HC Deb 08 August 1972 vol 842 cc1500-12
The Secretary of State for Employment (Mr. Maurice Macmillan)

With permission, Mr. Speaker, I wish to make a statement.

I have now completed the process of consultation on the proposals published for discussion on "Training for the Future".

As the House will recall, there were three main elements:

First, the development of a Training Opportunities Scheme to give a wider choice of training to meet the needs of individuals.

Second, the establishment of a National Training Agency which would take over many responsibilities at present carried out by my Department and which would co-ordinate the continuing work of the industrial training boards.

Third, it was proposed that the levy-grant schemes of the industrial training boards should in general cease after the end of 1973 and that the National Training Agency should finance out of public funds continuing incentives to key training activities.

The Training Opportunities Scheme has been widely welcomed. The first substantial development in the scheme starts this month. I mean to keep the pressure on expansion in order to exceed, if possible, the target figures set out in "Training for the Future."

The proposal for a National Training Agency has received substantial support. But many people, including the TUC and the CBI have expressed concern at the separation of such an agency from the new Employment Services Agency operating within my Department.

Before coming to any final conclusion on the ultimate form of organisation, I propose to have further talks with the TUC and CBI. The purpose will be twofold: to co-ordinate the employment and training services, and to involve employers and employees in both these activities. To get things moving before any permanent organisation can be established, I am reorganising the training services within my Department under a Chief Executive to match the management structure of the Employment Services Agency.

This "Training Services Agency"—and, naturally, the permanent organisation into which it will in due course be integrated—will carry out the broad range of functions set out for the proposed National Training Agency in "Training for the Future". These include the operation of the Training Opportunities Scheme; financing grants to encourage key training activities; meeting the administrative expenses of the industrial training boards, though the staff of the industrial training boards will continue to be employed by the boards; and providing training services in areas not covered by industrial training boards.

The cost of these activities, in addition to the cost of the Training Opportunities Scheme, would—as envisaged in "Training for the Future"—be in the range of £25 million to £40 million a year.

Finally, I come to the proposals for the future operation of the industrial training boards. Many responsible people have expressed to me their conviction that these would lead to a substantial falling-off in the quantity and, more particularly, the quality of training in important industries and that some continuing financial pressure for good training is necessary if the ground gained in the last decade is not to be lost. Nevertheless, I am convinced that the present system of levy-grant is not satisfactory.

I therefore propose the following changes. As regards industrial training board levies, smaller firms—for which the levy-grant system has never really been suitable—will be wholly exempt, and the present exemption levels will be raised. I shall also require boards to exempt from the levy after 1973–74 any firm which they are satisfied is carrying out such training as is reasonable to meet the firm's own needs.

Other firms above the exemption limit may be required to pay a levy which will not, however, exceed 1 per cent. of pay-roll, and the money will be used by boards to encourage better training in their industries. Adequate appeal machinery will be instituted. This will mean that over the next two years a great number of firms will become free of the levy complications. I believe that these arrangements will also help to ensure the maintenance of adequate and good quality training by industry.

These, in outline, are the plans for reorganising the manpower services which are essential to the reduction of unemployment, to better job opportunities for individuals and to the proper use of manpower resources. They will take time to put into full effect. But we are starting the rapid expansion of training and training opportunities at once.

Mr. Prentice

May I at least welcome the fact that the Government have moved a little along the road that we advocated from this side of the House in the debate on 5th June in that they have decided not to abandon the levy-grant system altogether in 1973? Is this not one more example of policies that were formulated in the "lame duck" period being abandoned? We want to know from the right hon. Gentleman why he has moved only such a small way along the road.

There are two points in particular which emerge from the statement. First, why does the right hon. Gentleman suggest that all smaller firms in all industries should be exempt irrespective of the training needs of each industry? Does he realise that this is liable to deal a death blow to many of the group training schemes operating among smaller firms which have been such a great help to workers recently? What does he mean by "smaller firms"? Will he give us some definition, because it is a matter of some urgency that we should know what is meant.

