Finance Committee 28 March 2012
Decision on Taking Business in Private
Economic and Fiscal Outlook (United Kingdom)
The Convener: The third item on our agenda is evidence from Lord Smith of Kelvin on the Smith group’s recommendations on youth unemployment. I welcome Lord Smith and invite him to make a short opening statement.
Lord Smith of Kelvin: You will be relieved to know that I will not go through the report, which I assume you guys have read. You will see that the group is composed of a number of businesspeople, two headteachers, someone from the Convention of Scottish Local Authorities and a director of education.
We began about seven years ago by looking quite carefully at the connections between schools and businesses that might employ school leavers. We very quickly zeroed in on the group of youngsters between the ages of 16 and 19 who are not in any form of employment, education or training. The important point is that, if young people between the ages of 16 and 19 are not in employment, education or training, it is highly likely that they will never be in any form of employment, education or training. There is a high correlation with bad health and criminality, and a tremendous cost—it means that we will have to support people for perhaps 50 or 60 years.
On top of all that, more than 20 per cent of youngsters in that age group are unemployed. Graduates are having difficulty in finding employment, so there is a danger that the 16-to-19 cohort will be completely crowded out of the employment market. The worst possible outcome is that throughout their lives they will make no contribution to the economy and that, worse still, they will start to suffer from low self-esteem and for 50 years of their life will feel totally and utterly worthless and not valued at all by society.
We have been advising Governments of different hues over the past seven years. We put in our report what we found through speaking to voluntary organisations, the youngsters themselves, local authorities, employers and so on, as well as what we honestly thought needed to be done. It was not a total prescription, but we put in what we found out. We intended to disband after submitting our report, but I will come back to that in a second.
We wanted to ensure that there was political buy-in and that budgets, at a time of public spending cuts, were going to be protected in this area. We also wanted to give some guidance about what public sector organisations, which are very big employers, should be doing and about how we take youngsters through from very early intervention to critical stages, such as the move from primary to secondary school, which is a very strange experience for them.
We wanted to understand how employers could be reached. I have not come across any business, large or small, that does not want to do something in this area—you are pushing against an open door. However, the information pathways are sometimes confusing and the ask of employers is never made very clear.
Local authorities around the country are usually the point of delivery for a lot of the support. Some local authorities are very good and some are not so good. There are some striking examples of local authorities grasping the idea. For example, two or three years ago, West Dunbartonshire Council did not know who was NEET—I know that we are not allowed to use that expression these days, but it is a convenient epithet. Today, the council is so co-ordinated that it knows where everyone is, and it is making real inroads. If that best practice could be spread across other local authorities—there are others who are doing well, too—we could make tremendous inroads.
We have submitted the report to the leaders of all the political parties and the Government. I had a meeting with Alex Salmond and I have had a couple of useful meetings with John Swinney. A Minister for Youth Employment, Angela Constance, has been appointed, and all the political parties are buying into this. We are not trying to convert people; we are just saying that we think that this is the way in which to do things, and humbly suggesting some ideas that may be worth following up.
The Convener: Thank you for that opening statement.
We often hear from employers that there is a mismatch between the skills that they require and the skills that are available. Your report states:
“Employer feedback also acts as a ‘canary in the mineshaft’ for the coordination of economic policy and skills development.”
What is your view on the way in which the mismatch is being tackled by, for example, Skills Development Scotland?
Lord Smith: Skills Development Scotland is the group around which I would build a lot of this stuff—they are the right people, but they could do quite a bit more. I am interested in the cohort that I mentioned—rather than, say, graduates—because they are not as well equipped to join the jobs market. It starts with simple life skills: turning up appropriately dressed, on time and with the attitude that they want to learn. They then need some basic skills in reading, writing and arithmetic. A lot of employers take people on and train them very well. When I started in accountancy, I did not have a clue. My first job was to make up the fire in the office for the senior partner. After that, I learned to work the phones and so on.
The Convener: John Mason was an accountant, and after 10 years he was still doing that. [Laughter.]
Lord Smith: That does not make him a bad person. He has seen the light now.
Three or four years later, I found myself doing sets of accounts and advising customers. It is about having the right attitude. There could be a lot more contact between schools and employers—they should not be frightened of one another. Most people want to work for a living, and it is important that we know what employers want.
The Convener: On page 11 of your report, you state:
“we recommend that a forum for senior corporate representatives from our largest employers is created, with direct engagement from the Minister or senior officials two or three times a year, to ensure skills priorities and shortages are understood.”
