Committee for Employment and Learning

Thursday 22 June 2000

MINUTES OF EVIDENCE

Members Present:
Dr Birnie (Chairperson)
Mr Carrick (Deputy Chairperson)
Mr Beggs
Mr Byrne
Rev Robert Coulter
Mr Dallat
Mr R Hutchinson
Mr J Kelly
Ms McWilliams
Mrs Nelis

Witness:
Mr J Simpson

The Chairperson: We are delighted to have John Simpson here to give us an overview on issues relevant to the enquiry which we are now beginning on the training system, its impact on the economy and the effects of university research on the economy. A biography of John is in your packs and, in a sense, I don't need to say any more, it commends him massively.

You are very welcome. Do you want to say an extended piece at the start or do you want to go straight into questions?

Mr Simpson: May I just enter a small paragraph?

The Chairperson: No problem, go ahead.

Mr Simpson: First of all, thank you for the invitation. Also, thank you for arranging this meeting today at this time. As you know, there are other pressures on all of us and it is fortunate we were able to end up with this particular timing if we are to do something before the end of the month.

The issue that you have set out to examine is, of course, a very significant one. I don't think I would be understating its importance if I said that it is probably the most important issue which will affect the economic progress of Northern Ireland in the next decade. I know there are many issues which are important, but over the last couple of years I have come more and more to the conclusion that the extra needs on the education and training structure are such that if we don't tackle them urgently we will actually frustrate the process of economic development in a way that none of us would intend. It is a highly significant issue. Your debate is taking place in circumstances where the economy is doing reasonably well.

The usual comments about the nature of the economy have changed. Who would have thought that we would have been talking about levels of unemployment, particularly short term unemployment, which are now nearly as low as we would expect in a prospering economy anywhere in western Europe? That means that something has changed. You may be tempted to conclude from that if things are going that well why not leave them well alone and allow the trends to continue? On that I have to say that I don't think the trends will continue if we leave everything alone. I suspect that we have been reasonably successful in the recent past because we are a low cost, low wage, relatively unskilled developing part of the UK economy. Those options are closing down.

The attractiveness of Northern Ireland as a low cost centre with people available at relatively competitive wage rates is not something that will continue nor is it something we would wish to continue. We therefore have to get into a position where we are talking about higher value added, we are talking about a higher proportion of people available looking to contribute to that, having a greater range of skills. If that isn't our agreed consensual approach then we need to debate further and see why not because it certainly comes through very strongly to me.

There are other features which apparently contradict the story of a relatively successful economy. Look at income levels in farming, look at what's happening to food processing in terms of competitiveness and profit margins - it is very worrying - and look at what's happening to the textiles and clothing sector where probably in the last five to six years we have lost a quarter of the employment. We are also likely to go on losing employment in the building sector in its present shape. Then come to heavy engineering and you know the questions of whether or not we will continue in shipbuilding and what form of shipbuilding. All of those you could put together and say: "why are you talking about success when you can list that catalogue of problems?" I think this does illustrate what some people would call a two-tier economy. I don't think it is as distinct as that, but we have a number of issues which are going against us as well as going for us.

We have a number of successful parts of the economy. We have, for the moment, the construction sector doing well, we have the software and ICT sector doing extremely well despite one small hiccup last week which I think merely illustrates that there are risks in all of these things. The general message is that it is an expanding sector and has enormous potential.

There are sections where we need more skilled people. If I may simply add to that, we tended to think in the last decade of the public sector employing fewer and fewer people. The usual assessment is that the numbers will reduce further because, all being well, we will employ fewer people on law-and-order type matters. A very significant change that is now happening is that resources are being made available to allow a real expansion in health and education, and the level of that real expansion will mean that we will need more skilled people.

There are indeed critical issues as to whether or not we have got the right levels of training for particular professions related to health care, but not so much for education. We therefore need to look to expansion. We do have, at the moment, growing evidence of skill shortages, not necessarily at degree level, but across the vocational sectors. I think that is a critical issue which your Committee is bound to debate further as you develop this enquiry.

You have set yourselves a very broad ranging enquiry, extremely broad ranging and I suspect that once you define for yourselves what you think the parameters of that debate are, you will probably wish to focus more closely on some issues which will emerge from the discussions that you are about to have.

The Chairperson: Thank you very much, John, that was very useful. Are you happy to take some questions?

Mr Simpson: Yes.

Mr J Kelly: Good morning, John. It is nice to have you here. I have followed your political, social and economic comments over the years with great interest. I think you have made a great contribution to political and economic life in general for the community. I was interested in your comments about how we have come to be an unskilled based economy from a very highly skilled economy down the years. What do you think we should be doing in seeking finance to replace declining industries such as the shipyard, aircraft and linen industries or to put in place a new agenda?

Also, I know it is unrelated, but I think that education is a very important part of our lives and I would like your comments, at any stage, on how you feel about the funding of education.