Why does the right hon. Gentleman make this arbitrary upper limit of 1 per cent. for industrial training levies? At a time when many of the training boards are finding it necessary to propose higher levels would it not be much more sensible if each board could assess the training needs of its own industry, propose its own levy and its own level of exemption, particularly since the right hon. Gentleman still has the power to approve or disapprove the recommendations which the boards make?

Is the right hon. Gentleman aware that these are matters that we shall certainly want to debate in Government time soon after the House returns? Will he make this point to the Leader of the House, and will he also tell the House whether he now envisages that there will be a need for legislation at an early date or whether he thinks the proposals can be carried through without that?

The House is interested in what the right hon. Gentleman has said about talking to the TUC and the CBI about co-ordinating employment services with training. Is he aware that he seems to be moving very slowly in the direction of the Labour Party over this? Will he look at what we said in our Green Paper about the need for a national manpower board because, he seems to be getting to the same point although much more slowly than we did? We have always welcomed the Training Opportunities Scheme and we welcome what he said about its being implemented quickly. Does he recognise that this scheme will be no use unless it is part of a policy for restoring full employment and that plans for extending Government training centres with the current appalling level of unemployment will inevitably be met with cynicism and no one will take him seriously until this forms part of a strategy for restoring full employment?

Mr. Macmillan

I think that we could have done without the somewhat cheap jeer at what my right hon. Friend the Leader of the House published some time ago as a consultative document. When we consulted on it we were accused of giving in to pressure, but this consultation was genuine, as I constantly pointed out to the House. The result of it is outlined in the statement I have made. It will require legislation in due course.

As to the small firms, my Department will discuss the level of exemptions with each board following the course recommended by the Bolton Committee. The levy level of 1 per cent. was arrived at because some boards are already operating a system like this with great success, notably petroleum and wool. A large number of others are moving in this direction. Most boards already have a levy rate of 1 per cent. or less.

I would remind the right hon. Gentleman that my right hon. and hon. Friends when in Opposition were considering plans for a manpower services commission and all that I have said so far is that we are establishing a departmental agency and consulting all those concerned on the possibilities of co-ordinating this with the employment service, which I accept is required to have a satisfactory organisation for dealing with the problem of training, re-training and helping towards a solution of the unemployment problem.

Mr. John Page

Is my right hon. Friend aware that a large section of industry has felt that the system was quite unsatisfactory as it is now and will welcome his new proposals? Is he also aware that his very sensible treatment of levy-grant with a large number of exemptions for firms where proper training is being carried out is workable and will be welcomed and means that the whole system will be much better used than in the past?

Mr. Macmillan

My hon. Friend is right. These plans were the result of very wide consultation with both sides of industry and with all those concerned with training. That they are workable is self-evident since, broadly speaking, this is a system which has already been worked with some success.

Mr. Denis Howell

Can the right hon. Gentleman tell us a little more about the viability of the industrial training boards after his proposals are effected? He says that all small firms are to be exempted and that many other firms are to be exempted on the ground that they train their own personnel, even though the number of apprenticeships has dropped dramatically. If we add those two things together, who is left to pay the money to keep industrial training going?

Mr. Macmillan

I endeavoured to make it clear in my statement that the administrative costs of the industrial training board will be borne centrally and not out of the levy. The levy will be wholly available to encourage training in industry. I remind the House that the system of selective grants which was envisaged in the original consultative document is maintained, and this forms part of the £25 million to £40 million extra a year which we are putting into training.

Mr. Costain

Does my right hon. Friend appreciate that his statement will be widely welcomed by the small firms which found that the Labour Party's policy was theoretical and impractical? Does he agree that a great deal of money was wasted on training schemes which trained people for wrong jobs? Will he take account of the unfilled vacancies for which job training is most needed and arrange that training is directed to this end?