What should be the driving force for the establishment of such a group? Should it come from ministers or from the Confederation of British Industry Scotland?
Lord Smith: It should come from ministers in the first instance. As I say, you are pushing against an open door.
You must understand that a Tesco needs a different selling message from a wee plumber in Peebles, because some of the decisions are made at headquarters and, sadly, we do not have enough companies headquartered in Scotland—although the companies that I represent will respond immediately to action that is taken. Sometimes, it is necessary to go to the human resources departments in London, Manchester or wherever to get buy-in to do things in Scotland. Very large employers—hotel groups and supermarkets, for example—need a different sell. It is necessary to go there first and then empower the local people. Then you get talking to them and they will take people on. Companies that are headquartered here and medium-sized firms can make an on-the-spot decision—just like that—when a local authority approaches them directly.
However, for a local authority such as Clackmannanshire Council to go direct to a big employer does not work. As with any marketing programme, it is important to differentiate and say, “We will take this approach to that size of employer.”
The Convener: In previous evidence sessions, we were advised that, although the public sector is good at encouraging private sector employers to do more in relation to training and skills, the public sector itself is not always particularly good at, for example, taking on apprentices and providing training. What more could the public sector do in that area?
Lord Smith: I mention again the most vulnerable group, because I do not want it to be forgotten in the rush to say, “We’ve got all these graduates coming out of universities and they’re not getting jobs. This is really serious. Let’s do something.” The group that I mentioned is still going to be there. It is a large group, and we need to look after it. Public sector bodies, many of which are big employers, should be not forced but encouraged to take on people in that target group. It would surely be possible to bring some of those youngsters into the health service, the caring professions and so on.
At SSE—Scottish and Southern Energy, as it was—we run a number of programmes. Surprising as it might seem, we are desperate to get young people. We need them to cut down trees, to joint cables and to work in call centres—there is a whole range of things that we need them for, so we need youngsters to come forward. Yes, we go for graduates and people who come out of school with good qualifications but, working with Barnardo’s, we also take particularly disadvantaged groups and prepare them for work. There are a number of similar schemes, but we do ours with Barnardo’s in Dundee, Inverness and Glasgow, and we are now exporting it to Cardiff and Hampshire.
We take on 20 or so youngsters at a time and they get exposure to our operators. We get young guys in a trench with a grizzled old guy who is saying, “Haud this and I’ll explain what we’re doing here,” and mutual respect develops between the two. We had difficulty to begin with. For example, people said that they did not want to take on difficult kids, but they have enjoyed it and have developed their management skills in the process.
The youngsters suddenly realise that they are valued. There are a million stories that I could tell you, but I will tell just one. There was a wee guy who did not turn up on his third day. Ordinarily, we are not able to follow these things up, but the guy in the trench knew where he lived, so he went up, got him out of bed and said, “Listen, I can’t do this unless you’re with me to help.” I think that that was the first time anyone had ever said to this young guy that he had any value at all. Our guy could not do his job unless the young guy was there. He has now gone way ahead in SSE. I am not talking about Ian Marchant, incidentally, in case you were wondering. He came in as an accountant.
The Convener: I thought that he might have.
Thank you. We begin questions from members with Gavin Brown and then Paul Wheelhouse.
Gavin Brown: I back up what Lord Smith says about Barnardo’s. It gave evidence to the cross-party group on skills not too long ago, and it blew people away with what it is doing.
The papers that we have been given suggest that the excellent report that was published in November is the culmination of the Smith group’s work. Does that mean that the group will disband and that that is the end of it? Does that have to be the case?
Lord Smith: It is biblical—there is a time to sow, a time to reap, a time to be born and a time to die, or something. I have spent seven years keeping this restive bunch of entrepreneurs, educators and so on together. I think that it was felt that we were becoming almost too executive. We began by prodding Government to do things, but we were ending up being the solution. Many of us said, “Let’s write down what we know and hand it to the Government.”
As a group, we have gone away, although we are going to get together again. In an unguided moment, John Swinney asked us to reconvene and tell the Government how it had done a year from now. We will come back and hold his feet to the fire. However, as individuals, we absolutely have not gone away. Many of us are big employers in Scotland and we are very happy to co-operate with things. There is an appropriate length of time, and we felt that seven or eight years was it.
Gavin Brown: I accept that entirely, and I am glad that Mr Swinney has persuaded you to meet again. For the record, I think that there is now more of a need for an organisation such as the Smith group than there ever has been. Could something be done to take it forward?
