INDUSTRIAL TRAINING LEVY (ENGINEERING)

HC Deb 14 March 1978 vol 946 cc373-401

10.32 p.m.

The Under-Secretary of State for Employment (Mr. John Golding)

I beg to move,

That the draft Industrial Training Levy (Engineering) Order 1978, which was laid before this House on 22nd February, be approved.

This is a historic occasion, because I understand that it is the first time that a levy order has been brought before Parliament. It is brought because under the Industrial Training Act 1964, as amended by the Employment and Training Act 1973, an order giving an industrial training board approval to raise a levy in its industry in excess of 1 per cent, of emoluments must be approved by both Houses of Parliament.

It is not necessary for the major part of the engineering industry, where the proposal is for the levy on employers to remain at 1 per cent. It is necessary because the Engineering Industry Training Board is proposing to raise a levy of 2 per cent, on large employers in the mechanical and electrical engineering construction sector. The 2 per cent, levy will apply only to employers engaged mainly or wholly in engineering construction activities, and it will be raised only in respect of site employees—those actually working on construction sites.

Thirdly, the 2 per cent, levy will apply only to an employer whose payroll for site employees exceeds £½ million a year. Fourthly, where an employer meets the previous conditions he will be assessed for levy as follows: no levy on the first £50,000 of his payroll for site employees, 1 per cent, on the next £450,000 and 2 per cent, on the payroll above £500,000. It is estimated that for a large employer the average levy on the total payroll will be about 1½ per cent.

Mr. J. W. Rooker (Birmingham, Perry Barr)

Is there not another exemption in that a site must have 60 workers employed on it? That is my understanding of article 5 of the order. If that is so, what is the estimate of the number of sites that will be exempt?

Mr. Golding

I have no estimate of that. In the construction industry the situation changes from month to month and it would be difficult to estimate.

Why is it necessary to have more than 1 per cent, for the civil engineering sector? The Engineering Industry Training Board decided unanimously to ask the Manpower Services Commission for a higher levy because in the past there has not been a sufficient training effort by employers in that sector. The need for better training is clear. First, about three-quarters of the workers on sites are skilled. Secondly, it is important for the reputation of the civil engineering industry that jobs are done competently. Thirdly, it is a high-risk industry from the safety point of view and training is important to meet safety standards.

Training in the industry is difficult to organise due to the great mobility between sites. The Manpower Services Commission and the Government have devoted time and resources to improving training in the industry over the past few years. In 1974, all the activities of employers in the sector were brought within the scope of the EITB whereas previously they had been split between the EITB and the Construction Industry Training Board. The EITB set up a committee for the sector representing both sides of industry. It has done a good job already in drawing up plans for improving training in this difficult area.

The Government provided resources for the Manpower Services Commission to give £3½ million over three years to help the EITB to begin the job of improving training in the industry. The board made available £1 million on a loan basis to help the sector committee to get things moving.

When the Manpower Services Commission gave the money to the board, it made it clear that it was only filling a gap and that in due course the firms in the industry would be expected to shoulder the major burden of training. The board has now come forward with the levy proposals. It has sought the support of industry for its proposed levy. I welcome the fact that the two major employers' organisations in the industry, the Engineering Employers Federation and the Oil and Chemical Plant Construction Association, support the levy as set out. They have provided evidence of majority support among their memberships. I am pleased, too, to say that the AUEW has also given firm support.

In determining its main priorities for 1978–79, the EITB will be concentrating particularly on maintaining and, if possible, improving the level of apprentice training in the industry and, secondly, on improving the quality and quantity of the training of professional engineers. It will be giving priority to management and supervisory training, and to other skills such as welding, non-destructive testing and site draughtsmanship in instructional skills. I should add the important point that all the training includes training for safety. The Government regard all these as important areas.

One of the Government's own priorities is to maintain the level of apprentice training in industry at a time of recession. Speaking generally, over £135 million has been made available to industry over the last three years. We also believe that management and supervisory training is essential to ensure that work is properly organised and that jobs are completed on time. We see, too, that the training of highly skilled workers obviously contributes to improving the quality of the work done.

The MSC will continue to make money available for key training activities in this sector in 1978–79. This is still under discussion with the EITB. The money will be made available to support, initially, off-the-job training, the training of professional engineers and draughtsmen and management and supervisory training for adult operators.