Mr. Macmillan

I think that the smaller firms will welcome these proposals, which follow a recommendation of the Bolton Committee. On my hon. Friend's second point, the whole purpose of trying to co-ordinate the Employment Services Agency and the Training Services Agency is to make sure that training is given for jobs for which there are vacancies and try to develop skills which are required rather than for skills which are not required.

Mr. Harold Walker

Is the Secretary of State aware that those who are genuinely and sincerely concerned for the future of industrial training will be deeply dismayed by his confirmation today of the Government's doctrinaire flight from the principles of the 1964 Act? Is it not true that the Engineering Industry Training Board—the key board—among many others, warned him that the termination of the grant-levy system would bring about a serious reduction in industrial training and seriously undermine the programme on which it had embarked?

Is it not also true that the substantial scaling down of the levy-grant system will inevitably lead to a fall in spending on industrial training? What indications has the right hon. Gentleman had that trade union officials and educationists will he prepared to participate in future as they have in the past in the diluted scheme he is now putting forward and will not feel that they are wasting their valuable time?

Mr. Macmillan

The scheme as outlined follows very closely the recommendations of many of those whom we consulted. It would have been impossible to follow the inclinations of all those we consulted because there were such widely differing opinions, even among training experts. As for the engineering industry, the point made clearly Ito me was that it was the absence of a levy rather than the levy-grant system which might lead to a falling off in training.

This scheme is designed to obtain what was widely recognised to be necessary; namely, some form of sanction against firms which will not, or cannot, train for their own needs. The question of training beyond industry's own needs will be covered, as it was originally proposed to be covered, by the special grant system. I do not see that this will lead to any fall in spending since it has always been accepted that training by industry for industry's own needs should be a charge on industry rather than on the Government. As I have said, there is the sanction of the levy for those industries which do not carry out that responsibility. I therefore hope that all those concerned with making a success of the training which is so important for the future of industry and of the country will find this a system which they will be able to operate successfully.

Mr. Pardoe

Is the right hon. Gentleman aware that, contrary to the Government's apparent belief, there is even now in industry a need for more training, not less, and that his reference in his statement to ground gained in the last decade was unnecessarily complacent? Does he realise that not enough training momentum exists in industry for it to continue at a sufficient level without plenty of stick and carrot? Will the right hon. Gentleman define more precisely what his stick and carrot amounts to? What will the new levy amount to in total? Will it be part of the £25 million to £40 million a year, or will it be over and above that?

Mr. Macmillan

It is not possible for me at this stage to quantify what the levy is likely to be, since it will be raised wholly from the firms which are not carrying out, by definition, their training responsibilities within industry. It will be spent wholly on improving training within industry.

The hon. Gentleman makes a great mistake when he says that we are spending less on training. We are spending some £120 million a year more on the Training Opportunities Scheme and intend to spend from £25 million to £40 million over and above what is raised in levy on special grants and training generally.

Mr. Normanton

As a member of the Central Training Council, may I extend a conditional welcome to my right hon. Friend's statement? It is conditional in the sense that it reflects substantially my right hon. Friend's undertaking and that of his predecessor that the document which was presented would be consultative. Many representations made to my right hon. Friend have been duly noted.

Does my right hon. Friend agree that the standards of training at all levels in industry, technical and managerial alike, still leave much to be desired? Therefore, will he give clear directions and impose duties upon all the agencies—those to which he has referred today and those which have operated in the past—and to the industrial training boards which continue in being that they must undertake to raise the standard of training, and increase and not diminish in any circumstances the quality of their service?

Mr. Macmillan

I think that the whole House will agree that the need is to raise the standard of training and to improve not only the training within industry but also, as we are doing in the Training Opportunities Scheme, training designed to give greater opportunities to individuals. My hon. Friend will agree that there are two elements in considering this matter—the efficiency of industry, and the opportunity for individuals. I should not like the second to get lost in our consideration of the first. Any training enthusiast would give only a conditional welcome to any scheme put forward by any Government since the divergence of view among training enthusiasts is such that any scheme is almost bound to be open to criticism from some training enthusiast.