Lord Smith: I am sure that there are people who would be interested in that. There were junior members of the Smith group whom we called ambassadors—people such as Douglas Hutchison, who worked with West Dunbartonshire. Younger guys like him could form another group. You could very easily get a group of employers together.
Gavin Brown: In the report, you talk about the move from primary to secondary, which is potentially difficult for many people because there is less pastoral care in general and greater numbers of pupils in the school, as the pupils usually come from several feeder schools. The report includes good recommendations, but do you have any other specific suggestions on the issue? Is there any further work on the topic that we should consider?
Lord Smith: I am sure that we all remember what it was like to move from the primary school, where the teachers know who you are, and suddenly you are in the big school, where you are no doubt beaten up in the playground or something like that. There is a form teacher who is supposed to be responsible for the pastoral care element, but you move from classroom to classroom, spending a period or two in geography before going on to history or whatever. You are only 12 at the time, and you do not know who to talk to if you are upset. It is a difficult time, and the particular cohort about whom I am talking have no home life to go back to. As representatives from Barnardo’s could tell you, those youngsters come from backgrounds that feature three generations who are not working and an attitude that work and education are not for the likes of them.
One young guy who was involved in a building project in North Ayrshire that was designed to get people fit for work told me that his girlfriend had chucked him because he had a job. That discrimination came about because no one in their group of friends had a job and she was losing social credibility because he did. When I was growing up, it was the ones who did not have the jobs who had the stigma. It was all about education, getting out of poverty and working hard at school. Once the kind of thing that I described creeps in, it is difficult to sort it out because those young people are not going to get any positive reinforcement when they get back home.
I do not have detailed answers about how to tackle that; I just know that, at an extremely vulnerable time of people’s lives—when they are 11, 12 and 13—they move to an impersonal world that is marked by harder work, which gets more difficult as they go on. Other periods are tough, too—up towards 15 or 16.
I do not have all the answers. I have never been a teacher, although I wanted to be one. That is a frustrated ambition.
Paul Wheelhouse: When, in my maiden speech in Parliament, I referred to the region that I represent—South Scotland—as having a “low skills equilibrium”, there were a lot of blank faces around the chamber, as people did not understand what that meant. Suffice it to say that, in highly rural regions such as the south of Scotland, there is a lack of supply of high-skilled jobs, which means that there is a mismatch between the desire of a young person who is considering going to college to study a course and the economic requirements of the area that they come from, as the employers—particularly small employers—do not tend to recruit skilled graduates or college leavers.
In the submissions that we received for our recent round-table discussion on fiscal sustainability, the Joseph Rowntree Foundation made a point that was backed up by another submission, which said:
“any skills and learning strategy designed to boost employability throughout life must be accompanied by an economic and jobs strategy that promotes inclusive, as well as sustainable, growth”.
Without being dismissive of the problems of urban areas, that particularly applies in rural areas, which do not see the rapid rate of economic growth that happens in some of the cities, and which also have a lack of jobs. Could you comment on the work that your group has done in relation to rural areas?
Lord Smith: I think that a lot of what you say is true. A lot of the businesspeople in the group come from cities such as Glasgow and Dundee, where the situation is really quite bad. However, I live in the Borders, and I am chancellor of the University of the West of Scotland, which has the Crichton campus in Dumfries. Without that there would be an economic disaster, because several thousand people supply it with everything from sandwiches to repair work.
It might be difficult for us to get our minds round this idea because we travel a lot, but for a youngster who lives down in the Borders, going to Glasgow is a huge adventure and can be quite frightening. Youngsters in the south-west of Scotland will go to a university in the south-west of Scotland. That is where they want to live and work with their pals, go to university or college and, they hope, get a job.
We talk about poverty in the inner cities but there is an astonishing amount of poverty elsewhere. When the sun is shining as it is today and the hills are green around Peebles and Gala, it looks idyllic, but it is actually very tough. Some of the jobs that fill the gaps down in the Borders are one-man-band type things; very few businesses there can take people on.
I agree with what you said. We are looking at all this in inner cities. For example, I speak to a lot of people in Glasgow, and we think that the Commonwealth games has brought opportunities there: there will be 15,000 volunteers, and several thousand contracts will be let. A lot of that business will go to the greater Glasgow area as well as the rest of Scotland.