Mr Simpson: I'm not sure I am able to answer all aspects of that to your satisfaction. You can come back with supplementaries, but the thesis focuses on the way in which the skills mix that we have been relying on is changing. We still have and we are enhancing the skills mix we need in the aerospace sector and that is one of the plus features of what's going on around us. It is quite significant that Bombardier has felt it a critical enough issue to set up its own training centre. It sometimes refers to its own "university training centre" in Interpoint. A big firm can set up this sort of specialised training centre and gear a whole organisation to it. That sort of option is not open to the firm that employs 100 or 200 people and therefore the public sector education and training systems have to do more.

The way in which skill demands are changing means that we need a very much more developed set of ideas as to how the education and training sector responds. I don't want you, at the end of my discussion, to think that all I'm interested in doing is training people for jobs. I am interested in training people for jobs, but I do know the education system serves a much wider purpose.

You will read in all the various documents, time and time again, the statement that the education and training framework must take more account of the needs of the economy, and we have the education interests sitting on the other side trying to respond. The actual mechanisms for response are, to be polite about them, woeful. If we are going to have the opportunity to develop higher value added jobs, they are going to need higher skill training and we are actually going to have to put ourselves in the position where we don't nit-pick about whether or not we are training the right numbers to the nearest 10 or 20. We have to take a radical look at this for an up and coming generation, and indeed some of the adults who are prepared to engage in this as well. We need to provide the opportunities and a series of incentives for more people to become involved. We need a big game plan and we need to tackle it coherently.

The statements in 'Strategy 2010' on what the education and training sector should do are fine in principle, but they stopped where they should begin. The timetable that they give is unrealistic. No arrangements have been made to make it happen, and there is no clear statement of who has to do it!

Mr J Kelly: Thank you very much.

Mr Dallat: John, delighted to meet you. Many of the jobs in the future will continue to be provided by small businesses where the resources and the opportunities for in-house training are often inadequate. What incentives could be used for the benefits of both the small employers and their employees which would ensure the prosperity of this important sector of our economy and would, at the same time, add to the skills which you quite rightly highlight?

Mr Simpson: It is an important issue. We all know that we only have about 200 or 300 businesses in Northern Ireland which employ more than 200 people. We are predominantly a small and medium sized employment economy. Part of the answer to your question has to be that we have to have a clear idea as to what the education and training system should do for everybody. I exaggerate slightly to make the point, but there is a temptation to say: if employers want skilled people why don't they train them? They are the ones who are going to make the profits, they are the ones who know what they need, let's give people the basic 3 R's and they become available in the labour market and the employers can develop their particular needs.

That, I want to suggest, is not adequate. First of all, it is no longer the 3 R's; do we refer to the 4 R's when we talk about Information Technology, even though there isn't an R in ICT? The basic competence for a teenager that we now would like to see has changed. We need to have a clearer concept of what the education and training system should offer. Then employers will adapt the skills of people they recruit to their particular needs. I have no doubt about that. But what we need to do is in the Further Education sector. This is where I think the greatest weaknesses are. In the Further Education sector we need more coherence because this sector is providing for many thousands of younger people who are in their late teens, early 20's, and many of those are the employees that are becoming available to those small businesses.

We have to ask small businesses if they are able to recruit people with the basic competences that they need. The short answer to that must be at the moment: no, they are not able to recruit the competencies which they need.

This Committee may have occasion to look at the outcome of the literacy survey that was done recently. I don't know whether Members have looked at it already, but we congratulate ourselves on the high proportion of young people who go through the 'A' Level route, to use a shorthand. We only too infrequently acknowledge that a very high proportion of the younger people who get to the position of needing to find jobs and look after themselves actually have very little in terms of qualifications - it is too high a proportion. Equally within that there is a very high proportion for whom the education system is failing the 3 Rs never mind the fourth R.

The education and training system should develop its concept of generic skills, meaning both education and vocational ability, to the point where people were as well prepared for as wide a variety of types of employment as is possible. There is a point at which a skill is specific to an individual employer and when that is so, the employer has to help as well.

Can I use that to add one further thought? If Northern Ireland is to get its momentum going in the next decade, one of the most important incentives to new enterprises, either coming in or being born from within, is that the people that are ready for those enterprises should be well prepared for them. Consequently it can be an important industrial incentive that we actually say to companies coming in: Instead of relying on you doing all the training we, as a society, will do it. Instead of talking about capital grants and marketing awards we should be at least significantly contributing to anticipating the skill needs of these businesses.

The provision for that does exist, the Training and Employment Agency has its company development plan. We should spend less on capital assistance and more on human skill development.

Mr Dallat: Thank you.

Ms McWilliams: Thank you. You are very welcome John, it is good to be working with you again. One of the things that strikes me is that in terms of Northern Ireland and our education system, and this is a very big issue that we are going to be looking at, is the distinction that we make between academic and vocational skills. Have you knowledge of how it is done elsewhere? Certainly the Germanic model is one that people are putting forward and talking about and constantly the argument is, and you have made it yourself, that there's a growing level of shortages in the vocational sector. Obviously we have success stories, but not sufficiently successful in terms of applying what is needed out there in terms of demand and what we have got in supply. How do you think we could address that and who best do you think we should look at in terms of what may be good practice elsewhere that might be possible, not to transport, but to amend or incorporate in some way into our own system?

