HC Deb 23 May 1973 vol 857 cc589-99
Mr. Harold Walker

I beg to move Amendment No. 16, in page 14, line 3, at end insert:

'and such sums shall include a sum not less than £35 million in each full year which shall be payable in respect of the key training activities of Industrial Training Boards, and the administrative expenses of such Boards, and for the promotion of training in sectors of employment not covered by Boards, and such sums shall be adjusted each year to maintain its value at the level it had in 1973'. This amendment to some extent reverses an attitude I expressed in Standing Committee. I expressed the view then that it was undesirable to write into the Bill the £35 million to £40 million we were discussing—the sum referred to in the Government's discussions prior to the production of the White Paper.

I was prompted, among other reasons, to reverse that view by my growing fear, which was justified this week, that the Government might find it desirable, due to the changing economic circumstances, to attack public expenditure. I thought it would be advisable, therefore, if this somewhat derisory sum of £35 million was written into the Bill as a firm commitment, with the proviso for the automatic adjustment of its value in an inflationary situation. The wording of the amendment follows the wording of paragraph 65 of the White Paper and the words used by the Secretary of State on Second Reading—words which are nowhere reflected in the Bill.

I repeat my belief that the £35 million is wholly inadequate. That view is shared by many, if not most, people concerned with industrial training. The Road Transport Industry Training Board, one of the biggest boards, said:

£35 million is inadequate if impetus is to be maintained. The Heating and Ventilating Contractors' Association said: The proposed annual budget of £35 million would seem to be inadequate to meet industry's demands upon it as envisaged in the White Paper The Construction Industry Training Board said: More money is needed than the £35 million. The sum is inadequate. The TUC General Council . .did not believe that the £25 million to £40 million was adequate. The Agricultural, Horticultural and Forestry Industry Training Board said: The provision of £25 million to £40 million appears totally inadequate and can be expected to result in a decline in training activities. I will not weary the House with more quotes, but these are typical of many that have reached the Opposition and, I am sure, the Government. I put them before the House so that it may be clearly seen that we are reflecting the view of those engaged in, and concerned about, industrial training, including many employers. It is part of our fear that the Government will allow even this inadequate sum to be eroded by inflation and nibbled away by their attacks on public expenditure.

I hope that the Minister will amplify and clarify the statement made by the Chancellor on Monday. Will he tell us where the further £6 million will be spent and whether the proposed eight months' deferment of the commencement of the new arrangements is firmly fixed, or can we expect further revisions? It is an extraordinary situation when one Minister gives what appears to be a firm, clear and categorical statement in Committee only a week or two ago about the dates of commencement of different parts of the Bill and then another Minister, the Chancellor of the Exchequer, comes to the House this week and changes what the first Minister said. That not only creates doubt about the credibility of Ministers' statements but it creates doubt and confusion amongst those who even-tually have to implement the provisions of the Bill.

9.30 p.m.

Mr. Kenneth Lewis

Does the hon. Gentleman appreciate that some of the training boards—I cannot speak for all of them—are very glad that there has been a postponement for eight months? That is because they are not yet in a position to run the new arrangement.

Mr. Walker

The hon. Gentleman knows that there are many training boards which would be pleased if the whole arrangement was permanently deferred. That is hardly an answer to the point which I am making. During a few weeks one Minister's statement was rebutted by another Minister. Such an event can only cast doubt on the credibility and the reliability of Ministers' statements.

I return to the central sum of £35 million. It seems clear not only from the comments of the boards but from a scrutiny of the figures in "Training for the Future" that the totality of training activities is bound to be reduced. The money will have to be allocated to the different purposes set out in the White Paper which are referred to in the amendment. There are bound to be cuts in the activities of the boards because the boards must necessarily budget in advance. By now they must have worked out the worst. They must be told quickly. We are entitled to know as well so that we shall know which training activities will be cut back.