The order provides for the raising of a levy in excess of 1 per cent. on part of the payroll of some large employers in a highly specialised sector of the engineering industry. In providing special arrangements for this sector, which includes those involved in building power stations, petroleum refineries, chemical plants and the structures that are necessary to exploit the North Sea, the order recognises the particular problems of the industry in raising its level and standard of training and it emphasises the importance of doing so for the long-term good both of the industry itself and of the economy. It also makes a direct contribution to the development of the potential of individuals.

Mr. Jim Craigen (Glasgow, Maryhill)

How optimistic is the Minister that in these rather capital-intensive industries there will be a great deal of potential for young people to find apprenticeships and other opportunities in the skilled trades?

Mr. Golding

This is a matter to which the EITB is at present giving great attention. I discussed it with the board's chairman, Hugh Scanlon, only the other week. The board is very closely examining the document "Training for Skills", issued by the MSC to try to ensure that there is an adequate flow of apprentices into the industries for which it is responsible. I think that the board is delighted with the general proposition that, if industry plays its part in providing training, the Government will top up by the use of taxpayers' money to ensure that we have an adequate flow of apprentices in industry.

I have pleasure in commending the order to the House.

10.44 p.m.

Mr. James Prior (Lowestoft)

I would not detain the House for more than a few minutes at this time of night, but the Opposition felt that this important order ought not to go through without some debate on the Floor of the House because, although the order relates to a comparatively small part of the engineering industry, it is my belief that we do not pay anything like enough attention to that industry in this House. Perhaps at some future date, in Opposition time or Government time, we ought to have a proper debate on the industry.

I am always appalled to find how few Members of Parliament are connected with the engineering industry.

Mr. Rooker

Especially on the Opposition side.

Mr. Prior

I would say that it applies on either side of the House.

The House should pay more attention to the engineering industry and seek to understand its problems, since it is one of the main wealth-creating sectors of the economy. Over the last 50 or 60 years, the capacity of the industry has not kept pace with that of other countries. Britain cannot prosper unless we do something about this.

We give the order a fair wind. We are grateful to the Under-Secretary of State for his explanation of the order. I am sure that no hon. Member on this side would wish to dispute anything that he said. The information that I have is that the employers involved in this sector of the industry have been fully consulted at all stages in the preparation of the order and agree with its proposals. Therefore, there is no problem about lack of consultation.

I pay tribute to the chairman of the Engineering Industry Training Board, Mr. Hugh Scanlon. He has done a first-class job and has perhaps set a precedent for future chairmen of training boards. I should like to thank him for all that he has accomplished. He has won the respect of employers' representatives as well as of his own trade union representatives. Sometimes I wonder whether he is more popular with the employers' representatives than with his union representatives. However, I do not wish to make his job more difficult than it is.

The question of apprenticeships is of vital importance. The more we grow into the concept of training to a standard rather than concentrating on an inflexible period of time, the better it will be for the industry. We are much too hidebound to sticking to a time limit. In many respects, concentrating on training to standard is better.

One of the main complaints is the lack of educational standard of those who come forward for engineering apprenticeships. This is partly because young people with higher qualifications tend to go for other jobs and, therefore, the standard available to the industry has come down in the last few years. But that does not alter the fact that many employers say that the low standards of arithmetic and English are such that remedial education is necessary before industrial training can begin. That is a serious commentary on our education system to which we must pay close attention.

I have just visited Japan and America. Although I was not looking particularly at this sector of the engineering industry, I had a chance to see some line production in various factories. My overwhelming impression—this is supported by information available here, including that in the articles which The Sunday Times began two weeks ago—was that the problem of British industry is not the speed at which we run our machines. There is little difference in that respect between Britain, Germany, Japan, America and other countries. One of our problems is keeping our production line going. There are too many stoppages in the course of the day because our maintenance engineering and the ability of our engineers to walk round the line to keep it going is not as good as that of our competitors.

It always seemed to me that there was, in a way, a weakness in the Engineering Industry Training Board set-up in that many of our food companies—and other companies, too—the maintenance engineers are not of the quality required and are not trained in the way that the board trains those going into engineering firms pure and simple. This is one of the main problems that we have to solve in Britain. It has been borne out a hundred times over that it is not that our people do not work as hard as or work shorter hours than our Continental competitors. In many respects our people work longer hours, but they simply do not keep the production line going hour in, hour out in the way that other countries do.