However, we need to look further afield if we do not want rural areas to become totally depopulated—and we do not want that. People have family and other connections in rural areas. We need to keep institutions such as Queen Margaret University and the University of the Highlands and Islands, and make sure that, in rural areas, there are learning areas that people can go to. It is then a job for the Government to steer companies into those areas—the people who live there have just as good brains as those who live in the inner cities. A lot of them do not want to travel or work in Edinburgh, Glasgow, Perth—or whatever other cities we have now.
Paul Wheelhouse: I agree whole-heartedly. My previous career involved higher education demand work and I was conscious that there is also an aspiration aspect. If there is a lack of jobs in an area—
Paul Wheelhouse: —such as Gala or Eyemouth, college and university participation rates are particularly low. The college participation rate in Eyemouth, where I live, is less than 50 per cent. Without jobs, we struggle to raise the aspirations of people who are going through school. You talked about the problem group who reach the end of their school careers without any qualifications. They could have been saved from that position if there were good jobs that gave them something to look forward to and something to study for.
Lord Smith: I cannot think of any school or university that is closer to the Borders than Queen Margaret University. It is just outside Edinburgh, although it looks as if it is in the Borders. We should get employers to talk to schools and universities and encourage the kids to think about broadening their horizons a wee bit, even if that means that they might have to travel a little bit further to work. Alternatively, employers could open up something that was a bit closer to those areas.
It is a really big issue that is underrepresented when politicians talk about all these issues, because the big numbers are in the big cities.
Paul Wheelhouse: Elaine Murray and I have raised the topic of rural transport. Irrespective of whether there are concessionary fares—that is a separate issue—a major challenge is the lack of buses or trains to get young people to where the work is. Has the group picked up on the issue of access to transport in relation to access to jobs?
Lord Smith: I do not think I have anything to add on that specifically. I am sorry—
Lord Smith: I do not have all the answers. However, what you say is absolutely true, and the railway line to Gala will not be the answer to all the problems in the Borders—and there are other rural areas to consider.
Mark McDonald: I have raised in a previous evidence session a theory that I would like you to comment on. My perception is that, as a society, we have categorised certain jobs as things that people do if they do not do well at school—essentially, jobs that are not desirable. The mindset now is that there are certain jobs out there that people genuinely have an aversion to because the implication is that the people in them are doing them because they didnae stick in at school. What is your take on that?
Lord Smith: I think that that is right. There are such stigmas around. Mind you, I would have to say that there are stigmas about investment bankers right now and possibly even about power companies, given the fuel poor and so on.
I think that the stigma that you described is absolutely wrong. We have some people in SSE who have very satisfying and reasonably well-paid jobs who work with their hands. They are some of the unsung heroes. I was appalled to hear one of your number—I think that it was an MSP—ask why those guys were being given breaks at the time of the storms just two or three months ago. We have to rest those guys from time to time because they do heroic things such as shinning up trees and moving wires around. They love their jobs.
Some people might think that working in an office is easy, but I suggest that they should try a day in a call centre, because the stress involved in that is unbelievable.
We need to get over those attitudes. We used to be a proud manufacturing country. I do not know when it happened that you had to have lily-white hands in order to be respected. We need to get back a bit more to manufacturing.
Fashions change. My children are now in their 40s, but when I was trying to give them some careers advice, the last thing that I thought about was the idea that they could make a living out of monkeying around with a television screen to come up with a computer game. However, that is now one of the growth industries—it is one that Scotland is very good at, particularly in the Dundee area. There are lots of spin-offs with multimedia stuff.
I do not know how we change perceptions about certain jobs, but the stigma that they attract is wrong. People can have very satisfying jobs in manufacturing. People do not have to be bankers or accountants—well, perhaps they should have accountancy, as it is a good basic qualification, but they could turn their hand to manufacturing later on.
Mark McDonald: Sure. I was going to ask about how we change perceptions and remove stigma. Do we need to look at things from an educational standpoint, in the sense of giving guidance to young people on their future?
Lord Smith: It is certainly about education and getting businesspeople in as champions. There are some very motivational people, such as the Jim McColls, Tom Hunters and Tom Farmers of this world, who can talk to youngsters in school about a job in retailing, manufacturing, engineering or science. If we get those people talking to youngsters it might open their minds.
I remember a careers teacher who took me aside—I think that she was from outside the school—and interviewed me for a while about jobs. I told her I was thinking about insurance, because my mother wanted me to get into that as a safe job—as it was then. The careers teacher told me that she did not think that I was aggressive enough to be in insurance. Perhaps she was right—I was a very shy wee guy at the time—but life changes people. The point is that she made an immediate judgment. She thought that it was about the man from the Pru who put his foot in the door and sold policies and that I just did not have that kind of personality. However, in insurance, you have actuaries, back-office staff and so on.
