INDUSTRIAL TRAINING LEVY (Hansard, 29 July 1965)

§ Mr. J. B. Godber (Grantham)
I beg to move, That an humble Address be presented to Her Majesty, praying that the Industrial Training Levy (Engineering) Order 1965 (S.I., 1965, No. 1263), dated 11th June, 1965, a copy of which was laid before this House on 22nd June, be annulled. There are several points which I wish to make at the outset. This is the third occasion on which this Prayer has been on the Order Paper. On previous occasions it has been accompanied by two others, but because of the volume of Government business going through Parliament on each of the previous occasions no time has been found to debate them. I am glad that now we have at least a few minutes in which to discuss this matter. Tonight, we have only the one levy Order before us.
I should perhaps point out, although I am sure that this is well known to all hon. Members, that it is parliamentary custom that on many occasions—indeed, the majority—when a Prayer is moved there is no intention, in moving it, to seek to annul the Order but that this is the only way by which an order of a negative nature can come before the House for consideration.
I would not have thought it necessary to make that observation had it not been for some comments made by the Joint Parliamentary Secretary on a previous occasion in the House. I am glad that he is in his place tonight and I hope that he will take this opportunity of putting his remarks in, shall I say, a somewhat 852 different perspective and, I hope, of withdrawing some of the implication of what he said on that occasion. I was extremely annoyed when I learned of his remarks and I reacted to them fairly strongly at the time.
I recognise that in the circumstances in which he was speaking there was a good deal of pressure—as there would be on a Minister winding up a stormy debate—so one can make allowances for that. Even making those allowances, I hope that, on reflection, the hon. Gentleman will agree that some of the things he said were misleading to a considerable degree. I hope that he will be able to put them in better perspective tonight.
On 14th July, in winding up the debate—I am seeking to put this as moderately as I can—the hon. Gentleman first made a complete misstatement, and I think he agrees with me that it was so. He said: Under the Industrial Training Act, in the first year alone the Government will spend a sum not far short of £100 million. That was completely wrong and, presumably—

§ Mr. Deputy-Speaker (Dr. Horace King)
Order. I have allowed the right hon. Gentleman to pursue a personal difference to a certain extent, but he must get back to the Order now.