Mr Simpson: Thank you for that very difficult question. There isn't an easy model to pull off the shelf to cope with our needs. We have to distinguish between what the education system provides for people at the point of recruitment and what is expected from employers once they have done the recruiting and what they will do inside the organisation. We have to find our own way, almost because of the last point I was making, which is that we have to use the advanced vocational training system and, taking it further than firms might expect elsewhere in Europe, we have to develop it and use it as a selling point.

There is, at the moment, a model which is trying to put vocational skills into the same structure as academic developments. I am much more inclined to the view that, whereas there is a need for an acceptance of an equivalence of status, and you and I would not be at odds on that, I think there is also the need to avoid trying to merge the two as if they actually did the same thing.

The more that we try to merge these, the more we will do damage. We have to realise the diversity of purpose and that the notion of recognition is fine but the notion of equivalence to the point of saying that is the same as - it is not the same as and won't be. But I haven't got a ready answer, Monica, to your question on particular models. We do need to re-examine how far we can create a system which gives the basic range of qualifications to everybody getting to the age of 18 or 19. At the moment we tend to think that after the age of 16, other than those who are going to higher levels of education, they can find their own way. That clearly is inappropriate. We ought to know what's happening, why it is happening and to know how we influence it and in terms of Further Education I would feel that we don't have an adequate feel or influence of what's the answer.

May I enter, Mr Chairman, the caveat that although I serve as the Vice-Chairman of the Consultative Committee on Further Education, I speak this morning on a purely personal basis.

The Chairperson: This is a crucial question. Do you feel that perhaps we have gone too far in terms of increasing the age participation going to Higher Education, going to university? We are oriented very much towards the American model. We now have roughly 45% (and the Government wants to raise this to 50%) of 18 to 21 year olds going to Higher Education, and to some extent people, as you were hinting at earlier, are going through Further Education as a step to Higher Education. Have we gone too far and are there problems?

Mr Simpson: A subjective opinion from an external observer: there is a danger that we will go too far if we haven't already gone too far. I think the reciprocal of your question really is this: if we had an adequate appreciation of what should be happening in Further Education, the bias in the system would be removed which says the academic ladder is the better and more successful route whereas on this other ladder you are not sure whether the "rungs" are really safe. We have to have this broader ladder to the Further Education sector in which young people can then make an informed choice.

At the moment I would describe the academic ladder as the one that has an automatic escalator. If you can do A' Levels, you do 'A' Levels if you get the right grades you go on and use them, because why wouldn't you, what else would you do? I don't know if it's controversial to take that view. In the room there are those who are better informed on this than I might be, but I recall, in the days when I was dealing with undergraduates in their early years, asking myself about the end of their first year, were they wise to let the system suck them in? It gives you an answer when I use the phrase 'suck them in', doesn't it? I used to reckon there were probably in any large group, about 10% of those teenagers who, if they had seen and had been attracted by a wider perspective of what was available, might not have done what they were doing. Of course, they can get very bored then.

Rev Robert Coulter: Some years ago when I was teaching in Further Education I was asked to take on a class of fabrication engineers, trainees, some of whom couldn't spell their middle name. We were having a general inspection and the Inspector criticised very heavily that particular class because I hadn't been teaching them Shakespeare. Allied to that, is the Victorian attitude in many of our grammar schools where young people are directed specifically to the professions rather than to industry, and the problem between the upper echelons of excellence in education, thinking only of the empirical attitude to the syllabus rather than the essential, individual needs, how do we begin to redress that balance?

Mr Simpson: I would offer one short answer. What we are offering, beyond getting the basics of an education system in place, has to be relevant to the person and to his well-being for his working career as well as everything else. Suppose you had decided to start with a quotation from Hamlet each day, would it have been relevant and would it have helped them? They might have remembered the quotation, but it wouldn't necessarily have done what you were looking for. I suspect that I would be condemned for being the philistine on this. I would answer your question by saying: test all the things that we are thinking about in terms of relevance both to the person in leading a full life and to his leading a life which gives him the possibility of a full income. For those who keep saying that we should stop emphasising this economic aspect of education, I have to say that I'm not going to deny the wider discussion, but I do have to emphasise that the economic aspect is the area in which we are failing.

Mrs Nelis: Good morning, Mr Simpson. You spoke about the state of the Northern Ireland economy, you talked about the decline of the traditional industries - farming, textiles, heavy engineering, and then you looked at the present and what might be the future. I represent Foyle and we have the highest long-term unemployment. To bring us up to the Northern Ireland average we need to create 12,000 jobs in five years - we have lost 3,000 in the last two, most of those are around the traditional industries. I met yesterday with a factory of 130 workers who have been on short-term working since February. It doesn't look as if this factory is going to survive either. Most of them are working for about £50 a week, if you take the combination of what they are entitled to on state benefits and short-term working.

It is absolutely essential that we look at the future of our young people and how education meets their needs in terms of training and vocational training. I taught literacy in 1974, and we had a problem then. We now have computers, and we still have a problem. There is something to be said for the state of our education system when our children go into school quite literate at five years old and come out after two levels of education with a very poor command of the English language. I think that is an ongoing problem that no one has addressed.