The other day I was talking to someone in Dunlop, and he told me that by means of a graph the company has compared the uptake of power in factories here with that in its plants abroad, and it has been found that whereas at the start of the morning, when the power is turned on, the graph immediately shoots up and remains at the same level throughout the day in other countries, in Britain it tends to wobble around all day, which is a further indication that we have great difficulty in keeping our production line working throughout the day.

I hope that the Engineering Industry Training Board will pay particular attention to the problem of maintaining a flow of production on the line. I do not think that we have given this matter or the problem of restrictive practices and who does what sufficient attention. I do not for one moment think that these are matters for the House to deal with— heaven forbid!—but they are matters over which management and unions have to get together. The board is a good catalyst for talks of this nature, and one of the great benefits that has come from training boards is getting the two sides of industry talking together in an informal and off-the-record way. That, again. is something that I strongly support.

I am worried, as, I think, many hon. Members are, about the growth of bureaucracy that is overtaking certain sections of what might be called the training industry. I think that the House and the Government have a duty to watch that carefully. Whether my Government were right to make the Manpower Services Commission independent of the Department of Employment I just do not know, but I have an awful feeling that there is a degree of duplication and a creeping in of bureaucracy that has to be watched, because if it is not kept carefully under control it will lead to a certain disillusionment on the part of both sides of industry. I hope that the Government will bear in mind the fear that bureaucracy is beginning to take over in the training industry.

Those are the only remarks I want to make, except to end by saying again that in this House we do not pay enough attention to the importance of the engineering industry. I doubt whether we have paid enough attention to it at any time this century. Anyone who reads Corelli Barnet's "Collapse of British Power" has to recognise and go back to the last century to find that the Select Committees which were discussing technical education were saying that unless Britain pulled itself together we would fall behind other countries. It has taken a long time for this to happen. What in the 1880s was being prophesied would happen quickly has started to come about in the 1970s.

As our industrial base has narrowed and as the efficiency of British industry has declined, the need for the Government and all those who have any influence on public opinion to do everything possible to encourage the engineering industry to recruit people of high quality, to see that they are properly rewarded and to see that the differentials for skill are once more sustained at reasonable levels has become of great importance.

I am always being told that an enormous number of milk roundsmen in London are qualified, skilled men but that nowadays it is better and more profitable to do an unskilled job and to fill in by doing a bit of moonlighting than to follow a skill. There is no point in anyone in this country spending vast sums on training people if they are not to be properly rewarded after they have achieved the skills that industry requires. It will mean a widening of differentials and taking a different attitude from the one that we have adopted over the last few years. I hope that it will be a matter not of party controversy but of common ground between the parties in the House. A number of industrial matters are so important to the future of the country that they must become common ground between the parties.

We must have a strong industrial base, and our great engineering industry must be an important part of it. If we do anything to destroy the confidence of the engineering industry in its ability to invest and in the ability and desire of people to work within it, we shall do no service either to our country or to that industry. There are many other matters about which we can argue. That is why I give the order a fair wind tonight.

10.57 p.m.

Mr. J. W. Rooker (Birmingham, Perry Barr)

My first point is a criticism not of my hon. Friend the Under-Secretary of State but of the explanatory note to the order. In fact, it does not explain anything about the order. The explantory note is meaningless. It gives no indication to members of the public or to Members of the House of the effect or the contents of the order. There is nothing to indicate the peculiar nature of the order as it affects engineering construction.

Before my hon. Friend signs the order, I ask him to get the explanatory note altered. He can do that after the order has been passed, because the explanatory note does not form part of it. I think that he needs to pull up his officials, because this is mumbo-jumbo. It does not do what it purports to do.

My second point concerns the definition of "engineering construction". I accept all that my hon. Friend said about the vital nature of this industry. It is a difficult industry to organise in terms of trade union activity, management, manpower, cash flow, orders and so on. It is also difficult for the Inland Revenue to collect the taxes which are due from various sections of the industry, whether from workers or from companies, as we have seen recently.

I hope my hon. Friend will confirm that there are no loopholes in the order that would enable the bucket-shop operators in the construction industry to become classified as engineering constructors and thereby obtain some of the exemptions available to many small firms because of the minimum level of payroll, the minimum number of workers on a site and so on. There are possible loopholes if people can change the definition of their firm.