How much of the £35 million will go to the Engineering Industry Training Board? If we recognise that there are about 20 boards, how much will be left in the bowl for the others to scramble over? I am pleased to see that the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Food is present. Perhaps the Minister of State will tell us whether the agricultural, horticultnral and forestry training board's grant of £1.9 million is coming out of the £35 million or whether it is coming from another source.

We have been told that the electricity and gas industry training boards are to go. We are entitled to know whether the Government's grant will be extended to cover their administrative costs. Will they be expected to provide their administrative costs from their revenue whilst private industry will largely receive Government grants which are, in effect, Government subsidies? Will that be equally applicable to the other nationalised industries, all of which are providing adequate training facilities? All the nationalised industries are doing a first-rate training job.

It seems incredible that the nationalised industries will be required to provide their administrative costs out of their own revenue whilst private industry is to be subsidised by Government grant. It seems that the Government are trapped between an electoral commitment which was designed to win the support of the small and backward employers who were loth to pay the industrial training levy, whose support the Government wanted and who by and large were the people doing a poor job of industrial training, and the new-found realisation that the inevitable consequence of implementing their pledged commitment would be to diminish industrial training at a time when expansion would be needed. The course on which they have embarked commits them to yet a further subsidy to private industry, a cut-back on our training effort, and not only the sacrifice of our industrial and economic seed corn but the frustration of the hopes and ambitions of many of our young people.

Mr. Dempsey

I want briefly to comment on the implications of the amendment. The Government have had sad failings in their thinking on industrial training. In 1972, £215 million was put into industrial training by industrialists, but now the maximum under the Bill will be £35 million. That is a reduction of £180 million, or 84 per cent. of the total normally expended on industrial training. It is a very serious situation. I cannot understand where the Government intend to find the difference. Does it mean that the 84 per cent. reduction is bound to result in a reduction in industrial training, or are the Government so idealistic that they think industrialists will provide the money?

Now that employers with fewer than 120 employees are exempt from the levy, have the Government considered the implications of what they propose? It will involve 17,700 firms, employing a total work force of 490,000. A study of industrial training reveals that small firms employ the bulk of apprentices. I know of a large firm in Lanarkshire which has international connections and is a large employer of labour but does not engage a single apprentice. The firm poaches them all after the small firms have trained them by offering them attractive conditions. Statistics show that over the past eight years large firms have reduced their apprentice intake by 50 per cent.—a substantial amount.

The small firms upon which we depend to train apprentices are opting out because they have been exempted from the levy. If the Minister thinks that they will automatically take part when they are entitled to be exempted, he and the Government are living in cloud cuckoo land.

In my constituency we have an automobile group training association and an engineering group training association called LETA. Our trainee places numbered 200, but they have fallen to about 124 since the Government introduced exemption from the levy. We have all those vacant places, and not a hope of making them up. If this further exemption takes place we shall have to consider whether it is possible to continue a training establishment in my constituency. Incidentally, it was the first in Scotland. We pioneered this form of training. This is the implication of the lack of financial provision in the Bill.

My hon. Friend the Member for Doncaster (Mr. Harold Walker) referred to the £35 million, and I have drawn attention to the £215 million. There is a leeway with not a snowball's chance of it ever being made up. It is bound to have disastrous consequences for the industrial training of apprentices. It will certainly have such consequences in my constituency, in North Lancashire. It is my duty to draw the Minister's attention to this serious situation. I have quoted these figures to try to impress on him the seriousness of the inadequate provision in the Bill.

The Minister ought to tell us whether the Chancellor's statement means that there will be a postponement of the operation of the inadequate £35 million from August 1974, when it was due to be introduced, until April 1975. If that is the implication of the Chancellor's statement, may I ask where the training establishments will get the money needed during the eight-month period to pay for the on-cost of running the training centres and providing all the necessary equipment for the training? The money will not fall from the trees in Scotland, neither will it come from the gas. It has to come from somewhere. It has been coming from the grant on the one hand and the levy on the other, but this is now in danger.