However, I want to talk in terms of age, and in particular about skilling and retraining of people in the traditional industries who are losing their jobs by the thousand - how can education meet that? I'm thinking in terms of the traditional industries, where you talk about decline, and the public sector reduction in law and order. How are we going to meet the training needs of those people. I talked to LEDU about re-training a factory in Derry that closed two years ago and of the 170 work force LEDU only picked up on 40 for re-skilling and re-training. I think that is a very important question that needs to be addressed and is side lined.

Mr Simpson: I'm not going to disagree with the thrust of the way in which your argument is developing at all, but I begin to hope that there are answers. Take your particular location, you have one of the most ambitious and go-ahead colleges of Further Education in Northern Ireland, which, as you know, has got its PFI building programme underway.

You illustrate a couple of points that I would like to underscore. First, there is a significant need, and we mustn't lose sight of it, for a system which copes with adults where job change becomes unavoidable or necessary. To some extent we will try to avoid the problem because we will have new policies for textiles and clothing, but we cannot behave like King Cannute. Is there the right provision for adults? This takes you down the route, which I'm sure you will want to explore further with the Department, of what are we doing about lifelong learning, its phrase, which is synonymous with the problem you and I are exploring. Obviously, that has to be a fairly significant dimension in the Further Education sector and, to some extent, the Higher Education sector. Don't ask people to make too big a jump, the provision area where you can cope with nearly all abilities is in Further Education.

You asked what we should be doing. There is a tendency to say: "Let's think about it." To take a hi-tec example, what does Seagate need to get people to come to work for it, or what is it that some other firm needs? In a situation where large numbers of people are losing their jobs because of industrial change, I don't think we will be able to design tailor made re-training programmes specific to new skills for a particular new firm. I think what we have to do is to offer generic opportunities.

Some of you are involved in training for particular groups and giving them new opportunities. You can offer them, for example, a basic introduction to information technology and use of computers and give them new skills. You may say "we don't know who you will work for but you will be better equipped and you will be challenged."

Too often the question is posed as "we, in Further Education, want to know from you, the business community, what you want us to do." I think that is the search at the end of the rainbow. In our education and vocational training we have to say that here are skills and aptitudes which, if we make them available and encourage people to adapt, they will then be better placed to fit into the way in which the job market will change.

My suggestion to the Further Education sector would be "Don't tell me that you have been down the road to talk to the main employers; you just want to provide what they want. Ask yourselves the question: is the experience of what they want informing your judgment, but are you then offering a width of preparation which is going to be useful in other ways? Some of them will be able to say that so and so will be able to work for Seagate, and that so and so will be able to go and work for an IT company. Fine, but don't ask for that; don't make that the formula which constrains what you do."

Mr Byrne: Again, welcome John, it is good to see you. You have made reference to some of the themes that have been developing, in particular this almost "shoe horning" everybody down the academic 'A' Level route. The Chairman made reference to the fact that we have been increasing the percentage of people at 18 going on to Higher Education. That's largely governed by the common curriculum which is rather academically based. In other words, every pupil in Northern Ireland, whether in secondary or grammar, are all following the common curriculum. I believe that the common curriculum does not meet the needs of all of our students. In the past we did have what I would call practical technology subjects   - woodwork, metalwork and, in particular, technical drawing, but they are no longer there.

There was a certain type of pupil that was not book centred, but had practical application, and very often he could develop competency skills from that of a generic kind which I think did serve the industry needs in the past. Have you any comment about the common curriculum in relation to that? In the past we also had apprenticeships which were maybe between three years and five years. They were very specific and very narrowly focused, but they did have a quality of proofing about them that had a mixture of theory and practical, and they were tested largely through City and Guilds. I think anyone that did them would have gained a lot from it. There are big shortages, in my opinion, at technician level. Sometimes I think that the general view that IT training is the be all and end all is mistaken.

As someone who was 20 years in FE, in my opinion there is too much talk about being an IT operator at a very superficial level, or the other extreme of software engineering where you have to be a high flyer, but there is a vast range in between which requires practical knowledge and application alongside basic competencies of numeracy and literacy. As I see it, we are hitting big bottlenecks in that practical technician level. If you talk to many firms they say that they can't get people that have that competency.

Lastly, we now have modern apprenticeships and New Deal. I would like to ask John if he has any sort of qualitative assessment to make of them. I would agree that we have had people of low skills and a low wage economy, but in the future to compete as a bit region economy we have to offer some competitive advantage. It is no longer going be one of low skill and low wage because the modern industry requires a much higher level of skilling, more value added and therefore I wanted to hear a little bit more about that.

Mr Simpson: Well all I have to say on your final point is yes, I agree.

Mr Byrne: And regarding a qualitative assessment?

Mr Simpson: The earlier part of your comment in terms of basically ensuring that people gain a range of skills and that they are verified is important. I think that the old apprenticeship system is giving way, but it mustn't give way in a fashion which takes us away from validation and competence testing. Whether that emerges now as NVQs, which is the likelihood, or whether it draws an emphasis on part-time release so that validation takes place say in an FE college, all of that is something we want to underpin and ensure doesn't diminish. The FE colleges do have the competence to gain the confidence of employers who are offering part-time release. That, I think, is a critical issue.