We need people to go into the schools and say, “This is the world of work. Listen to what I do. Listen to what the people who work for me do. I work with my hands—I make things and we sell them to Chile and Brazil,” and to capture the youngsters’ imagination. Youngsters do not often meet people who do such things. I was in a Brazilian Weir Group factory recently that had an open day. All the youngsters who were children of the factory workers walked through just to see what the big furnaces and drilling machines did, and their eyes were like saucers.
You need to open people’s minds, but the schools, education people and businesspeople have to make an effort as well. For example, anyone who listens to Jim McColl talk about life and eternity will want a job in manufacturing.
Mark McDonald: We all want young people in Scotland to achieve the most that they can achieve; for some, that will mean going to college or university. Have we struck the right balance between pushing for as many people from as many backgrounds as possible to go into further and higher education and ensuring that those who, for whatever reason, do not go into further and higher education or feel that doing so is not for them do not feel isolated as a result of their decision?
Lord Smith: We certainly need to do more for those people. It is great that we moved higher education on. I was a beneficiary of the golden generation that we keep reading about. I was born in 1944; the health service had been created by the time I needed any repair work done and universities were starting to spring up on every street corner. My parents were not wealthy. However, not only did I not have to pay university fees, I was paid a grant to go. I think that only 5 or 6 per cent of the population went to university in those days, but bursaries, scholarships and grants were available. When you have 50 per cent—I think that that is the figure—of the population going to colleges and universities, you cannot sustain that system of grants, scholarships and free education for everyone without issues arising in the health service, in defence, in schools or in roads. I would not like to be the politician who has to make all those decisions, but absolutely free education—indeed, education that you are actually paid for—is simply not sustainable.
As for the people who do not get to university, a lot of them can end up with very good and very well-paid jobs and can go into education later if they want. Indeed, that is what the famous Jim McColl did. He came into the Weir Group when he was 16; learned a trade; and later took an engineering degree and then a masters of business administration at the University of Strathclyde so that he could go up into management. These things are possible; in fact, as I point out in the report, companies such as KPMG and GlaxoSmithKline are coming to schools and saying to pupils, “We will pay the £9,000 a year to put you through university”—I know that education is free here; I am talking about England—“but we want you to work with us for two or three years after you graduate.” I think that things are changing, with companies taking youngsters on and allowing them to take degrees later if that is what they want to do. Nevertheless, I agree that, with the other 50 per cent of the population, we are not doing enough to say, “Listen, guys, it is just as important for you to go out and do useful work,” and to ensure that what they do is valued by society.
Elaine Murray: My question leads on from that to an extent. I know that your remit did not cover graduate unemployment, but the fact is that the large numbers of graduates who are not getting into the careers that they want are taking jobs for which they are overqualified and others are left unable to access those jobs. If an employer asks applicants, “What did you do when you left school?” and the choice is between someone who went to university or college and someone who has been unemployed since he left school, the latter has little chance of getting the job. If we do not have the right employment opportunities for young people right across the piece, some people will get squeezed out of the employment market altogether by others who have a portfolio of work, even if they are overqualified for the jobs that they have had. I got quite cross with a member of my party in the Westminster Government who responded to the problem by saying, “Oh, well, in South Korea everyone who works in a shop has a degree.” That is not the issue; the point is about having appropriate jobs and the appropriate amount of skills.
On the back of that, we have, at a time of high unemployment, a Government that is making people work longer. In fact, the other day, I had a letter telling me that I had to work until I was 66—and if the good people of Dumfriesshire decide that I should, perhaps I will. The retirement age is being raised all the time, so a load of older people are still in work. Personally, I believe that the Government is doing that because pensions are more expensive than jobseekers allowance, but it is an extremely short-sighted policy when large numbers of younger people are wondering why the hell they bothered going to university or college and many other people are just not able to get jobs. That is perhaps a bit outside your remit, but that is my first comment.
Lord Smith: It is outside my remit, but I must agree with you. It is very sad. As university chancellor, I biff them over the head as they get their degrees and wonder what is to become of those magnificent, highly educated young people. When I give them a talk about the world being full of promise, inside I am unsure that they are all going to get jobs.