A small employer probably receives a grant of £600 for the training of apprentices. When we bear in mind that the employer is losing that apprentice's skill, production and service the average cost works out at nearer £1,200 with a deficit of £600. Where will that come from? The employer has now opted out. He is not responsible for the levy. Will he pay the additional £600? I cannot visualise many small employers in my constituency or in the West of Scotland being willing to meet such a payment. This means there will be a further rundown in the number of apprentices, and sooner or later the question will arise whether the training establishments are viable units I regret to say that at the moment we have not ruled out the possibility of considering closing dates for some centres.

It is absolutely tragic in view of the necessity to train our young people. We have heard about the importance of skills. This is a serious situation, and I want the Minister and the Government to get down from their ivory tower, to the grass roots, so that the implications of this disastrous policy—reducing the amount of money available for industrial training by £180 million—will be realised. I hope that even at this late hour the Government will have second thoughts and will appreciate that we are talking not about millions of pounds but about the future of young girls and boys, our future citizens.

9.45 p.m.

Mr. Chichester-Clark

I expected to hear the hon. Member for Doncaster (Mr. Harold Walker) and indeed perhaps the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) on this subject, but I did not expect the hon. Member for Coatbridge and Airdrie to ascend so far into the clouds. He certainly disappeared from my sights in some of the things he was saying. Where he was getting the figures from I do not know. Perhaps I should have a private conversation with him because I would be getting a little far from the amendment if I were to follow some of his flights of fancy. I understand his anxiety, however irrelevant some of it may have been to this amendment.

I ought to acknowledge that the hon. Member was right in certain respects; namely, the timetable in relation to the Government's intention to make public funds available for the administrative expenses of the boards to encourage key training activities. In fact, the £35 million has been changed by what was said in the statement by my right hon. Friend the Chancellor of the Exchequer on Monday.

As I say, I was not quite sure where the hon. Member for Coatbridge and Airdrie was getting some of his figures, and I could not understand where he thought the training boards had been getting their money from hitherto. I will sort that one out with him.

The fact remains that as a result of the postponement, the levy will continue; that is, for a limited period. That is how the boards have been financed in the past.

As the hon. Member for Doncaster knows, our original intention was that the new system should start from 1st August 1974. But now, as the Chancellor has said, the plans for meeting the expenditure of training boards out of Government funds will be deferred by eight months. This postponement includes the financing of the key training activities and the provision of services to sectors not covered by the boards, the areas which we have sometimes in the earlier stages of the Bill referred to as the gaps.

Equally, it will not be possible to introduce statutory levy exemption schemes before then, or the 1 per cent. limit on levy, or the new small firm exclusion requirements. I recognise that this is a matter which will disappoint my hon. Friends, but I am sure they will appreciate the overriding concern to cut down on public expenditure.

So boards will need to continue to operate the existing levy grant system until the end of March 1975. I am afraid—and I acknowledge it straight away— that this is bound to cause some concern amongst training boards which have been working hard to prepare their plans for the new system. My hon. Friend the Member for Harrow, West (Mr. John Page) pointed out that in some cases they might find the delay even beneficial in getting on with their plans. If it has cause inconvenience, that is something we must all regret. It is certainly disappointing for some firms which are looking towards exemption or exclusion, as the case may be, under the new system.

However, it is fair to say that we know that the trend in a number of industrial training boards has been to move towards an exemption-type approach, even under the existing scheme of things, and there has been a strong tendency to exclude more small firms. I have no doubt whatsoever that that is likely to continue. Obviously the postponement will cause some problems. Nevertheless, it is an eight-months' postponement only, and the problems which it causes have to be set against the clear need, which my right hon. Friend defined, to take action now to sustain the steady growth in 1974, 1975 and beyond.

I would say that postponing the change in the system—and here I cross swords with the hon. Gentleman—is something which is different from slashing the budgets of the training boards after the new system has been introduced.

The hon. Gentleman complained once again about the inadequacy of the £35 million. He can complain about it, but he was reading in the main—unless I am mistaken—from statements which were made before it was known that the intention was to move towards a levy exemption system, and that there would be an element of levy still available to the boards. Sometimes that is forgotten.

