitably your original memorandum was for good reason introspective because it related specifically to Wales. You also alluded in your evidence today to your global perspective and your global relationships; you might want to give us some more information about that. Thank you very much. Witness: Ms Catherine Speight, Regional Secretary, Amicus, gave evidence. Q202 Chairman: Good morning, could you introduce yourself, please, for the record? Ms Speight: Yes, I am Catherine Speight and I am the regional secretary of Amicus. Can I apologise, Chairman, for not being able to provide you with a written memorandum; I am without a researcher at the moment and I have been off work. I understand that you did take evidence from the Wales TUC just recently, so hopefully I will be able to supplement what they told you. Q203 Chairman: Thank you very much for that; we would nevertheless still like to have a memorandum subsequently from you, it would be extremely helpful. Could I begin by asking you about the effect of progressive and growing globalisation of industry and what effect this has had on manufacturing in Wales; very briefly - because we have lots of other supplementary questions - could you give us an overview of what has happened? Ms Speight: From our perspective - Amicus is the largest private sector union in Wales and we organise across all sectors of manufacturing - there has been a significant decline in the last five or six years in the number of manufacturing jobs; we have gone down from something like 20% of Welsh jobs to around 14% now. A lot of those jobs have been lost from companies that exited Wales to maximise profits, not because the companies were failing or because Welsh workers were not providing the goods that people required, but it was cheaper to do it elsewhere and it was easier to close a Welsh plant than it was anywhere else. Q204 Nia Griffith: You were present in the earlier session when we heard a lot about the offshoring of jobs and I believe now we fear that even the back office jobs could be offshored to various places. What do you think we could be doing, either to prevent that happening in the first place or to mitigate the effects, either as UK Government or the Assembly Government? Ms Speight: As a UK Government we have to introduce stronger legislation to make it more difficult to exit UK jobs; it is a lot more difficult to exit a plant in France or Belgium or Germany where social impact studies have to be done, redundancy pay is more often than not a lot higher than what will be paid in the UK, and wherever that situation exists we will always be the cheapest option to close. Q205 Nia Griffith: But it is not just a matter of closing, it might be a matter of developing and bringing in new jobs as it were, but instead of bringing them in to Wales they are bringing them in offshore - in other words the company is expanding but they are actually not bringing the jobs here. Do you think there is any way we can combat that at all? It is a very difficult question and there is not an easy answer. Ms Speight: It is, yes. In a lot of respects it is not anything wrong that the Welsh labour force has done; as I say, a lot of the time it is a question of economics and maximising profitability. Q206 Mark Williams: Your website highlights the issue of education and skills, the shortfalls at a UK level, particularly in basic literacy and numeracy. How well placed is the workforce in Wales to respond to the need for those high-skilled workers in high tech and knowledge-based industries; what particular problems do you see that persist? Ms Speight: We are improving in Wales. One of my hobbyhorses, for want of a better word, has always been that vocational education and academic education should be valued in the same way, but it has not been historically. We are improving in recognising what skills the Welsh economy is going to need in the future and making sure that our education system is tailored to provide the skills that the young people are going to need to provide the jobs in the Welsh economy. Q207 Mark Williams: You are confident that at UK level and the National Assembly ---- Ms Speight: It is a long process because a child's school life is 10 or 12 years - even longer if you go on to higher education. Over the last few years it has been recognised that we do not educate children for education's sake but we equip them with the skills that they are going to need to be successful in the economy that will be in Wales in the future. Q208 Mark Williams: If there was one specific measure in education policy that you would like to see Government, at whichever level - primarily National Assembly level - pursue, what would that be? Ms Speight: We are doing quite well in higher education and we are providing graduates for the research and development field within Wales. If we are lacking in anything it is traditional skills, it is the skills that we need to build the buildings before we put the graduates in there to work. In Wales we have some major construction projects - and of course with the announcement about the DCA that will be a huge construction project - but at this moment in time we do not have the skills in Wales to be able to deliver those and we will be importing skills from elsewhere. Q209 Mark Williams: You as a union are going back to the basics of numeracy, literacy, and you heard in the earlier session the capacity of people to write letters, those kinds of skills you feel are lacking: we are making some advances but we have further work to do on those things. Ms Speight: I do not think anything will ever be perfect, we can always improve on what we are doing, but I do believe that we have improved. I have been regional secretary since 2004 and I have had an interaction with the ministers in the Welsh Assembly; I do believe that we have started to recognise what needs to be done to deliver the education that people are going to need in the future. Q210 Mr Jones: Ms Speight, we are living in a fast-moving, international business climate with whole new industries springing up. What work is your union carrying out to help workers respond to the demands made by this changing economic climate? Ms Speight: We are probably one of the biggest accessors of the Wales Union Learning Fund and we recognise that a lot of our membership is in traditional areas that are fast disappearing, and new technology is taking its toll on the workforce. Amicus have had probably in the last four years about £1 million from the Wales Union Learning Fund and we have used that to develop learning centres; we have recruited union learning reps