Skills Training Agency (Hansard, 13 February 1990)

§ The Parliamentary Under-Secretary of State, Department of Employment (Lord Strathclyde)
My Lords, with permission, I should like to repeat the Statement made by my right honourable friend the Secretary of State in another place this afternoon about the future of the Skills Training Agency.
"The Skills Training Agency (STA) provides training through a network of 60 skillcentres. It has experienced considerable financial problems over the years. It has broken even only once in the last five years, with a trading loss of about £20 million in 1988–89. This was in spite of an arrangement, up to 1987, under which fixed amounts of training were purchased from the STA by the public sector. This arrangement was criticised by the Public Accounts Committee, and ended in 1987.
"In March of last year my predecessor announced to the House that he had decided, on the basis of a feasibility study, that the STA should 1272 be offered for sale. Throughout the sale process it has been made plain that the Government's interest is in receiving bids from those who wish to run a training business.
"I have now received advice from Deloitte Corporate Finance on the final offers received. In the light of that advice, I have agreed terms of sale with two bidders. Their offers together cover 47 skillcentres, plus the STA's head office, mobile training service, sales teams and colleges. The main successful bidder is Astra Training Services Limited, a company formed by a management buyout team in the STA head office. I am placing in the Vote Office full details as to which parts of the STA I propose to sell, and to whom, together with the Government's objectives for the sale.
"This is an extremely satisfactory outcome to the sale process. It enables the creation of a viable private sector network of training provision with good coverage of major centres of population in England, Scotland and Wales. Over three-quarters of the skillcentres will be sold on the basis that they will continue to provide training.
"This will also be the first successful management buyout bid in the Civil Service. The management buyout team knows the business, and has detailed plans, backed by professional advice, to develop training both for unemployed and for employed people in a way which responds to the needs of employers. Its plans include investment of over £11 million in the first three years, and opportunities for staff to participate more fully in the business through an employee share ownership scheme.
"The existing five regional offices, and 13 skillcentres, are not included in this sale package. The regional offices do not feature in the management structure envisaged by Astra, and were not part of its bid. The 13 skillcentres are poorly utilised, and at some, no training is currently taking place. I propose to close down the training businesses in these parts of the agency, and wherever possible the staff will be redeployed to other posts. Alternative arrangements will be made to allow trainees to complete training in progress.
"In addition to producing a substantial private sector training network, I expect the course of action I am announcing today to yield a positive return to the taxpayer. The sale of the training business will involve a payment from the Government to Astra of some £11 million. This is a price determined in the sale process after open competitive bids and subsequent negotiation. It reflects the costs of turning around a business which is currently unprofitable and creating training businesses with good prospects of viability.
"The sites of those offices and centres which are not included in the package to which I have referred will be offered for sale. Having obtained professional valuation, I expect the net proceeds from these sales to exceed by a significant margin the payments from the Government to the training business purchasers.
1273 "My officials will now consult STA staff and their trade union representatives on the implications of my statement for staff, including the measures I have taken to give effect to ministerial undertakings about pension and other arrangements for staff who transfer into the private sector. In due course I shall lay orders before the House to ensure that when the sales are concluded staff who transfer are protected by the Transfer of Undertakings (Protection of Employment) Regulations 1981.
"In conclusion I would like to pay tribute to staff who have continued to work unstintingly for the STA's success through a potentially unsettling period. For them, for the agency's customers, and for the STA contribution to our national training effort, the uncertainty of the recent past is now over and there are sound prospects for the future".