Mr. Harold Walker

To correct the wrong impression of the Minister, each of the quotations I gave was of remarks made either in Committee or on Second Reading. I could have given many more.

Mr. Chichester-Clark

I am still glad that I made that remark, because many people concerned with training have not grasped that the £35 million will not be the amount of money spent on industrial training. There will remain a levy element. The sooner that message gets across, the more reassuring it will be to those who care about the future of training.

I was asked about money for the Agricultural Training Board. That is financed out of the Vote of the Ministry of Agriculture, Fisheries and Food, so it is not affected. I was also asked where the extra £6 million mentioned by the Chancellor of the Exchequer on Monday will go and whether it will do anything to help. There has been a vast extension of the training opportunity scheme, which has been a considerable success since it was launched last year. We have a target of 40,000 people to train this year, and the £6 million is in the main needed for the higher cost of the training courses in colleges of further education. That is mainly because trainees are taking more two-term rather than one-term courses than was expected.

This gives me an opportunity to mention how we are expanding construction training under the training opportunity scheme. By the end of May nearly 3,950 places should be available for GTCs in the construction trades, and the number of places will have been increased by nearly 40 per cent. in 17 months. By the end of this year about 4,200 places should be available providing 7,200 trainees a year for the industry. The total this year is expected to be about 6,500 trainees. In addition, there are classes providing training at a skilled and semiskilled level available in employing establishments and colleges.

The Chancellor's announcement does not mean that we are less conscious of the importance of the training boards and their work. There has been no reduction in the training boards' current account which is derived almost entirely from the levy. It is merely a question of postponing the introduction of the new system by eight months as a contribution towards the reduction of public expenditure in 1974–75. It is still the intention to bring the commission into existence by about the beginning of 1974, although it may be rather longer before it is given formal powers in relation to approval of the boards' proposals on levy exemption and other matters.

The amendment seeks to provide a sum of not less than £35 million, to be adjusted each year to maintain its value at the 1973 level. On the question of maintaining the 1973 value of the sum allocated, all the figures included in the public expenditure programmes are updated each year to take account of changes in price levels. That is standard practice. The sums allocated will therefore automatically be adjusted each year for price increases.

I am afraid that I cannot advise the House to accept the amendment. The hon. Member for Doncaster must concede that in Committee we have been fairly generous in meeting his requirements. I think he will concede also that we have managed to make a better Bill, and I acknowledge his help in this. We made our policy clear in the White Paper which was published with the Bill, and my right hon. Friend also made it clear on Second Reading.

The White Paper said: It is intended that when the arrangements are in full operation up to £35 million in a full year should be available to the Commission for these purposes …". That, of course, is different again from what was in the original consultative document, which the hon. Gentleman will remember was £25 million to £40 million, and, as I have already reminded the House, since then we have decided to retain the levy, although within a new framework. One must see the £35 million within the context of that retention of the levy.

I do not think it would be right for this Government, or indeed any Government, to commit a future Government in legislation to a minimum amount of expenditure on a particular service or area of activity. Obviously, the House has before it each year the estimate for the grant in aid to the commission with a provision for grants to the training boards, which will be clearly identifiable. The Bill gives the commission full power to make grants to boards under Section 5(1) of the Industrial Training Act 1964 as amended by the Bill, and I am sure this is the right way to deal with the question. Any limit, whether maximum or minimum, laid down in legislation might turn out to be inappropriate as time goes on because of changes in circumstances. No one can really say what the scale of this problem of training is going to be in 10 years' time or what scale of public funds might be needed for this purpose.

I think it would be better to stick to the sensible practice of not referring to any specific sum in the Bill. At the same time, I recognise how important it is that when the new system is introduced the training boards should know what sort of amounts may be available to them from public funds, and that is why the £35 million has been included.

I am grateful to the hon. Gentleman, if for nothing else, for giving me the opportunity to set out what the position is in relation to the postponement, but I cannot advise the House to accept the amendment.

Amendment negatived.

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