§ Mr. Godber
I should not dream of raising the matter, Mr. Deputy-Speaker, were it not that the hon. Gentleman, as I shall seek to show—and I have to quote more of what he said to make my point—made comments about our Prayers which call for discussion. If you will allow me to go a little further, I will seek to show that that is so. I merely say on this point that I subsequently put a Question to the Minister, when it was shown that the amount spent was much smaller, less than £2 million in the first two years.
In the hon. Gentleman's next quotation, in response to an intervention from my right hon. Friend the Member for Wallasey (Mr. Marples), who was leading for the Opposition, he said: Perhaps he will say why his right hon. Friend the Member for Grantham (Mr. Godber) has tabled Prayers to annul the Orders that we have made to put the Act into effect. It makes one wonder what was 853 the intention behind the Act. It was a sort of enabling Act, by which one could do a great deal, or do very little. We decided to do something about it. The Orders were published, and at the first possible opportunity the Shadow Minister of Labour, the right hon. Member for Grantham, tabled Prayers to annul the three Orders that were made."—[OFFICIAL REPORT, 14th July, 1965; Vol. 716, c. 630–1.] That is my reason for raising the point and I hope you will agree that it is right that I should do so, Mr. Deputy-Speaker, because of my earlier point that this is a perfectly normal procedure which, as the hon. Gentleman knows well, is used in the House. It is used regularly by Opposition parties with no intention whatever of seeking to annul.
My purpose in regard to the Orders was quite straightforward. These were almost the first levy Orders under the Industrial Training Act, a Measure which I was responsible for piloting through the House. I had no intention of holding up the operation of the Act and I cannot believe that the hon. Gentleman thought I had. He was seeking to make a party point which was completely unfair. I understand that he was under great pressure because of the strain of the debate, but, even so, I hope that he will take the opportunity tonight completely to withdraw any suggestion that I did not wholly support the Act, because all those concerned with the operation of industrial training know well from my record at the Ministry and subsequently that I am desperately keen to see the Act succeed and to see the boards go forward to success.
My purpose in tabling the Prayers was to enable the Minister or the Parliamentary Secretary to explain—I thought that he would be glad to do so—some of the issues in regard to this entirely new legislation, which we have only just had before us. Four of these boards were set up when we were in office and we have now had the levy Orders for those four. The one which we are considering tonight is that for engineering. This was the one on which I thought that it would be of particular advantage for the Parliamentary Secretary to be able to give explanations, because the levy in this Order was substantially higher than in any of the others.
854 That is a point on which there has been criticism, and, possibly, it is this which has led to the misunderstanding. I have never criticised it. I have always said that all levies would have to be at a high rate, because they would "bite" only if they were at a high rate. The whole purpose of the levy is to impose it upon the whole industry and to pay back grant to those who are giving sufficient training.
Therefore, to the extent that the levy is a high one, pressure is increased on those who are not training to do so. Although this levy is a high one I was merely seeking to know why there is this wide discrepancy between the levels of levy between the different boards. That is why I put down the Prayers originally on the three different Orders. In this case, it is 2½ per cent. of the total pay received.
From the Report of the Engineering Training Board, which came out today, I see that the Board decided to start its levy at a level which would bring in sufficient money to cover the total current costs of training in the industry. It rejected the idea of starting with a small levy, but decided to begin as it meant to continue, with a levy to embrace the whole range of training. This may be the explanation which the Joint Parliamentary Secretary wishes to give, but it does seem to be perhaps a different attitude from that of the other Boards, and while one obviously would not expect complete unanimity it is perhaps surprising that there is this degree of discrepancy.
There is this difficulty in this case, that there would be an interflow between the Engineering Board and the Iron and Steel Board. There is a joint committee dealing with the affairs of the foundry industry. It is a joint committee between the Engineering Board and the Iron and Steel Board. It is, therefore, a somewhat complicated matter. As I was responsible for setting up that committee I realise, as the Joint Parliamentary Secretary does, the differences between those industries, and the fact that it was impossible to fit the foundry industry neatly into one or the other, but, because of this, the discrepancy between the rate of levy in the engineering industry and in the iron and steel industry becomes very important, because we have some foundry 855 operators who are levied under the iron and steel rate and some under the engineering rate.
I want to ask the Joint Parliamentary Secretary whether there is any intention to try through the operation of this joint committee to even out the levy in the foundry industry between the two, in the one case a 2½ per cent. levy and in the other case a per head levy of, I think it is, £7 per annum. If it were on a per capita basis in the engineering industry, the levy would come out, I imagine, nearer £20 rather than £7. So there is a big difference between them. I hope that the Joint Parliamentary Secretary will be able to tell us whether the joint committee will be able to smooth out the difference, because I think that there is some feeling in the foundry industry that some people are at a disadvantage compared with others if they come within the orbit of the Engineering Board as opposed to the Iron and Steel Board. This is one other reason why I particularly wanted an opportunity of raising this matter.
One or two of my hon. Friends want to speak, I believe. I certainly want the Joint Parliamentary Secretary to have an opportunity to clear up this matter to which I have referred, so I do not want to go into too great detail about it, but I hope that he will be able to tell us something about this, and something more about the speed at which things are going forward, because an implication of his remarks that night was that we were hanging back and that he and his colleagues were rushing forward. In fact, the very reverse is the case. If he cares to study the Reports of the Engineering Training Board and the other boards we set up when we were in power he will find that, in most cases, with the advice and guidance of the then Government they anticipated being set up and substantially in advance—

§ Mr. Deputy-Speaker
The right hon. Gentleman is going wide now of the Motion. He may discuss only the levy and things appertaining to the levy.

§ Mr. Godber
I apologise, Mr. Deputy-Speaker. I thought that I was perhaps going just a trifle wide, but, of course, the Engineering Board's Report includes a reference to the levy—

§ Mr. Deputy-Speaker
That may be so, but the fact that the Report mentions certain things does not mean that everything in the Report can be discussed in this debate.