In terms of the whole range of issues that you have raised including generic competence, those are the issues that are underpinning the philosophy that I see emerging. If I can broaden your question slightly, I think there's an uncertainty on how we are going to influence the validation processes and content of what Further Education institutions are doing.

I was involved in a discussion about this the other day. The Further Education colleges at the moment are now incorporated and are freestanding. They manage their own budgets and have a profit and loss account. That releases in them a series of incentives to make sure that they use their funds to get results which are in keeping with what their college programme suggests. I know there are some challenges, but these need to be done fundamentally. We need an overall college development programme which fits the general needs of Northern Ireland. Where is the composite which brings together the college development plans? To which the honourable answer is: "The colleges are doing their own investment plan; it is not our business as the Department to try to make that into a macro view of what's happening." For example, although you were making an interesting comment about ICT, there is a major argument already taking place, which will go public shortly, about whether or not Northern Ireland is making adequate provision for ICT skills at different levels.

There is a view developing that we are doing enough and we don't need to do any more. Another view which I support is that we are well short of what we should do, but we need the debates and we need to be well informed about the outcome, because if we are underproviding we are actually saying we will put a bottleneck into the development of that sector which is why it is an important issue. But if you say to the Department "Tell me, what contribution are the colleges making to provision for Information Technology? They don't have a process that builds this up as a programme." The study that has been done actually shows - and this is an interesting side-effect - that a very large number of those who go to the colleges of Further Education to develop information technology skills go on to university. You may say that this is not a bad thing, but it does mean that the number coming out and available for what I would call technical support as opposed to professionally coming out at another level, is actually much lower than you would expect. But your point, and I'm using it with my particular emphasis in this area, is that we actually do need to get a hold on the totality of what the colleges are doing. If we treat them as 17 colleges, each free to do what it wants to do, responding to its own market place, then we would suspect that there will be a tendency to do the easiest thing, which is to keep on doing what you are already doing providing you get high enough figures of enrolments. That is not the right challenge for Further Education.

Mr Byrne: I agree there has to be a co-ordination of the skills vocational remit. There is going to be a merging of the training centres which will mean that there will have to be some sort of emphasis again on practical skills, particularly construction related skills. However, I would like John to comment further on these modern apprenticeships and the New Deal which we have heard so much about, but about which I have serious concerns regarding quality.

Mr Simpson: In terms of the modern apprenticeship, New Deal, I think it is early days, but what I have seen suggests that the first results are not meeting the original aspirations. We will all want to watch that carefully. I don't know quite what the conclusions will be and we need to wait for some more evidence before we decide whether that type of process is working effectively. I picked up one of the T & EA brochures the other day. It reads very well as a glossy, but the evidence that is coming out now is that it is not quite working out as they intended. I think we will take another day and have another look at it.

Ms McWilliams: Could I ask a supplementary on the New Deal? One of the issues that has concerned us too is the return of New Deal funding, and the Minister of Finance has just responded to me in writing saying yes, it is the case. I think it was approximately £7 million this year and we will continue to lose money out of that programme, in terms of it going back to the Exchequer.

Mr Simpson: Going back, but not using it?

Ms McWilliams: Yes.

The Chairperson: We have also had correspondence from the Minister of this Department on that subject and his assurance is that there has been no re-allocation of New Deal money to other areas of his departmental budget and also that money not used in any year will roll on into the next year.

Ms McWilliams: I'm aware, Mr Chairman, that it wasn't re-allocated to others. No, my question specifically is on the New Deal, that the bid that went in was too high.

Mr Simpson: The original targets were very ambitious and you are confirming this.

Mr Carrick: John, may I just tease out your statement regarding the provision of basic skills training up to a certain level in the generic sense? Probably beyond that there would be more specialised training depending on which industry, or niche of industry, you go into. On a practical level how do you see the interfacing between education, training and industry? Do you see formal mechanisms being developed so that we can have effective linkages, so that we can have a seamless supply through education and training into industry? This would enable us to have joined-up Government in education, particularly in Further and Higher Education? Are we identifying particular individual talents and skills early enough? Has this a role in the generic approach that you referred to?

Also, because of social or domestic circumstances, some children found themselves a victim of having to leave school at 16. Is the system robust enough and flexible enough to pick up those young people? Sometimes I feel that Further Education is for the middle class and that Higher Education may be for a mixture of middle and upper class. Is the working class properly factored into the system and is it getting a fair crack of the whip? And at community level, how are we going to feed into this joined up system?

Mr Simpson: There are three levels to the issues that you are raising, one mentioned briefly and I put it to one side. There is the question of the links between industry, education and training at the level which asks, do individuals get the right introduction and the right experience? That takes us into the activities of Industry Matters and similar organisations where I have been involved and it takes you into the activities of the Northern Ireland Business Education Partnerships, NIBEP, and the local versions. Those are useful in their own setting, but they are mainly orientated to practical experience, to people giving placements and offering one-to-one experience. That is fine. It is a very difficult thing to do because the number of employers who can actually co-operate is quite small relative to the possible demand. You tend to look at the big employers and say "We have hundreds of people who need a placement." But not all of them want to co-operate and not all of them can co-operate. It is a major issue at a practical level.