It is an issue, but I am not sure what can be done about it. It is outside my remit, but it is something that I think about a lot. Should we limit the number of graduate places to ensure that we are not producing too many graduates? I disagree with that. It is wonderful that pretty much anyone can now get to university if they really want to and they are bright enough to pass the exams. That was not the case when I left school or when my father left school. He was just as bright as I would ever be, but there was no chance of people such as him getting to university. I do not want to see the pendulum swing back the other way so that universities become elitist. Nonetheless, it must be crushing for graduates to leave university and end up stacking shelves in a supermarket.
I agree with you, although I do not know the answer or what the correct balance would be. I would not want universities to close just because we feel that there is an inefficiency in the supply and demand.
Elaine Murray: The other side of the argument is that the economy needs to grow to provide jobs for the skills that exist, so we should look at the types of jobs that we are trying to stimulate in the economy.
Lord Smith: Absolutely—that is part of it. It is all very well doing these things and trying to have pathways into work, but the economy must grow and we must have policies to do that. I will be 68 this year and I do not want to be compulsorily retired as chairman of one of these companies—one day, the board will turn on me.
Elaine Murray: I have a daughter with two degrees who works in New Look, which is one of the reasons why I feel strongly about the issue.
Let us move on to a slightly different issue. You have talked to us about young guys—a young guy here or a young guy doing this or that. Is there a gender issue that we need to consider?
Lord Smith: It is both genders. I understand that, nowadays, “guy” is a non-gendered word. Coming from Maryhill, in Glasgow, and having a limited vocabulary, I grab any word that I can get. I am talking about females as well.
There are other issues with youngsters. There is a project in Paisley called Paisley threads, which tries to help. Young girls get pregnant—that does not happen to boys. In fact, the boy could be off down the road, free as a bird. That is a problem because some of those youngsters are in the middle of courses at college or university, and their careers are sometimes destroyed because of a baby. They need to think about childminding, accommodation—they cannot stay in student accommodation with a child—and so on. A lot of the young women get into terrible trouble, and they are bright young women—okay, they got pregnant, which was maybe not so clever. The Paisley threads crowd work very hard to make sure that the young women get childminding so that their course is not interrupted.
The issue is not gender specific at all. You might be more up to date than I am about the numbers, but something like 40,000 youngsters are in the NEET category.
Lord Smith: It is pretty much evenly balanced between male and female.
Elaine Murray: It is sometimes reported that the education of young men at school is an issue and that there are particular ways in which the education system does not cater for the needs of young men. I just wondered whether the situation was a reflection of that.
Lord Smith: There is a bit of truth in the role-model idea. Maybe there are a lot of female teachers and the pupils do not see many men doing anything useful.
Elaine Murray: Perhaps the curriculum does not value the skills that some of the young men have.
Lord Smith: I think that young guys need male role models—people who go into schools to talk to them about what they do for a living, so that they can listen and be inspired. There is an element of that, but the situation is pretty evenly balanced in the category that I am talking about—16 to 19-year-olds. It is not that it is all boys that we have given up on and that it is okay for the girls, as they get through somehow. That is not the case at all.
John Mason: I think that we have established that I am an accountant.
John Mason: I’m not apologising.
My question ties in with the point that you made about KPMG and GlaxoSmithKline. When I started off, it was a fairly new idea that practically all qualified accountants were graduates. Since then, the same has become true of nursing and a number of other jobs. The expectation is that graduates will be recruited, who will go on and do something else. A lot of us have assumed that that was basically a good thing from the point of view not just of the individual but of the economy. Now we appear to be moving back to taking youngsters out of school and training them, regardless of whether they get a degree. From the point of view of the economy, is one way better than the other, or does it not matter?
Lord Smith: I know some of the best accountants. When I came through, almost no one did a university degree followed by a shorter period of accountancy training; it was a five-year course. I reckon that the idea was that having to work hard for five years made you a better accountant, but I know some terrific accountants who did not follow that route. That applies to a lot of professions nowadays. Of course, the practical bit is important as well. Doctors do not get to be doctors simply by doing a degree—they are not sent out with scalpels as soon as they graduate; it is seven or eight years before they are let loose on the great British public. It is horses for courses.
All that I am saying is that, in an effort to get talent, many companies are coming to youngsters and asking them to be part of their training scheme. They are offering to look after those youngsters during their studies, provided that they agree to come and work for them. They are saying, “We need good young talent. We’ll educate you as we go. We’ll provide training. We’ll send you on external courses.” It is just a trend, which is to do with youngsters having to pay £9,000 year—I realise that I am talking about England; there was a debate in the House of Lords the other day in which Michael Forsyth brought up the idea of changing the law up here, but the proposal was defeated. Companies are taking on trainees who will be those companies’ graduate trainees and whom they will provide with finance. It is a consequence of youngsters having to pay fees. Employers are asking what the way through that is.