to assist our members in re-educating themselves, in accessing education that they might not have done since they were 16 or 18 when they left school. Q211 Mr Jones: In what sort of fields? Ms Speight: In basic IT; in Welsh. In a lot of cases it is getting them back into learning something that they want to do, which is probably not job-specific. Getting somebody back into education and back into the way of learning then opens doors for them to go on to other education elements. It is a big step when you have been 25 years out of education or any form of formal learning to take that step to go to college to learn a new skill, so a lot of the work that the Wales Union learning reps do and the money is used to educate people in learning again. Q212 Mr Jones: How is the Wales Union Learning Fund funded? Ms Speight: It is from the Welsh Assembly Government. Q213 Mr Jones: Do you know to what extent it is funded? Ms Speight: I am not sure, but I think over the last Parliament it has probably been about £4 million. I can put that in my memorandum if you want. Q214 Mr Jones: Thank you. What sort of support does your union give to workers who are made redundant? Ms Speight: There is a response unit from the Wales TUC and they go in and look at what skills the people have that are transferable to other jobs in the location, or to find out if they do want to access learning again, and that is why the Union Learning Fund is important because some people would not go down that path unless they had been through the process of a gradual re-entry into education through those sorts of schemes. Q215 Mr Jones: Is there anything more in your view that the UK or the Welsh Assembly Governments could do to support such workers who are made redundant? Ms Speight: Make it harder in the first place for them to be made redundant; let us keep the jobs. Q216 Mr Jones: I appreciate that, but given that there will always be redundancies is there anything more that the UK and the Welsh Assembly Government could do to support them? Ms Speight: I do not know. I suppose there are times when people want to access retraining and there are not enough places. A lot of the courses in traditional skills are now becoming over-subscribed because people are deciding to re-skill into an area where there is a demand, but because there is a demand there is also a demand on the training facilities and on the places available, so expansion of training facilities into those areas. Q217 Mr Jones: Do you perceive that there is a shortage of such places at the moment? Ms Speight: I do believe and I have heard that people trying to get onto courses for plumbing and suchlike have not been able to access that training because it has been oversubscribed in a number of colleges. Q218 Mr Jones: We heard earlier this morning that Wales has relatively high levels of economic inactivity; what do you feel that both the UK and the Welsh Assembly Governments could be doing to address this problem? Ms Speight: To make the transition from inactivity into work easier. There are a lot of perceived penalties for people going back into work, especially if they have been on invalidity benefit or suchlike. They want to go back to work, it might not work out because of their disability and they find that they cannot cope with either the hours or the job, but they have no ability to regain those benefits because once you have come off them that is it. To take that step, a lot of people will not do it because if it is a case of gambling with having a certain amount of financial security and access a job that might not work out or might not be suitable or whatever, then they will not take that leap. Anything that can be done to make that path easier, for them to try without risking their financial security that they currently have, would make more people willing to take that step. Q219 Mr Jones: Are you saying that there are some people who are deliberately choosing to remain on invalidity benefit? Ms Speight: Deliberately choosing is probably a bit too strong. There may be some people who are fearful that they are not going to be able to cope with the pressure of the job or the hours of the job and it is a gamble for them because if they are on that level of benefit and they do try it and it does not work out, they do not go back onto that level of benefit. Q220 Mrs James: We have worked on a lot of incidents et cetera and threats of closure within my constituency, and time and time again when people come to see me they say it is too easy, the regulation in Britain is far too easy, it is easy to take jobs overseas, that it is easier to take jobs to other factories. Do you think that we are uncompetitive in that way or that it is easier to get rid of jobs in this country? Ms Speight: It is easier. We have dealt with numerous closures, downsizing for want of a better word - the employers' word - restructuring. We have a company at the moment in Cwmbran that won the 2006 Welsh Business Award for Quality, Technicolor at Cwmbran. That company has announced closure and will exit Wales in April to relocate its work to Poland, not because it is losing money, it is part of the Thomson French group - they are not losing money but they can make more money if they move the business to Poland. I can give you dozens of companies that are doing that. Q221 Mrs James: What do you say the Government and the Assembly should be doing to mitigate this or to defend us against this? Ms Speight: Introduce the same protections that are available across Europe where social impact studies have to be done; the impact on a community of that business closing has to be addressed, has to be looked at and mechanisms have to be put in place to mitigate that impact by the company that is exiting, which is why global companies would much rather pull the plug on Wales and UK jobs than have to jump through all those hoops to exit one of their plants elsewhere in Europe. Q222 Mr Jones: Is there not this danger, that if it becomes more difficult to close businesses in Wales, companies may be less inclined to start up businesses in Wales in the first place? Ms Speight: I do not know that that follows because companies that are relocating out of Wales have made profits and made quality products in Wales. Q223 Mr Jones: Yes, I understand that. Ms Speight: They have not seen a decline in their business, it is just that they can make more money elsewhere. Q224 Mr Jones: I appreciate the point you are making, but my concern is this: if it becomes more difficult through statute or regulation to close a business in Wales or anywhere else in the UK, is that not