The second level is the issue of what we do for individuals enhancing their ability, to let them mature and develop. That, I think, is an issue for the local community, the local colleges and the better understanding of what's going on, because you are focusing on individuals and how you recognise talent and give encouragement. Then you go to the third level, which is the macro level, the link between business, Further Education and training. At the moment we haven't really got an adequate system. You read every now and again one side or the other saying "We must do better on this."

We commend bridging the gap between industry, Government and the Further Education sector. The trouble is we haven't actually managed to get on with it. What are we asking businesses to do? If we had business leaders in the room and we said that we were going to build a bridge between business, education and training, we would be saying to them: "Don't tell us particularly what your firm needs, although that must inform your judgment, but come in with an appreciation of your experience of business and industry and the way skills needs are changing." You say to the Further Education sector "Come into the room and tell us what you are doing at the moment and tell us what you can do to respond to this process." That is not an issue for one college with the local business community; it is an issue which needs a broader base. It is one of the major issues for the 17 Further Education colleges, but they need to have better co-ordination of what they are doing. Part of that co-ordination will be that they will be better informed by what business trends are, and they will then take the initiative to bring about change in each of their colleges. One of the worries is that Further Education colleges are very inclined to do next year what they did last year because that is the easiest thing to do. We have to move more quickly. Management at the college level becomes critical. It may have to make two or three people redundant in order to free up resources to employ more people. That is a challenge that has to be faced and can't be avoided. In fact, there are issues in terms of recruiting the right people to teach in Further Education. We expect people to take very challenging training roles in Further Education and we are modest about the rate at which they are paid. Maybe that is not within our remit, but if we want to bring about change to that sector there are issues there.

Can I put in an extra thought? Until recently we had the education division at Rathgael and the training division down in Adelaide Street. Logically that distinction never made a lot of sense. The new Department has to solve that problem. Some of the manifestations have been that the training aspect of the Training & Employment Agency has actually acted to fill gaps by its own actions in a way that it is pragmatic, and it is doing something, but the right answer in structural terms would have been for the training assessment made in the T & EA to be phased into the Further Education sector and for the answer to emerge in terms of the contribution of the Further Education sector.

You will be aware of the proposals that the T& EA financed to help meet some of the software industry skills. It developed the Rapid Advancement Programme. It has evolved as if the Further Education sector didn't have any contribution to make and it ought to have, it ought to be a key player. Instead we are going to commercial providers and saying "Please give us bids to provide this training and the T & EA will finance it."

Mr Carrick: I agree that we need this coherence and we need this co-ordination and collaboration and particularly I can think of three departments that that cuts across at the moment. Do you see a sort of streamlined mechanism to try and put this collaboration in place?

Mr Simpson: The Department of Higher and Further Education, Training and Employment, has to take the lead, and the Department of Enterprise, Trade and Investment has to play its role. One of the problems emerging from 'Strategy 2010' is that is very much a DETI perspective of life. They said of the Further Education sector that it needs to have a better relationship with industry and put on a timetable, of I think, 18 months. That was easy to say; that's a broad view from the high ground. 'Strategy 2010', is not a strategy, and it doesn't answer the questions in the area you are dealing with. It poses them, and there are issues for you to take further forward.

Mr Beggs: There seems to be general agreement with virtually everybody that there is almost too much focus on the academic for everybody and not enough recognition in society for those who go into industry or take up technical skills or become a bricklayer or whatever craft skill. Would you agree that one of the reasons for that is that society generally is not recognising the entrepreneurial spirit and the opportunities some of those skills can further develop? Everybody is thinking academic and not reflecting the importance that would be placed on technical skills in Europe or America, where, certainly in America, the enterprise culture is a driving force, and people recognise success, gained through whichever means and not just an academic route? How can we go about trying to change society through the Further Education colleges so that people give the appropriate recognition and subsequent encouragement to their children to take those technical routes?

Just to go on a little bit more, I picked up locally that there are technical shortages in some of the smaller firms certainly, again even a lack of people applying for jobs like training in bricklaying. We hear that in Dublin bricklayers are earning more than stockbrokers on occasions. That should be a job which should be highly valued, which obviously it is, as a highly skilled job with high remuneration. Yet for some reason people are not being encouraged to go into the job, because it is maybe wet or dirty or whatever, but there is a great opportunity there for people to earn good money and potentially go on and do things for themselves. So what do you see us being able to do in the Further Education sector to try and change that? Would you agree that we, if you like, must try and take a bias towards that technical craft route again?

Mr Simpson: Broadly yes, but, saving the superior judgment of your Chairman, the University process does tend to prepare people to be part of large organisations and for the professions. The entrepreneurial aspect of universities, particularly on the social sciences, tends to be relatively scarce, rather more maybe with the engineering side. In fact, the most successful entrepreneurs who can start small and grow tend to be people who haven't done PhD's, they tend to be people who have worked with their hands and developed skills and come from what you would call a blue collar background.