§ Mr. Godber
I bow to your Ruling, Mr. Deputy-Speaker, in this as in all things.
Having made my point, I hope that the Joint Parliamentary Secretary will have noted it and be, if not a sadder, yet a wiser man in regard to this matter in the future. I hope that the hon. Gentleman will at least adopt a fairer approach towards our attitude to these matters, and will acknowledge that we have been at least as keen as he has about this levy, and about other matters, too.
I shall not be able to quote from this other paper which I have here, but there are other misleading factors which emanate from a source which the hon. Gentleman may recognise. As I cannot quote from this paper, which the hon. Gentleman may have seen, I suggest that he studies it. It has been suggested that we were not keen on this, and I hope, therefore, that what I have said will disabuse people's minds of that idea.
So far as the levy Order goes, we acknowledge that in the engineering industry it is very important that high standards of training are achieved throughout the industry. We recognise that some aspects of this industry in particular have very heavy training costs. We do not dispute that that is so. I am asking the hon. Gentleman to tell us a little more about this, to explain, if he will, the difference in rates between this and the iron and steel levy, because of the interplay between these two. If he can tell us anything about the way in which these are going forward, without, of course, going outside the bounds of order, I hope that he will do so, because there is genuine interest in the operation of this Act in regard to the Board and this levy, and in regard to the other boards as well.

§ Mr. Mark Woodnutt (Isle of Wight)
My intervention will be very brief. I must declare an interest as a director of the Charles Churchill group of companies, and I shall be expressing the view of the Machine Tool Trade Association.
857 I am pleased that my right hon. Friend the Member for Grantham (Mr. Godber) has made it clear that he does not intend to force this Prayer to a Division, because the machine tool industry is well pleased not only with the Industrial Training Act of last year, which was piloted through this House by my right hon. Friend, but also with the Industrial Training Levy Order, which became effective on 30th June, 1965.
This levy of 2.5 per cent. of the total emoluments paid by the engineering industry is considered by the machine tool industry to be a fair assessment of the average amount that has been spent annually by the engineering industry on training schemes. It is true that some sections of the industry will have spent far less than 2.5 per cent. and that some of them will have spent considerably more.
I am rather pleased that the Minister of Technology is present this evening so that I can make this point, because the machine tool industry has been much maligned in this Parliament. The amount spent annually by the machine tool industry is far more than 2.5 per cent. of the wages that are paid annually, and for that reason it should receive considerably more in grants than it will pay in levy. It is only right that those sections of the industry which in the past have spent more on training schemes should get the greatest benefit now from any money that is to come from the Exchequer.
I should like the hon. Gentleman to give the House two assurances. First, will he assure the House that the funds created by the levy will not degenerate into another Road Fund—that they will not be raided to refresh other Treasury expenditure, but will all be used for the purpose for which it is now stated they will be used? Secondly, will he assure the House that the total grant paid to all industries—not just to the engineering industry—will exceed the total levy that is drawn from those industries; in other words, that the Treasury will make a contribution and industry will benefit to a greater extent than the actual levy that is collected?

§ Mr. John Farr (Harborough)
I welcome the Order, but I have a few 858 specific points which I should be grateful if the Parliamentary Secretary would deal with. First, can he state what will be the total cost of the levy? Presumably he has an estimate of the figure—namely, 2½ per cent. of the total emoluments of those in the engineering industry. Can he give us some idea what is the total income?
Secondly, is it intended to introduce the provisions under Section 5 of the 1964 Act, whereby the Treasury may help with expenses if it wishes? My reason for raising this specific point arises from a letter I received recently from a company in my constituency relating to this levy and the purpose to which it is to be put. I shall give the House a brief summary of this letter. The firm states that on 8th September, 1964, it was advised by the Ministry of Labour that it came within the scope of the Engineering Industry Training Board. Straight away the firm wrote to the Ministry of Labour and said that as it was engaged only in the rubber industry it disputed the assessment that it came within the scope of that Board.
It was not until three months later that it received a letter from the E.I.T.B. that its letter had been carefully considered and that it appeared that the firm was in the engineering industry. This company took the trouble of referring to S.I. 1086, which defined those companies which were concerned, and as it happened the view of the company was quickly confirmed. It wrote to the E.I.T.B. on 15th January to say that according to this Statutory Instrument it was excluded from participation. Again, it was not until three months later—