John Mason: Switching to the other end of the scale, I made a speech in Parliament—it was not one of my best ones—about my experience of trying to take on a youngster. I will not go into all the details again.
John Mason: I am afraid that it was not. It made it much more real to me what an employer—especially a small employer—has to do. You gave the example of SSE and the older guy getting the youngster out of bed. That was great, but for a smaller employer, the risk is bigger. If you have only two people in your office and one of them does not turn up, that is a huge problem. Are we providing enough support for smaller employers? That relates to the rural issue, but it does not apply only to rural employers. Is that an area that we need to work on?
Lord Smith: Yes, you definitely do.
There is good and bad in that. If we are talking about a sole trader or a two-person company—I am being careful about using the term “guys”—the upside is that the person whose business it is will spend time in the van with the young guy talking to him about the work and telling him about the customer they are going to see, and the youngster will absorb all that stuff. The downside of it is that, if the youngster is not ready for work and he does not turn up or his attitude is wrong, support will be needed. A sole trader cannot turn to an HR department, as we can in SSE, and say, “Look. There’s an issue here. Deal with it.” We employ 23,000 people. Companies such as ours have big, powerful HR departments that can get people to deal with such situations, but that is difficult for a wee sole trader in Gala to do. The upside is that small employers will provide one-to-one mentoring. Some of these people are terrific at that, with the result that the youngster learns their trade beside the master—or mistress.
The other side of it is that support is necessary. There are many schemes. I am trying to remember the name of a building scheme in North Ayrshire—I think that it was called youthbuild. I cannot remember whether Barnardo’s was involved in it, but organisations like it were. People in Aberdeen Foyer, for example, do terrific work in the area. They prepare people for work and supply a backstop. Such people put people out to small firms and, if something goes wrong, they can simply phone and a mentor guy from Aberdeen Foyer, youthbuild or wherever will come in and deal with the youngster and try to get them back on track again. I keep stressing that it is dead easy for us to say, “Well, you know, they’ve got a job now.” However, people go back home to parents and grandparents who do not understand why they are doing it all on benefit. If a young guy has a hard time at work, who does he share that with when he goes back home at night? No one listens.
John Mason: Absolutely. I completely agree. The issue is the scale of the support that is needed. My experience is from the Clyde Gateway area, where there was a pot of money. A group like Barnardo’s—I have forgotten its name—gave support, but it became obvious that the need for support was huge.
I know of another local example. The mates of a youngster who was taken on by a company went up to him at lunch time and mocked him publicly because he was working, so he did not go back. Getting some youngsters out of such situations is a matter for the long term.
Lord Smith: It will, but we are not going to walk away because that is difficult. Many voluntary organisations do a tremendous job.
John Mason: So we need more resources for those voluntary organisations. Is it key that we should somehow support them better?
Lord Smith: Yes, but target the resources, for goodness’ sake. Aberdeen Foyer has 52 sources of funding. People say, “Let’s call it buildit, Foyerit, Aberdeenit or something. There’s a three-year programme and we’ll put the funding up.” They do not say, “Let’s give more money to existing programmes.” There always has to be another source of funding, such as European funding. If my treasurer or finance director in Weir Group turned around and said, “We have 52 sources of funding,” I would fire him. That approach is so inefficient.
There are other areas in the voluntary sector that we should consider. There are terrific people in the voluntary sector, but sometimes they cross over. Again, I cannot remember the name of the organisation that I am thinking about, but it includes people who are very, very good at dealing with young offenders, yet there are other organisations taking on young offenders. Should there not be a bit of rationalisation? When people are volunteering, it is very difficult to say to them, “You’re not allowed to go beyond that brief because someone else is doing that.” However, the voluntary sector could perhaps be doing a wee bit better in relation to funding and avoiding overlaps. Sometimes it happens through local authorities. The point of delivery exists, but a voluntary organisation is doing it. Voluntary organisations need more support but, as I said earlier, we need better roads, better universities and better skills as well. I do not know how these decisions can be made. They are very difficult.
Paul Wheelhouse: I will be brief, as I am conscious of the time.