§ Baroness Turner of Camden
My Lords, I thank the Minister for repeating the Statement and for the clarity with which he did so. However, I am sure that he will not be surprised to learn that we on this side of the House find it less than satisfactory. It would appear that the Government are continuing their policy of distancing themselves from training and leaving it to other people. That is what is involved in the concept of employer-led training which we have discussed on innumerable occasions in the House.
The Statement indicates further steps in the privatisation of training about which we on this side of the House have expressed strong doubts. We did so when the last Employment Bill was before your Lordships' House when we said —and I say it again today —that industry training is an important enough matter to be the subject of its own Bill rather than to be tacked on to a Bill at a late stage in debate.
As we in the House already know, we lag far behind our EC neighbours when it comes to training. In Germany, for example, 70 per cent. of engineers have recognised qualifications compared with only 40 per cent. here. We train only one-third of the number of qualified electricians and technicians per head of population that they train in France. Only 15 per cent. of Britain's young people enter higher education compared with 45 per cent. in the United States and 38 per cent. in Japan. As everyone is aware, this country's managers generally have few professional qualifications. Moreover, we are in the process of dismantling or reorganising some of the structures that have worked.
We have discussed the Construction Industry Training Board and its future in the House recently, and its future is still obscure. The Engineering Industry Training Board has been superseded by another body which will be dominated by employers. I have still received no answers to the questions that I have asked about the future of special projects for women in engineering; nor do I know what will be the fate of future applications for money to the European Social Fund. The EITB obtained substantial assistance from that fund towards its special projects; but as I understand it the money is 1274 available only when there is some direct input of public money into training. The grant and levy system passed muster in that regard.
The Statement does nothing to allay the fears of those who believe that the Government are withdrawing their direct input into training. What is more, we appear to be paying public money to do so. We are selling the skillcentres but we are paying £11 million of taxpayers' money for them to be taken over. The withdrawal of government from responsibility for training has not worked in the past nor do I believe that it will work in the future.
What is to be the fate of the remaining centres? The Minister indicated that some of the centres will be sold. I should like to know more about what will happen to those centres which are being disposed of. Are they to be closed? What, if anything, is to take their place? Although the Minister has, rightly I believe, paid a tribute to the staff of the skillcentres, I should like to know a great deal more from him about what will happen to the highly trained staff in the skillcentres. What is to happen about their pension arrangements? They are being removed from Civil Service employment to the private sector. I should like to know more about that point. What support will there be for special projects when the skillcentres are transferred to the private agencies and pass into private ownership? What will happen about training for the disabled, women, the disadvantaged and ethnic groups? Privatisation is no answer to this country's skill problems and so I cannot welcome the Statement. I regret that the Government are moving further down the path of privatising training instead of making a much greater public investment in that important area.

§ Baroness Seear
My Lords, I too should like to thank the Minister for repeating the Statement. I believe that I am on record as being as keen as anyone in your Lordships' House to see a much better level of training. However, on this occasion I do not go the whole way with the noble Baroness, Lady Turner. My knowledge of what has gone on in the skillcentres suggests that for one reason or another —it may have been a lack of support and finance; I do not know the reason —they have not been as successful as they should have been. They have been under-utilised and occasionally they have undoubtedly not been up-to-date. I am not therefore surprised that the Government have decided not to continue with that form of training.
Of course I hope that there will be an increase and not a decrease in the overall amount of training after the change takes place. There are a number of questions about the Statement that I should like to put to the Minister. We are told, for example, that there were two bidders. Who was the other bidder? May we know? Were there bids from some of the successful and professional private training organisations? As I understand it, the sale is to the existing staff. As I said, the record of achievement of many of the skillcentres has not been especially outstanding. There may have been other bidders who would have done a better training job. The whole objective should be to obtain the best possible training available.
1275 Why have we paid £11 million of taxpayers' money? It seems very odd indeed having sold, in what is in fact a management buy-out, to the people who are at present running the organisation —so they will be the same people —because of the non-success of the concerns involved, and the fact that they need to put in £ 11 million over the next three years, to try to bring these centres up to any kind of modern standard of training. Are the Government providing them with all the capital they need to make good the inefficiencies which were there before? It seems an odd way of going about a management buy-out and getting rid of these resources.
Finally, there is another point. At one time —I have not checked whether this is still the case —there was a very successful unit which dealt with the training of trainers. If my memory serves me right, it was at Letchworth. The training of trainers is a matter of the greatest importance because training cannot be done properly except by people who are properly trained to do it; and one of the great weaknesses of modern training in many areas —I fear it will be a continuing weakness with the set-up the Government have supported through the techs —is if training is done by people who are inadequately trained to do it. That was an extremely useful unit. Can the Government tell us what has happened to it? For all I know it may have been closed down earlier, but if it has been we very much need another unit of the highest possible quality to provide the training for trainers which was provided by that Letchworth unit.