I remember doing a study of where the senior managers went from a particular firm closing in Antrim. You may suggest that those highly qualified people should be setting up new businesses, but it wasn't in their minds to do it. They had been trained to be contributors to a team management in a large organisation, and were frightened of trying to set themselves up in business. Of course there are exceptions, I know, but in general that doesn't happen. Northern Ireland does not have a good record in taking business risks. In fact, when you look at the creation and loss of small firms, we are much more inclined to hold on to existing businesses, but we have a very low proportion, compared to the other regions, of new businesses setting up here. That says something of an inherently small conservative society.

We did a review of the experience of firms in the Information Technology industry and asked them about the qualities of the people that had been recruited in the last year. The qualities were reviewed in terms of their technical competence, their personal skills, their enthusiasm and their business awareness. The feature in which they scored lowest, you have already guessed, was business awareness, which is quite remarkable. The average HND entrant to ICT type industry was a very low scorer. We used the scoring system which meant four was pretty good, three was marginal, two was poor and one was very poor. Of the group, the HND people scored 2.5, people coming as ICT graduates came at 2.5 and the non-ICT graduates came with a 2.3, in other words they were even less aware. It does bear out your point that business awareness, the notion of an enterprise culture, is going to be very hard to put in.

How do you put the incentive to develop your own business and to get business awareness and enterprise culture into undergraduates? It is quite difficult; it doesn't fit the circumstances in which you are giving them challenges in terms of academic ideas. If I were taking that particular group and said to them "I want you all to be enterprising and think of setting up your own businesses", they would look at me and say "What did you do? It is all very well you telling us what to do, but you didn't do it." It is one of the most fundamental problems. I only underscore the fact that this business of enterprise culture is something that we need to keep re-stating to ourselves and gradually find better methods of putting it into the education structure.

Mr Beggs: Just to come back, very briefly, to the point I was making, even at the Further Education college level there is almost the same problem. There is a direction just to get their degree and be a member of a big organisation rather than to adopt skills and look at least as an option at a small business or go out and get further experience and then out.

Mr Simpson: I will give you one other of my experiences. I chair a company known as the Emerging Business Trust which is available to offer loan capital and now we are venturing into equity. We are venturing into equity provision to help small businesses in Northern Ireland. I think we have over 200 small businesses on our books. These are people who, by and large, are coming at the enterprise culture with the right dynamic, right momentum and a few of them have higher technical qualifications. Many of them are coming at it because they have found a method to develop their own businesses. There is a section of the community that do want to develop their own businesses. From the Emerging Business Trust we are tapping into that. We haven't advertised ourselves heavily because we couldn't cope with this if it suddenly became too large a flow, but for the moment the evidence is that we are meeting a demand. Obviously it is a bit more of a risk for us because with a loan you have got security on assets, with equity you are playing a slightly different game.

I signed cheques earlier this week for three equity participation elements in small businesses in which the sums, to give you an order of magnitude, the sums in terms of equity were between £25,000 and £50,000.

Ms Nelis: Mr Simpson, I just want to go back and ask your opinion of traditional industries, do you believe they have been totally abandoned or are going to be abandoned, or is there a way that some of them can be saved? It seems to me that 'Strategy 2010', seems to be directed at IT and I think that there has to be some marriage. You can't abandon the traditional industries entirely. Some European countries who went through this before us have actually turned some of the traditional industries around and made them quite successful.

Mr Simpson: One of the best aspects of that document is the review of the different sectors. Of course, what has come across has been those that are doing well and gaining interest, but the review of what you call the traditional sectors is worth noting. It may be depressing, but it is not defeatist. There are significant problems with the making of clothing in large volume plants where, in fact, what has kept them alive has been large numbers of people doing semi-skilled processing in very large volumes.

This is exactly what the Far East and North Africa can now do, and in terms of world trade they are cheaper. The shirt industry has always been able to argue, reasonably persuasively, that the up-market design and high quality market won't shift because that is a different set of issues. I'm quite interested in the fact that the London Department of Trade has now taken an initiative in terms of the textiles and clothing industry for the whole of the UK, and the local version of this is trying to find out where the strengths would be and what should be reinforced because it is not a question of just abandoning the sector. There are going to be serious continuing problems and clothing is going to be the major casualty area. The food processing sector, for example, is going through a wobble but it won't disappear. High volume, low quality clothing will be a contracting market and that is one of the things we have to face. Where does the success of Ben Sherman come in today's circumstances when all around were going one way? What was it that the new owner brought to the party that has given him such a successful firm? He brought production, combining production locally with production from the Far East and North Africa. Has he got something in his formula that we ought to know more about? The Growth Challenge has got a textile sector, NITA, the Northern Ireland Textile and Apparel Association, and it is examining this, and that is the challenge to it. There are a couple of success stories around.