Mr. John Mendelson

How does the Secretary of State reconcile his announcement of the consultations that he has held with the conclusions that he has drawn? Is he aware that the Engineering Industry Training Board in Yorkshire and nationwide is a firm believer in the present system? Does he realise that those people most directly concerned with the work are very fearful about the abolition of the present scheme? Has he visited one of the training centres of the Engineering Industry Training Board in Sheffield where as many as 250 apprentices were trained for whom no place could be found in private firms?

In the face of this evidence, how has the right hon. Gentleman come to his conclusions? As the House is adjourning for the recess tomorrow, had he not better wait before preparing legislation and listen to the House and to the people most directly involved before making up his mind?

Mr. Macmillan

We have had a very long period of intense consultation. I realise the importance of the point which the hon. Gentleman has made about training apprentices. That is covered by the extra money which we are bringing forward to enable apprentice training schemes to be continued.—[An HON. MEMBER: "They are being destroyed."] There is no question of them being destroyed.

As to the opinions that we considered, there were those which training boards put forward as agreed views, those which their members, both employers and employees, put forward separately and those put forward separately by the educationists. The main point of them, and the key to the criticisms, such as they were, of the plan set out in "Training for the Future" was that a financial sanction was required. Our consultations indicated that the entire apparatus of the levy-grant, system was not required, but that some financial sanction was required, and that is precisely what the system I have described provides.

Mr. Speaker

I understand the House's interest in this matter, but I cannot allow many more questions.

Mr. Geoffrey Finsberg

I join in the general welcome which has been given to my right hon. Friend's statement. As one who has been engaged for six years in dealing with 10 industrial training boards, I believe that the principles which he has put forward for change are good. My right hon. Friend referred to the exemption of companies which are good trainers. How does he propose to make certain that an independent judgment is made upon their work and that it is not left to the whim of an industrial training board? Will he have a look at the 1 per cent. cut-off for the levy and perhaps consider that it may be fractionally too high?

Mr. Macmillan

There is nothing to stop training boards reducing their levies below 1 per cent., as some are already doing. I have merely set an upper limit. On my hon. Friend's other point, I referred in my statement to the need for an adequate appeals machinery. The precise form it will take will depend upon the final form of the major organisation, which we shall decide after discussion with the TUC and the CBI. I entirely agree with him that there must be some form of appeal to a judgment independent of the training board concerned.

Mr. Orme

Is the right hon. Gentleman aware that his statement gives us the worst of all worlds? As one who has had an engineering apprenticeship, I know the unevenness within that industry. The right hon. Gentleman is pandering to the worst employers, and the best employers will be exploited as they were previously. Is he aware that the module system built up in the engineering industry, which is second to none in Europe, could by his actions be destroyed? Is the Minister further aware that the Engineering Industry Training Board, which has proved to be possibly the most efficient and the best training board, both on the trade union side and on the employers' side, will be greatly disenchanted by the Minister's statement, which sets back industrial training for a generation?

Mr. Macmillan

I understand the hon. Gentleman's apprehension. I agree with him that there is great unevenness in the engineering industry, but I am perfectly confident that the system I have proposed provides a sufficient sanction to prevent firms which are either unable or unwilling to train adequately for their own needs from escaping the levy. They will either train adequately or they will pay the levy. There is no threat to the module system to which the hon. Gentleman referred. When he comes to examine the proposals in more detail, he will see that we have taken great account of the views expressed by the Engineering Industry Training Board, among others, and I have every belief that it will find this system satisfactory.