§ Mr. Deputy-Speaker
Order. I think that the hon. Member is discussing another Statutory Instrument, which defines what is an engineering firm. He must come back to the question of the levy.

§ Mr. Farr
Mr. Deputy-Speaker, my purpose in raising this point was to discuss some of the purposes to which the levy will be put, and to show that there is a certain amount of laxity at the moment in the running of the E.I.T.B.

§ Mr. Deputy-Speaker
There may be. I do not question the right of the hon. Member to raise this matter on the appropriate occasion, but this is not the occasion.

§ Mr. Farr
I immediately bow to your Ruling, Mr. Deputy-Speaker. As time is short I will content myself by saying that I will take an early opportunity of sending this correspondence to the hon. Member, and trust that he will study it.
Will he be good enough to answer my two earlier questions? I assure him that I welcome the Order.

§ The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Richard Marsh)
I must apologise to hon. Gentlemen who, I can see, would like to take part in this debate, but I am sure they will appreciate that I must take some time to answer some of the points which have been raised so far. We may well, I hope, since this is an important subject, have other opportunities of debating it either on the Adjournment, or, if the Opposition feel strongly about it, they may even care to devote a Supply day to it.
To answer, first, the specific points of the hon. Member for Harborough (Mr. Farr), the total cost of the Engineering Board levy is likely to be about £80 million in the first year as a result of the 2½ per cent. levy.
The second point which the hon. Gentleman raised was answered recently in a Written Answer to the hon. Member for the Isle of Wight (Mr. Woodnutt), who asked whether the Treasury would, in fact, assist the boards. Direct Treasury assistance given to the boards up to 31st March is about £135,000, and, of course, a great deal of assistance has been given to the boards by providing them with staff, particularly senior staff, during this interim period.
It is estimated that during the current year direct Government grant to the boards will be running at about £1½ million. It would be quite dishonest to suggest that it is anticipated at any stage that Government grants will equal the size of the levies. I think that when one considers the size of the levies, when one realises that we have another 25 or 28 boards to set up and that already, in this first year, the levies are running in total at not so far short of £100 million, hon. Members on both sides will appreciate that it would be unlikely that any Government would make that sort of grant.
860 At the moment, the position is that the Government have made grants of about £135,000, and in the current year the Government grant will be about £1½ million, but one obviously expects that eventually the boards will be self-supporting.
If I may turn very briefly to the remarks of the right hon. Gentleman the Member for Grantham (Mr. Godber) may I say that I think he really is a little too sensitive on these points. He may disagree with me, but it seems to me an extraordinary attitude that the Opposition should complain that the Government spokesmen have not put their case for them.
The discussion on this Industrial Training Levy Order arose in the course of a previous debate on technology, on 14th July. I think that hon. Gentlemen on both sides of the House would agree that the proceedings developed into a brawl. I do not object to this at all, although hon. Gentlemen might have done. In that debate, I was reported as saying: Under the Industrial Training Act, in the first year alone the Government will spend a sum not far short of £100 million. Whether I said this, I personally doubt, but I do not think that anybody could honestly have believed that a Parliamentary Secretary was throwing "off the cuff" Government expenditure of £100 million next year without anybody knowing anything about it.
If the right hon. Gentleman did believe this he was soon disabused, because I told him the very next day that this would be a fantastic belief. In case there were any doubts after that, a written answer was given to him on the following Monday, the earliest opportunity, in which it was explained exactly what money had been spent by the Government on this.

§ Mr. Godber
rose—

§ Mr. Marsh
Well, I had less than 20 minutes last time, so I suppose that it does not matter if I have only 10 minutes this time.