§ Lord Strathclyde
My Lords, I thank both noble Baronesses for their comments. I was not entirely surprised by the words of the noble Baroness, Lady Turner. I was slightly more surprised by the words of the noble Baroness, Lady Seear, and I very much welcome her support for this change.
The noble Baroness, Lady Turner, after 10 years of privatisation undertaken by this Government appears to be still not convinced that privatisation is sometimes the right course to adopt. The noble Baroness compared some statistics of the United Kingdom's record with our partners in the European Community and in the United States of America in training and education. I think that statistics in themselves are not necessarily enough: one has to look at the quality of the training and education on offer. That is of course exactly why we are going down this path —to galvanise employers to play a full part in training provision. We have done that through the techs, and the principle set up in the techs of employer-led bodies is continuing in this case of privatising the STA. I had hoped that the noble Baroness, Lady Turner, would take some joy from the fact that this is a management buy-out and it is the people who are already involved in the industry who will be taking it on to even better things.
Both noble Baronesses asked whether the Government were paying to get the skillcentres taken off our hands. I think one has to look at that situation against the background of a continuing loss-making position over many years, with taxpayers' money 1276 being thrown away on an arrangement that was not entirely successful. What is happening now is that we are paying to keep our training going through the £11 million transfer to ensure that the investment by Astra is preserving and improving training. Preserving training must indeed be our first priority, but overall the taxpayer will benefit. The taxpayer will still gain because of the sale of the property of the 13 skillcentres which will close.
The noble Baroness, Lady Turner, asked about the staff. The terms and conditions of the staff are of course protected, as I said in my original Statement, by the Transfer of Undertakings (Protection of Employment) Regulations 1981. The Government Actuary's Department has assessed the pension arrangements proposed by the purchasers and is satisfied that they compare with present Civil Service terms. In the coming weeks there will be a substantial amount of negotiation with STA staff and their unions on these proposals. In particular, they will look at pensions and possible redundancies, and these matters have been set out in the bidder's position papers.
The noble Baroness, Lady Seear, asked who the other bidders were. There were over 100 expressions of interest. There was one other major private sector buyer for a number of the skillcentres, but they wanted only 26 centres, so that bid was considerably less favourable than the deal we have now, which I think is generally to be welcomed. I believe we should encourage the skillcentres to continue the work they have been doing.

§ Baroness Seear
My Lords, may I intervene? It seems rather odd when the noble Lord says he is getting rid of them because of their inadequacies and he mentions the figure of the loss, and then he says he wants to encourage the same people to go on. That seems very strange.

§ Lord Strathclyde
My Lords, I think that one has to look at what happens when companies remain in the public sector and they are restricted by, for example, the Treasury. There are also numerous public sector restrictions and overheads. Those represent some of the reasons the skillcentres have been incapable of being a success while part of the public sector.

§ Baroness Turner of Camden
My Lords, I am sorry to interrupt, but is it not government policy —at least that is the way it seems to me —to run down enterprises that they would then want to privatise? This seems to be a typical example.

§ Lord Strathclyde
My Lords, shame on the noble Baroness for even suggesting that we have been running down the skillcentres in order to privatise them. That must be quite wrong.
Let me turn to the very important question raised by the noble Baroness, Lady Seear: instructor training. Of course this is a very important issue. The instructor training colleges at Letchworth and at Hillington in Scotland are both being sold to Astra. As I have said, the training of trainers is essential to improve the nation's training provision.
1277 It is an important source of business for the company both in this country and overseas. Therefore, as centres of excellence in the training of trainers they will continue to provide that very valuable contribution.

§ Viscount Caldecote
My Lords, while accepting that there is obviously a need for change in these organisations, is my noble friend aware of the importance of continuity in training and of the damage that has been done over the past years by so many changes in training schemes? We have had the community programme, the YTS, JTS, ET, and so many schemes. It is very difficult for agencies in this field to keep abreast of them and to work effectively and efficiently. May I ask my noble friend whether he will do everything possible to ensure that there is now a period of stability for training organisations, so as to help with the efficient training which is so very important to our industry?

§ Lord Strathclyde
My Lords, I think my noble friend is trying to be helpful there. He is absolutely right in saying that there has been an element of confusion as to how training should be provided by employers and by employer-led bodies through the government network. However, I really feel that we have come to the end of that confusion by setting up the training and enterprise councils, by privatising the Skills Training Agency and by continuing the good work that has been done by employment training and youth training. I sincerely hope that over the next 10 years we will continue to see these programmes grow and prosper.

§ Baroness Carnegy of Lour
My Lords, would my noble friend agree that my noble friend Lord Caldecote and the noble Baroness, Lady Turner, are not absolutely right when they describe the story of the skill centres as one of stability? It is the noble Baroness, Lady Seear, in my view, who is giving an accurate description. That is not surprising because, unknown to my noble friend on the Front Bench, the noble Baroness has been involved in the work of the Manpower Services Commission for many years and she knows all about the saga of the skill centres.
Through the years it has been quite impossible to get those skill centres to run themselves on an economic and satisfactory basis and also to get them to provide the kind of training required. It has been very difficult for all sorts of reasons: I know some of them, but not all. It is an extremely sensible move. I am glad that those who have been at the head of the skills centres will have such an opportunity. One suspects that if they are the same people they will make the same mistakes as before. One suspected that in the case of the bus system, for example. However, when some of the employees in the nationalised bus system took over the services and eliminated all the problems of being in the public service they flourished. They are doing a marvellous job.
The move is excellent. If it costs £11 million of taxpayers' money in order to establish the centres —and the money will be raised by selling 1278 some of the old plant —it is not a matter about which noble Lords opposite should be roaring with laughter. It is a sound idea and I wish it well.