going to act as a deterrent to overseas companies who might otherwise be inclined to set up business in the UK? Ms Speight: Historically we have found that companies have come and set up in Wales, have we not? Q225 Mr Jones: But in the present regulatory climate. Ms Speight: Big programmes have come and they have taken the UK and the Welsh Assembly grants and as soon as there has been no clawback required of that money they have exited. Q226 Mr Jones: Does that not to a certain extent prove the point I am making? Ms Speight: Companies are still setting up in Germany and France where it is more difficult to exit. Q227 Mr Jones: But companies are actually setting up in the Far East, that is the truth of the matter, is it not, that is the market that we are competing with in the UK nowadays where regulation is virtually nil. Nobody wants to see the UK arrive at that particular point, but surely we have to be a lot more flexible in terms of employment in this country if we are going to compete with these tiger economies of the Far East. Ms Speight: There is being flexible and there is just wanting the fast profit. Q228 Mr Jones: I appreciate that. Ms Speight: There has got to be a balance drawn; if you look at it like that we will be going down from 14% of Welsh jobs in manufacturing to below ten in the next five years. Q229 Hywel Williams: How much migrant labour is there in Wales and is the fact that we potentially have lots of migrant labour because there are skills shortages or is there something else that is going on? Ms Speight: I have not got exact figures but the migrant workforce in Wales is on the increase. In some respects it is because of skills shortages. Skills shortages in construction are definitely attracting migrant labour, but migrant labour is also coming in to do lots of jobs in food processing. We have members in what is now Cranberry Foods in Abergavenny and when I looked after the plant three years ago there were no Polish workers there; now I think there are probably in excess of 50. In North Wales and in Wrexham it is an even greater number where they are coming in to do typically what people say Welsh workers will not do, the jobs in the service industry, in hotels, in shops, in bars, and a lot in food processing. Q230 Hywel Williams: I am just puzzled because this is a paradox that we have come across a number of times already on this inquiry; there are jobs for people to do and people to do those jobs but somehow they do not take them up. I have two firms in my constituency three miles apart, one of which employs a lot of migrant labour and the other one - it is a similar line of business - which employs none at all, and I cannot figure out why. Do you have any ideas as to why? Ms Speight: No. Are they both in the same sort of industry? Q231 Hywel Williams: Ish. As a union, you do not have a particular view on that issue? Ms Speight: No. I welcome migrant labour coming into Wales and if they are fulfilling a need that the Welsh workforce cannot fulfil then we have got to welcome them. The only caveat to that is that in some instances migrant labour is being used to undermine the terms and conditions of the Welsh labour force. Q232 Hywel Williams: That is my next question. Are you organising amongst migrant workers? What are you doing to support them? Ms Speight: Yes, we are producing bilingual literature, especially in Polish because it tends to be Polish in the majority and in fact we have got one Polish worker who is a union learning rep in Sharps in Wrexham, who have just won a big order for solar panels, and he is the liaison between himself and his fellow workers, and we are providing a union learning funding for English lessons and things like that. Q233 Hywel Williams: Just lastly, how is Amicus as a union responding to the challenge of globalisation in general in terms of its international activities and in terms of links with unions in other countries? Ms Speight: You might know that there is a merger ballot going on at the moment between ourselves and the Transport & General Workers' Union. If that is successful on 1 May then we will be a union which will have about 2.2 million members. We are actively developing links with European trade unions, with IG Metall. The Amalgamated Engineering Union, which is a predecessor of Amicus, and the Electrical Union always had some sort of link with IG Metall, but that is being developed. Our international work has come to the fore over the last three or four years. We are developing links with Africa and the African trade unions. We are actively involved in supporting ACTSA which is Action for Southern Africa. We are involved in supporting Justice for Columbia where we are trying to assist the Columbian trade unionists, who go through a lot more than we have to go through, including risking their lives for being trade unionists, so we are developing those international links. Q234 Chairman: Could I ask a final question following on that point that you made. What about the links that you may or may not have with China and India; those are the big questions that have been facing us in terms of job losses, and specifically also Eastern Europe? Ms Speight: It is funny you should say that because I am going to China on Friday. Q235 Chairman: Why are you going to China? Ms Speight: My daughter lives there! I will be able to see it first hand. China is a really big threat not only to Wales and the UK but to the whole of Europe. The economy there is growing at such a rate. I think there was one figure where they are turning out more graduates per year than the whole of the European Union. It is one of the biggest challenges I think we will be facing as an economy and if you want me to give you an answer about how we combat that, I have no idea. Trade unionism in China is not what trade unionism is in the UK and Europe. They do have trade unions and our General Secretary has been out and met a number of Chinese trade unions, but I do not think they are trade unionists in the sense that we are where we are wanting to protect working people and improve their working lives and terms and conditions. Chairman: Could I thank you for your evidence today and reiterate our desire to have a memorandum from you. We look forward to that and I hope that it will be all the better as a result of you coming here today because you can reflect on some of the questions that have been posed and then that will inform the kind of memorandum that you produce, in particular in relation to education and training and also in relation to your role in the new global economy. Thank you very much indeed. |