Mr. Golding

The figure of 60 is modified in respect of engineering construction. It is of much greater significance within mainstream engineering than within construction, because the figure of £50,000 for emoluments is more relevant in the constructional engineering industry.

Mr. Rooker

I accept that for the conventional engineering industry 60 is too low a figure to give exemption to small employers. One could raise it and there would still be a case to be made. But the construction industry is a different matter. For many firms in construction 60 would be a large number of workers on a site, although in the building of a power station or oil refinery one has what is in effect a mobile factory, with several hundred employees.

I wanted to make the point because of the notorious difficulty of the construction industry in operating under the tax laws of the land and in making other normal payments to the State. I would think that there were opportunities for the bucket shop operators to gain exemptions.

The right hon. Member for Lowestoft (Mr. Prior) had important points to make. I was glad that you did not call him to order, Mr. Deputy Speaker, because we are enabled to have a more wide-ranging debate than I had thought possible. A member of the Shadow Cabinet thought it important enough to take part in the debate. He has subordinates who would normally carry out that function. Clearly, there are reasons why he has done it himself.

The right hon. Gentleman said that the House paid little attention to the engineering industry. He is right. The reasons are abundantly clear. Few Con- servative Members are qualified or experienced in the industry, whether on the shop floor or in management. How can one expect a House full of lawyers, journalists and teachers to take on board seriously the problems of engineering and productive industry and its importance?

The House will give hours each week to discussions of the minutiae of legal matters and peripheral education matters. I often wonder what you are thinking about as you listen to the debates, Mr. Deputy Speaker. Do you think of the nation outside and the millions of people working in productive industry? Fortunately, I do not have to listen to all the debates. I am not saying that only those hon. Members with experience are qualified to speak—that is not so—but there are not enough hon. Members with a detailed interest in the industry.

It is well known that the character of the House has changed over the years. There are fewer and fewer Members on the Labour Benches who have been manual workers in engineering and manufacturing. There never were many. The Conservative Party may well be the party of business, but it is not the party of management. There are not many people on the Conservative Benches who are experienced in running factories.

Mr. Frank Hooley (Sheffield, Heeley)

My bon. Friend is being a little unfair in criticising the House. Labour Members are selected as candidates by constituency Labour Parties. That selection process is responsible for the lawyers and the teachers who are here. When there was a 10,000 Tory majority in my constituency, there were very few engineers and workers from the shop floor who were willing to fight that seat. People like me were left to do it.

Mr. Rooker

The House does not reflect society as a whole, and there is probably good reason why it should not be a mirror image of society. Because of the nature of society, it is difficult for people at the productive end of industry, the sharp end, the shop floor and management, to take the risks that result from becoming involved in local as well as national politics. It is much more difficult for those people than for people in other occupations, and that is one of the reasons for the present character of this House. That is why all the journalists and lawyers are here as Members. The nature of their occupations enables them to devote more time to the subject and to run the two activities together.

I am criticising the whole system. The problem goes down to the grass roots of the selection process. I reiterate what has been said about the House not giving enough time for debates on this subject.

I think that the right hon. Member for Lowestoft came along tonight to serve penance. We hear a great deal these days from the Opposition by way of apologies for their reform of local government, the National Health Service and water authorities. Those are all the things that the Labour Party gets the blame for because they took place in April 1974, although they were legislated for by the Conservatives.

One such matter that has never been debated substantially in the House is the hiving off of the activities of the Department of Employment by the Conservatives. I give the right hon. Member his due. He did not cover up the fact that it was his Government who set up the Manpower Services Commission, the Training Services Agency and the Employment Services Agency, a growing train of bureaucracy for which he and his right hon. and hon. Friends now castigate the Government.

Perhaps this is the next theme for the Opposition to pursue—first, immigration, then law and order, and now the next campaign from the theme committee of the "gang of four" is to be bureaucracy. The Opposition are laying the groundwork now by coming to the House late at night admitting that they were really to blame, after which they will go full tilt at the subject.

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. The hon. Member is running away with himself. The right hon. Member for Lowestoft (Mr. Prior) was talking about the industrial training levy. I think that the hon. Member is now expanding on that theme. He should confine himself to the order.