§ Lord Strathclyde
My Lords, I thank my noble friend for her remarks. They provided some useful information. She was correct in everything she said about the Skills Training Agency. I also hope that it will succeed in the future.

§ Lord Lloyd of Kilgerran
My Lords, it was a privilege to give way to the noble Baroness from Scotland, particularly in the presence of the Minister and the noble and learned Lord on the Woolsack.
First I apologise for not being in my seat when the Minister began the Statement. Secondly, I declare an interest in training because I am the president of the Mobile Radio Users' Association—

Noble Lords
Hear, hear!

§ Lord Lloyd of Kilgerran
Thank you so much, my Lords. Without qualification the mobile radio users' industry has been one of the most successful advancing industries in this country during the past five or six years—

§ Baroness Seear
What has that to do with it?

§ Lord Lloyd of Kilgerran
It has been successful not only in this country but also internationally. I have no idea what the noble Baroness, Lady Seear, is saying from a sedentary position, but if she would like me to give way I will gladly do so for another distinguished lady.
Having regard to what the Minister said today, what assistance can be given to the mobile radio users' industry because there is now a deficiency in the number of skilled employees? For instance, would the Minister be prepared to receive a deputation from our association indicating the importance of training in the industry and the importance of the industry to the economic position of this country?

§ Lord Strathclyde
My Lords, it is certainly interesting to learn that the noble Lord is the president of an organisation as distinguished as the Mobile Radio Users' Association. He has introduced a more general concept of overall training. I am sorry that he missed some of our recent debates on training at which his noble friend Lady Seear was present and on which she is an expert.
I shall try to be helpful to the noble Lord. I am always delighted to receive representations from him. However, I can be most helpful by pointing him in the direction of the training and enterprise councils which have a specific duty to be responsive and flexible to the needs of local indsutry, one of which he represents.

§ Lord Lloyd of Kilgerran
My Lords, I am grateful to the Minister although I did not understand his proposal. Nevertheless, it is a most important industry concerned with training.

§ Lord Dormand of Easington
My Lords, the House will not be surprised to hear that I found the Minister's Statement quite disastrous. I have raised the subject here on many occasions. He is saying that the principle of privatisation is better than public enterprise. It may be that many of my noble friends believe that in certain circumstances that is the case. However, presumably the Minister cannot and will not accept the fact that people who will run the skills centres will be there primarily to make a profit. There can be no denying that.
It is important to note that the skills centres in particular, and to some extent the TECs, will be run by the same people, as has already been pointed out by my noble friends. Therefore, we wish to know why on earth the skills training centres will be as important as the Minister has said. He cannot get away with this kind of Statement.
The Government have been in power for almost 11 years. I believe that if they place so much importance on training —and, by heavens, it is important —they should have done something about it before now. At present 50 per cent. of the country is not covered by TECs. The Minister knows my view; that by June, the date he has promised, there will still be no TECs in operation and vast areas of the country will have no training of any kind. He should be addressing those problems and not giving the House the kind of information that he has given today.

§ Lord Strathclyde
My Lords, we had a good debate until the noble Lord, Lord Dormand of Easington, rose and decided to dive in—

§ Lord Ennals
And a good contribution it was!

§ Lord Strathclyde
My Lords, the noble Lord made a dogmatic attack on privatisation and its issues. I do not remember his exact words but he implied that there was something wrong with profit. The past 11 years have shown that profit is most important—

§ Lord Dormand of Easington
My Lords, I did not say that and the Minister must not misquote me. In principle I believe in the mixed economy and there is nothing wrong with making profit. I said that this is not an appropriate field in which to be making profit.

§ Lord Strathclyde
My Lords, the noble Lord is wrong because skills centres, like anything else, must be in a position to charge the market rate for supplying the services that they provide, whether it is training or whatever. He said that TECs and skills training centres will be run by the same people. That is not necessarily so. There will be a contractual obligation between the skills centres and the training and enterprise councils. The skills centres will be competing with other private sector providers of training so that the TECs can obtain the best possible value for money.
The noble Lord also said that by the summer more than half the country will not be covered by TECs. As I have said to him before, we are two years ahead 1280 of schedule in the setting up of TECs. Already we have 55 TECs with development funding and we are delighted with the progress that has been made.