In the Borders, the textile sector has got its act together and companies are collaborating to provide apprenticeship opportunities for young people, and to share the risk in so doing. There are a number of examples of that approach. Previously, Cogent has done that in the oil and gas sector. Where there are highly skilled workers, there is obviously a risk that, when someone is trained, they will move on to a rival contractor. Therefore, companies are collaborating, sharing the risk, and, in effect, creating a pool of apprentices who can be shared in the industry. Has the group looked at such issues? Does that model have scope to be rolled out in other sectors? If so, are there any particular sectors to which it might apply?
Lord Smith: We have seen some of that. The textile industry in the Borders is a tremendous example. It used to be that the textile companies in Peebles did not speak to those in Hawick or Galashiels. Incidentally, the people did not intermarry either.
Lord Smith: It was a case of, “You’re not going with a girl from Gala, are you?”
Because a lot of them are under severe pressure—even the mighty Dawson International ended up in difficulties—it makes sense for them to collaborate if they can, so they do. I have seen the same thing happen in other organisations, such as companies that supply the health sector. If you look at individual sectors, you will find that employers are happy to collaborate. Amazing little initiatives are going on.
Willie Haughey, who is on the group and runs City Refrigeration in Glasgow, has some surplus properties—he would claim that they are not surplus—that he has fitted out for small businesses rent free. They are like incubation plants with dozens of one-man bands—one-person bands. Two or three of those start-up or very early-stage companies come in at a time and, by speaking to the guys in the next wee place, they may learn how they go about marketing, for example. The Willie Haugheys of the world also come in, wander around and give advice.
We are short of company birth rate in Scotland and that initiative is a fantastic opportunity. It is an example of a bigger fish allowing the smaller fish space. Perhaps, if he was able to rent out those properties for a big rent, Willie Haughey would not offer the same opportunity, but it is altruism after a fashion. He also has an insight into what new businesses are coming along.
It is not my job but, if anyone wants me to speak to businesses and get them together to do things, they will find that we are pushing against an open door. We could select industries or areas. For example, let us get several medium-sized companies in the Borders and say, “Listen, guys, if we train these characters, can we then share them around? We won’t steal from one another.” I really think that people would do it.
Angela Constance is going around speaking to many companies right now. You might find that more such collaboration comes out of that.
Paul Wheelhouse: Indeed. I hope that she will speak to the textile manufacturers in the Borders about that.
Lord Smith: When public sector organisations interface with private sector ones, they should tell them exactly what they want. The private sector organisations can always turn round and say that they will not do it.
As a business guy, I have found that, when public sector people come to me, they go round the houses and say, “Hi, we’d like a wee bit of support.” I say, “Just tell me. What is it? Do you want me to give them jobs? Do you want money, premises, coaching or mentors? Just tell me. By the way, if it is mentors, you can go and take a running jump, as I’m not prepared to do it,” or something like that. If they just spell it out in plain terms, they will get a quick answer and, if the answer is yes, it will happen.
The Convener: You make a really important point. A number of organisations contact me—and, indeed, other MSPs—and, when I ask them what they want me to do, they say, “We just want to raise your awareness.”
Lord Smith: I would say, “Okay, I am aware. Can I get back to making widgets now?”
The Convener: They do not seem to want me to do anything. It is a tick-box exercise that wastes my time and theirs.
Members have exhausted their questions. Would you like to make any final points to the committee?
Lord Smith: I do not think so. I am passionate about young people in the NEET category. I hear what Elaine Murray said about graduates. There are real issues in that, but young people who are NEET are almost a forgotten element. They are not forgotten, but they are very likely to be crowded out by graduates. Let us find things for them, for goodness’ sake. If they are not given employment, education or training with a purpose—I do not mean that we take them off the streets for the sake of statistics, give them something for two years and then put them back out on the streets two years older—we will produce tens of thousands of youngsters who feel utterly useless. That is not good for them or us.
The reason why SSE and other companies get involved in that policy area is that we have employees and customers in the community—that is where we get our employees from—and they have relations, grannies and children in the community who want to walk home safely at night, to have a decent education or to go out dancing in that community. SSE has 23,000 employees, and 100,000 people in that community might be directly affected. The people I am talking about are in that community and, if we do not watch out, we threaten ourselves. A company has a licence to operate only if it works within the community. If it does not do that, it does not have a licence any more.
The Convener: Thank you. That is food for thought. That was a very interesting evidence-taking session.
At its meeting on 14 March, the committee agreed to take the next item in private. It also agreed at the beginning of this meeting to take items 5 to 7 in private. Therefore, I close the public part of the meeting and allow a few minutes for witnesses and members of the public to leave.
Meeting continued in private until 12:22.