Mr. Redmond

Is my right hon. Friend aware that those of us who have taken a great deal of interest in this matter since "Training for the Future" was published will want to examine his statement with care? At the same time, we realise that many small firms will breathe a sigh of relief on hearing that they are to be relieved of the bureaucracy underlying all the form-filling, and so on. Will my right hon. Friend accept my congratulations that he has not fallen for the high-powered, expensive public relations campaigns which have been mounted since "Training for the Future" was adopted by the training industry—as it has become?

Mr. Macmillan

I remind my hon. Friend that small firms which are covered by a training board will be able to get advice and help from the training board, and that exempted small firms will be eligible for selective grants borne by the Exchequer and not by the training boards if they qualify for them. We intend to maintain the help for small firms, and the proposals seek to remove the element of bureaucracy and administrative complication.

Mr. J. T. Price

Although industrial retraining has always received strong support in the House, is the Minister aware that it is a peripheral activity in relation to the mass unemployment that we are suffering. Does he not agree that, however refined and sophisticated are the methods applied to industrial retraining, it is no cure for the faulty economic system that puts people out of work? Industrial retraining, with all its advantages to those who are without a job, does not compensate for the failure of the central Government to produce economic policies which will keep people in work. Just by fiddling about with industrial retraining we cannot deal with mass unemployment of about 900,000.

Mr. Macmillan

I hope that the hon. Gentleman will not regard our plans, or any Government's plans, for training and retraining as simply a method of evading the problem of unemployment. These are two different matters. Despite the high level of unemployment, there are, and are likely to be, bottlenecks in the shortage of skilled labour with the right skill. These bottlenecks contribute to unemployment, and that is where industrial retraining comes in. The provision of the right skill at the right time is an important factor in dealing with unemployment. These bottlenecks have held up many plans for development.

Mr. McBride

Is the right hon. Gentleman aware that I share the views of my fellow craftsman my hon. Friend the Member for Salford, West (Mr. Orme)? The new financial arrangements will steeply reduce industrial training opportunities and will give rise to intense criticism. What will happen to the waiting lists, especially in Wales? Is this to be training for employment? I hope that it will not be training for unemployment, which is the only thing that the Government have succeeded in increasing.

Mr. Macmillan

The hon. Gentleman need not be concerned about the loss of industrial training opportunities. We are spending £120 million on this. There is a waiting list. The Training Opportunities Scheme started to come into operation only this month. One of its major functions is to reduce the waiting list and increase the numbers of people being trained by the Government to between 60,000 and 70,000 by 1975 and to 100,000 as soon as possible. As I have said, I shall try to keep the target set by my right hon. Friend the Leader of the House.

Mr. Kenneth Lewis

Is my right hon. Friend aware that, whatever may be said by Opposition hon. Members, the reorganisation of the training scheme was inevitable in any case? It may be some years before we get it exactly right. Is he aware that the most pressing need at the moment arises from the fact that in a time of high unemployment many young men in the country cannot get training opportunities? These opportunities are delayed for a year or more, and by the time jobs become available the situation gets beyond the stage when firms will take on other apprentices. Will my right hon. Friend give first priority to this short-term problem?

Mr. Macmillan

Yes, indeed. As I said in my statement, it will take some time before these long-term plans can operate fully. Meanwhile there is a pressing need for training. This is why we are expanding the scheme to provide training opportunities and why I am setting up immediately in my Department a Training Services Agency under a Chief Executive in a managerial-type structure of the type which has been so successful in reforming the employment services.

Mr. Leadbitter

Is the right hon. Gentleman aware that his statement is not generally welcomed in this House and, indeed, that it will be highly unpopular in the country? Is he further aware that what he has said will cause uncertainty in general training since it breaks down the general principle which was created some years ago? Since he has said that the boards will be viable because of the grant system, will he say what estimates have been made about the future type of training, the levels of training and the numbers to be trained? Could he state categorically to the House that the levels, numbers and types will not be lower than the existing figures since there is a need for growth in these activities?

Mr. Macmillan

I fully accept what the hon. Gentleman said. There is an urgent need to expand training, and that is what we intend to do.