The Chairperson: I have a composite question in which I'm trying to sweep up some things which I think should be covered, but we haven't dealt with today. It is certainly no ill reflection on you because we have had an excellent consideration on training, but we haven't dealt at all with R & D and, in theory, that is also part of our enquiry. I suppose we might link that to any advice you give us as you hinted, I think, that our enquiry is very wide. Maybe you are hinting we should perhaps leave something out or put something in - have you any advice on that? Have you any comments on how devolution can really make a difference in this area, and can we do things differently from the rest of the UK?

Mr Simpson: There are difficulties. First of all with the width of your enquiry, you are either to be complimented or otherwise on being so ambitious. I suspect that when you review the things that people say to you, you may, as a first reaction, begin to reach some conclusions. They will point to issues which you should tease out a bit further. You will probably end up with a series of sub-divisions of your terms of reference. I presume you will be here for two or three years - you are not going to go away in the next couple of weeks, are you? The agenda will evolve over time.

Turning to your question on R & D. Most of the successful and interesting R & D comes from large organisations or from university laboratories. Where you have companies which are headquartered somewhere else the tendency is for the R & D work to be conducted elsewhere. The reverse of that argument is that this R & D is available for that company wherever it is and therefore if somebody is conducting R & D in, say, Glasgow for a company that has plants around Glasgow and here, you have to ask whether some of that R & D is influencing local plants? There is a weakness in the equation which says that our expenditure in R & D is low compared to somewhere else unless you re-weight it for the structure of your company. Even for an organisation like Bombardier, where would you expect its main R & D to be? We would like a lot of it to be here, but at the heels of the hunt you wouldn't fault it for having its main R & D in Canada. There is no easy formula to judge how effective this R & D work is.

There are things that can be done that are different. We do have the Industrial Research and Technology Unit which has a capacity to lend its efforts to encourage R & D work of local application. I think the lack of public awareness of what IRTU is doing and the apparently small scale of the work that it is doing is actually something that needs to be examined further  - shouldn't they be playing on a bigger scale and couldn't they be using their resources to enhance activity into Northern Ireland companies? I would like to see them do more. It takes you down the institutional road of asking: "Why do we have IRTU standing separate from the IDB? And what's the relationship with the Training & Employment Agency?" Our institutional arrangements are now plainly out of date and inappropriate. I am not one for moving the institutions around as if that made a big difference, moving the furniture, but I think you have to question the dynamic effects of the institutional arrangements.

If I may put a plug in for an organisation with which I was connected for about three years, one of the very important links for developing research based on new products has been the Teaching Company Scheme. I don't know how many of your members, Mr Chairman, have been in close touch with any of the companies and any of the university departments, that have used the Teaching Company Scheme. It is managed in Northern Ireland at a level which is more successful than many other parts of the United Kingdom, but it is a mechanism which allows a small or medium sized enterprise - or even a big one, but the emphasis is on small or medium enterprises - to link with a university department where there is expertise in its product, its marketing or whatever else it needs to do. It puts up a small sum of money to enable young graduates to be employed by the business, but to be supervised by the academics from the relevant university department. I saw this at work very successfully in a significant number of firms in Northern Ireland.

One of the unintended benefits of that scheme, because we tend to see it as being university research and expertise transferring to the small company, is a reverse flow. The university academics learned more about what they should be teaching because they saw the commercial application of what they were doing.

The Teaching Company Scheme is a very useful bridge between academic departments and businesses at the level of one business, one academic department. They get to know each other and you don't get a bluffer from an academic department who can't talk commercial sense because the firm will quickly push the academic to join in the commercial ambitions of the project.

Mr J Kelly: More a nostalgic, or even philosophical, observation but when I was young, maybe about the same time you were young, university education was the exception rather than the rule. If you were lucky you got an apprenticeship which was indentured and sometimes you had to pay for your apprenticeship. You went to the store first and you learned the nuts and bolts of engineering, then you went to the shop, but you had a journeyman. I don't know the derivation of the word journeyman, but he was a tradesman, not only would he teach you the skills of the trade, but he was philosophical as well, he knew about Shakespeare, so you were getting a really rounded education. We have missed all of that in the transition from craft to the academic, we have missed out on that round on education. It's how we get that link back to it again, I think it is a significant factor in our education that is missing.

Mr Simpson: That journeyman in today's terminology would probably have gone to University.

Mr J Kelly: Precisely, but what about the relationship between the student and teacher?

Mr Simpson: You now ask for your craftsman, your vocational training to take place with accreditation based in an institution or college, whatever it may be. You rightly say that the weakness in that is that the personal relationship which conveys the ethos of what they are doing as opposed to the technique is weakened, it is.

Mr J Kelly: Fair point.

The Chairperson: I think we have had over an hour and a quarter of questioning and discussion. It has been extremely helpful and we are very grateful that you could come at quite short notice. You have prepared yourself very well and brought a lot of documentation to bear on the matters arising. We may well want to talk to you again in the future as this enquiry proceeds. Thank you very much for coming. We wish you well on your many activities.

Mr Simpson: Thank you, Mr Chairman. I have enjoyed the experience so far. If I can be of help at another time let me know.

The Chairperson: Well, we may well wish that. Thank you.