Mr. Rooker

Of course, I accept your admonition, Mr. Deputy Speaker. But the right hon. Member went somewhat wider than the training levy—

Mr. Deputy Speaker

I am not denying that fact, but the hon. Member is going even wider than that.

Mr. Rooker

It is for that very good reason, Mr. Deputy Speaker, that my final point relates strictly to the training levy and to the question of rewards to apprentices for skill. This is supremely important. It is no good my right hon. and hon. Friends bringing forward orders to support and encourage a greater degree of apprentice training in industry, particularly in engineering, thereby encouraging young men to take up a skill and become craftsmen, if those men are not in the end to be paid for the sacrifice that they make. It is a sacrifice to go through an apprenticeship.

I do not accept the argument about time limits. There has to be such a limit because the scheme has to be properly structured. However, the five years that I served was too long.

Some trade union leaders say that there must be rewards for effort as well as skill. The implication of that is that men working on the track should not get a penny less than the men working in the tool room. That in turn implies that the person working in the tool room is not using effort in addition to the skill he has obtained. I do not accept that. I shall not go into greater detail, because hon. Members will gather to whom I am referring.

I have contributed to the forthcoming quarter's edition of the Engineering Industry Training Board's newspaper—various hon. Members in the main parties take turns at doing so—and I have made this point. It is no good encouraging young men and girls to go into engineering apprenticeships without providing an adequate reward for the sacrifice they make. The Government's pay policy must recognise that, and all the political parties have to face up to the fact that this is the one way of getting over the problem.

We do not want a party battle on the issue of differentials for skill. It would not do anyone any good, least of all the people whom we are trying to encourage to take up apprenticeships and the firms that we are trying to encourage to bring in new people, with the help of the Engineering Industry Training Board and other training boards. On the evidence so far, the Government do not appear to have accepted this. There are now many skilled craftsmen who have seen their differentials eroded and who are getting no real reward for the sacrifice of their apprenticeship years and the skill they have acquired.

Incidentally, I do not accept that there are unskilled jobs. Every job is skilled in its own way, and it is certainly a denigration to imply that a milk rounds-man is unskilled. Nevertheless, it is possible for skilled men today to do that sort of work and not have to take a moonlighting job in order to make ends meet. That is because the differentials have been so eroded.

There are many cases in which skilled workers are seeking loopholes in the pay policy, such as may be provided by the fair wages resolution. They do this rather than have an industrial dispute, because jaw-jaw is better than war-war. Large groups of toolmakers have lodged claims. It is their only way out of the impasse. Some of our trade unions have grown in such a way that many skilled craftsmen do not believe that their own unions take full cognisance of the sacrifice they have made to gain their skills and to keep in their trades.

It is greatly to the credit of many skilled craftsmen that they still encourage their sons to follow them, because on all the available evidence it is not morally justifiable in many cases today. The acquiring of a skill does not necessarily mean having a job for life, but it means that that skill will be, or should be, recognised and rewarded.

We need a turn-round by the Government and an acceptance of the sorts of points that many of us on each side of the House have made. The Engineering Industry Training Board, which still has Hugh Scanlon as its chairman, ought to take account of them. It would be more likely to be listened to by parties in this House than would other bodies in the engineering industry which were making exactly the same points.

The board has a very good record and is well thought of and accepted by the employers in the industry. The people on the board and involved in its operations are often skilled men. Indeed, one of the senior officials in North Wales was at one time my chief and owned a firm employing about 100 men, at which I served my apprenticeship in Birmingham. He is now using his skills as a former tradesman and owner-manager of a firm and is putting his expertise at the disposal of the board.

People of that sort have great expertise and knowledge. They can see and understand the problems. That being so, the board is in a good position to deal with points of the kind which have been raised and to bring forward some recommendations to the House. That would be preferable to having to go through the Manpower Services Commission.

11.14 p.m.

Mr. David Penhaligon (Truro)

I have been pleased with the tone of the debate. We have been discussing a matter which ought to be discussed far more often. There are, I believe, only eight—or perhaps 10—chartered engineers in the House of Commons, of whom I am one. That is extraordinary when we consider that, with the exception of Japan, we are the nation which most relies upon engineering expertise on a wide front in order to produce goods to export. It means that in this House there are some 625 hon. Members who are certainly not particularly knowledgeable in this area. I believe that parliamentary debates on this topic ought to be regarded as being of considerable importance and that greater scope should be provided for them.