§ Mr. Godber
A typical discourtesy. I wish that the Parliamentary Secretary would not adopt this attitude. In fact, the Written Answer was given at the earliest opportunity simply because I put 861 a Written Question down, but the Parliamentary Secretary seems to imply that a special attempt was made to put the thing right. This was not the main charge I brought against him.

§ Mr. Marsh
I am sorry that the right hon. Gentleman gets so touchy when people hit back. I have made two attempts to speak on this subject. On the first occasion I was just bawled out by his right hon. and hon. Friends. On this occasion, I did not deal with the second point raised by the right hon. Gentleman, because he got up and interrupted me. I then went on to say, in case there should be any misunderstanding: Hon. Gentlemen opposite are in favour of this, because they are in favour of retraining."—[OFFICIAL REPORT, 14th July, 1965; Vol. 716, c. 630.] It seems to me to put the position quite clearly. I cannot see why the right hon. Gentleman should be so sensitive—

§ Sir Tatton Brinton (Kidderminster)
rose—

§ Mr. Marsh
This is intolerable—

§ Sir T. Brinton
On a point of order. Many hon. Members have stayed here in the hope of discussing the size of the levy. Is what the Parliamentary Secretary is saying to the point?

§ Mr. Deputy-Speaker
Order. Apparently there is a personal issue between the Parliamentary Secretary and the former Minister. To be fair to both sides, I have allowed them each the same amount of latitude. I hope that they will not take up the whole time on it.

§ Mr. Marsh
I am sorry. I do not know whether one is entitled to reply to the allegations which keep being made. I agree that this is perhaps not the right time to do so, but the point was raised, and I thought that I might have an opportunity to deal with it.
Then there was an interruption by the right hon. Gentleman the then Leader of the Opposition who said, "We passed the Act." I went on to refer to Prayers being down to annul the Orders. That does not strike me as being too serious a thing to have said, and I do not want to alter it. When the right 862 hon. Gentleman for Grantham (Mr. Godber) was dealing with similar Prayers in the past, he was able to make similar allegations, when he said: This Government are pressing ahead, well ahead of anything which the party opposite has any intention of doing in this field."—[OFFICIAL REPORT, 22nd July, 1964; Vol. 699, c. 651.] However, I leave that, because this is becoming childish. I am quite willing to debate the matter at any other time but the right hon. Member is not the only one who feels aggrieved about it.
The difference in the size of the levies is a very understandable point to make. In the construction industry, the levy will be 1.2 per cent. of total remuneration in the full year. In the iron and steel industry, it will be only £7 per employee in the year. In the Wool Board, it will be 0.75 per cent. of the payroll, and, as has been said, in the engineering industry it will be 2.5 per cent. So far, the other boards have not produced levies, although eventually they all will.
It is reasonable that one should ask why there should be this variation for what would appear to be the same function. But it is not quite as much a problem as it might seem to be on the surface. The hon. Member for the Isle of Wight made the point earlier, when he said that he wanted an assurance that the levies would not be another Road Fund that could be raided by any Government in the future, and that they would stay in the industries.
The first point to be made is that none of the money will leave the industry. It will be raised by the industry and kept within the industry, and the industry will have control of it. It is not a tax, taking money out of the industry. The Government will have no claim on the money, because it is money which will be raised within the industry, and it will be distributed within the industry for its benefit. An even more important point—and it is why I say that it does not matter about the difference in the levies as much as might appear on the surface—is that wherever there is a high level of levy, there will be a high level of grant.
Provided the employers are doing the training which is necessary—and that is particularly true of the foundry industry, where there is a real variation between the two boards—if they pay a low level 863 of levy, they will get back a small grant. If they pay a high levy and do the job, they will get back a high grant.

§ Sir T. Brinton
Is the Parliamentary Secretary suggesting that there ought to be a profit on the expenditure on a man who is training? May I draw his attention to the facts that there are 25 million employed people in the country, that the Government spend £1,500 million a year on education, or £60 per employed person, but that it is proposed to spend £20 on training? It seems rather high.