§ Lord Beloff
My Lords, I hope that the Minister will reconsider his dismissal of international comparisons. It has been shown by governmental and private investigation that in the matter of skills we are well behind our chief competitors, particularly our neighbours in Europe.
Why over a long period of time has no advantage been taken of their experience in order to ascertain why they do things better, why they obtain better results and why in consequence our industry suffers? I have a feeling that this country does not take industry and its training seriously. Clearly the Government do not; the Opposition pay lip service to it but have other priorities; clearly this House does not. This House is now relatively empty. Half an hour ago it was full in order to discuss antiquarian trivialities such as coats of arms and Scottish hereditary chieftaincies which matter not at all to the vast earning mass of the British people.
If this House does not take training seriously, if the Government do not take training seriously, if the Opposition do not take training seriously and, in spite of the noble Lord, Lord Lloyd, if industry does not take training seriously, what is our future?

§ Lord Graham of Edmonton
A good Labour speech.

§ Lord Strathclyde
My Lords, I believe that during the past couple of minutes my noble friend Lord Beloff enjoyed himself. He appears to have a great interest in training but he has not played any part in our recent debates on the subject. I regret that because his views are extremely important and valid.
On the point about making international comparisons, I never said that they were bad. I said that bald statistics were not enough. That was the point I tried to make to the noble Baroness, Lady Turner. Two weeks ago we had a very good debate in this House about training and education when all these issues were brought to the fore. If my noble friend has not read that debate I believe that he should take an opportunity of doing so.

§ Baroness White
My Lords, can the noble Lord answer the point made by the noble Baroness, Lady Seear, about disadvantaged persons and their training? If these outfits are to be profit-making, they will charge. Who will pay the fees or other expenses of those who are disadvantaged?

§ Lord Strathclyde
My Lords, the noble Baroness makes a good point about the provision for disadvantaged people —the disabled, ethnic minorities and, in some instances, women —who need to play a full part in our economy. That is one reason why the Government have chosen training as one of the major priorities in the 1990s.
As I have said, the main provision for training will be through the training and enterprise councils. They will have direct responsibility for the training of all those people whom I mentioned.

§ Lord Peston
My Lords, perhaps on reflection the noble Lord may wish to withdraw one or two remarks which he made about his noble friend Lord Beloff. I have certainly heard the noble Lord, Lord Beloff, speak on these subjects before, particularly with regard to the question of standards. Perhaps he will hear his noble friend speak on that subject again in the near future.
To return to the Statement, I believe that the noble Lord is doing the best he can with a rather appalling brief. He must not confuse privatisation with the selling off of those properties. The Government could have sold off those properties at any time if they were of no use to them. We are concerned about the sale of a going business. I ask the noble Lord to realise that the word "sell" normally means that you give something to someone else and they give you some money in exchange. The word "sell" is not normally used to mean that you give something to someone and you give them some money as well. That is called giving it away rather than selling.
I ask the noble Lord to reflect on that. Why did not the Government at least retain some sort of equity interest? If they believe that there are benefits in privatisation, they could have benefited and could have recouped something for the taxpayer if the enterprise is a success. However, I can see —and I am not the greatest entrepreneur in the world —that to give it way and then throw £11 million after it is a "give away" deal. I ask the noble Lord to reflect on what he thinks he is up to.

§ Lord Strathclyde
My Lords, I apologise to my noble friend Lord Beloff if I implied in any way that he does not have a general interest in the subject. I was merely making the point that, since I have been employment Minister in this House and dealing with the Employment Bill, my noble friend regrettably did not take part in that debate and we all missed him then.
I am afraid that the noble Lord, Lord Peston, has this matter completely wrong. We are not throwing good money after bad. That is what we were doing, because in 1988–89 the organisation had a trading loss of £20 million and in the current year has a projected loss of £30 million. We are giving £11 million to turn the organisation into a viable, economic and proper concern which will continue to prosper in the future and provide the sort of training which every single noble Lord who has spoken on this issue in this Chamber this afternoon agrees is very important.

§ Lord Lloyd of Kilgerran
My Lords, I support what the noble Lord, Lord Peston, said in his praise of the speech of the noble Lord, Lord Beloff. I feel that I should resign my position as president of the Mobile Radio Users' Association and suggest that the noble Lord, Lord Beloff, should be appointed because, obviously, he would make better headway than I am able to do in dealing with the difficulties of appointing skilled personnel in that rapidly advancing industry.