§ Mr. Marsh
It is too late in the evening to deal with the details of how the grants were arrived at. The first thing which the Engineering Board has done and which, I hope, all the other boards will do, is to redistribute the costs of training. One problem has been that firms who have good training arrangements are subsidising firms with no training arrangements. I think that I am right in saying that this is one of the views of the Machine Tool Traders Association. Therefore, the distribution of training costs was a real feature of the scheme, as well as the establishment of standards.
It should be accepted that the cost of training is yery high for the firm which is doing it properly. It is not just a question of apprenticeship training. It is a question of management training, of technological training, which is a very real factor, of subsequently the boards carrying out the responsibility for adult retraining, taking green labour and retraining it and giving people whose skills are in less demand the new skills demanded by expanding industries. It is a question also of carrying out inspections, of having a central inspectorate to act as consultants on training facilities.
The whole thing is a very expensive job. The 2½ per cent of the Engineering Board's levy is virtually the amount of money which is being spent now. All that is happening about this is that some firms have been carrying the burden for other firms which have existed merely by pirating the skilled labour from firms which do this job. This is not a Government decision. This is a decision taken by both sides of industry.

§ Mr. John H. Osborn (Sheffield, Hallam)
Would the Minister concentrate 864 particularly on the foundry industry, because similar firms are paying different levies? This will be unequal. What steps will be taken to study the problem?

§ Mr. Marsh
This is the first year of the operation of the Act. There is the joint committee. We hope that we shall overcome at least some of the difficulties. The problem is not as large as it appears to be, because it does not matter how big the levy is. If a firm is doing the training, the grant which comes back to it will be correspondingly large. Therefore, it does not matter whether it is paying large levies or small levies, because firms will be getting large grants or small grants according to the levy.
It would be difficult to say how far we have gone so far. In the first year the Engineering Training Board has done an incredible job, as have all the boards. This has been an enormous job. Twenty-seven thousand firms have had to be identified and registered. About 1,000 firms, as they are perfectly entitled to do, have objected to being included in the list. Their complaints are being dealt with. The boards have carried out an enormous and revolutionary change.
I conclude on the note on which we started—or, perhaps, on a rather different one. No one disputes the right hon. Gentleman's contribution in this field when he was Minister of Labour. No one could dispute that he introduced the Bill, but I believe that if the party opposite had had the administration of this Bill, they would not have done what we have done or what we want to do. [Interruption.] I do not ask the right hon. Gentleman to agree, but that is my belief.

§ Mr. Deputy-Speaker
Order. I thought that we had left that. We are broadening the debate again.

§ Mr. Marsh
I am sorry, Mr. Deputy-Speaker, but we are not. We are dealing, with respect, with the Industrial Training Levy (Engineering) Order, surely?

§ Mr. Deputy-Speaker
Order. The Minister must be courteous to the Chair. If he wants to dispute the Chair's Ruling, there are correct ways of doing it. I ask him to return to the Order.

§ Mr. Marsh
I would merely leave the point, Mr. Deputy-Speaker, by saying that 865 the Board has done an incredibly good job in a comparatively short time. The whole of the Act marks a complete revolution in industrial training in this country and in the years to come the position will be such that we shall have laid foundations, as a result of this Order, that could provide us with the highest standards of industrial training in the world, a thing of which due warning was given yesterday when, at the International Apprentice Competition, this country—I am sure that this is not out of order—came top out of every country competing.

§ Mr. Godber
By leave of the House, may I, in the few remaining moments, say that I am grateful to the Joint Parliamentary Secretary for the last remarks that he tried to make. I think that both he and I can leave the matter with honour there. I am sorry that that matter arose.
We are grateful to the hon. Gentleman for the information he has given us about that Order. I am sure that he will agree that it would be of advantage if we could discuss in more detail the problems of these levies on a future occasion. We shall study what he has said with care.
With your permission, Mr. Deputy-Speaker, and that of the House, I beg to ask leave to withdraw the Motion.