I remember that, when I was standing for Parliament in my constituency, the other parties were rather worried that I might get elected. In fact, I was more worried than they were. As a chartered engineer, working for Holmans in Cornwall, I remember the final message that went out to deride my efforts. Canvassers said, "Of course, he only works down Holmans, you know. Would you like such a person to represent you in Parliament?". I only just won, but the fact that I was a chartered engineer was of little or no significance.

I believe that over the last 15 years this country has made a great mistake in regard to training engineers and training in general. Criticism is often made that the ability of those who now apply for the classical engineering apprenticeship to read and to understand numbers is not satisfactory. I suspect that is so mainly because those whom the industry used to take on as apprentices no longer make themselves available for apprenticeship.

They are scooped up in our great education system and go off and do something else.

I believe that this country has made a tragic mistake by creating a considerable divide—which certainly exists for the brighter half of the country—between academic training and training in industry. I am staggered how often I meet someone with a university degree, who wants to become an engineer, but who has hardly ever spent more than 12 minutes inside a factory or has hardly ever met industrial life head on. That is a disaster for which this country will pay very heavily.

Nowhere is this better expressed than in our talking to local sixth form colleges. That is one of the standard things which hon. Members are asked to do in a fairly non-partisan way. We are asked to talk about the House of Comons and the economy in general. One of my favourite questions which I always put to students—who, I suppose are academically the elite—is whether they have any ambition to be involved in the process of making something. In such a group, which is supposed to be the better 10 per cent., occasionally one student puts up his hand. My usual reply is "You and I have got busy lives in front of us keeping all the rest". That is the reality of the situation. The existing status of engineering and chartered engineers is very low indeed, and we shall pay dearly for that.

I welcome the order. We must welcome orders such as this for all industries. Such orders at least mean that every company will make a contribution towards training. There was an increasing tendency to believe that all companies would take their responsibility towards training seriously. But often a large number of the people go down the road to a firm which carries out no training whatever. The order will at least stop that. It will make every firm play its part and face up to its responsibilities. In view of the state of affairs that we have now reached, we must all welcome orders such as this.

I should also like to comment on the point made by the hon. Member for Birmingham, Perry Barr (Mr. Rooker) with regard to differentials. It is not fair nor true to blame the Government's present pay policy for the lack of differentials. The lack of differentials in engineering, as well as in many other spheres of life, has been a growing trend for a long time. It is not a particular effect of the pay policy over the last two or three years. It has been brought about, and brought to a head, because industry no longer has enough skilled people, which is regrettable. No longer are there sufficient skilled people to do the increasingly complicated jobs which engineering requires as an industry.

The industry has got over this problem for a very long time by making most of the jobs in factories jobs for idiots. The attempt is made to employ as little skill as possible. I know many skilled fitters and turners who use less than 5 per cent. of their skills on the occupations that they are given, because that is the way that the production line is run. It is run not to use the full capacity of available skills but to use as little skill as possible and as many untrained people as possible. The effect is not just the erosion of differentials; it is boredom. I suggest that the man who decided to become a milkman as opposed to remaining in industry did so as much as anything else because, in view of the way that industry has been run over the past 10 or 15 years, becoming a milkman was not only as well paid but far more interesting than the jobs of many in industry.

A number of specific points have been mentioned, and I should have thought there was a good case for a day's debate on many of them. Although this country is telling itself that we have plenty of oil—and perhaps for a few years we shall have—there is no doubt that within my lifetime we shall get back to the position where once again engineering is the backbone of whatever standard of living we have. Perhaps the oil gives us four or five years or possibly a decade in which to sort out this essential problem, but it is desperate that we both increase the status of engineering and bring training and education in later years closer to industry. It is obvious that we must increase the general level of skill available.

If we cannot achieve those objectives, all the parliamentary debates, all the taxation incentives and all the industrial levies will be as nothing, because the backbone of our economy will not exist.

Therefore, I welcome this order. I think that it will increase the amount of training that is done. I wish that the industry itself had taken on the responsibility, as opposed to the Government setting it up. But, for all that, I welcome the fact that the Government are taking it on, and I hope that it will lead to the increased training and the level of skills which the few of us in the House at the moment see as so necessary if the United Kingdom's economy is ever to take off.

11.23 p.m.

Mr. Jim Craigen (Glasgow, Maryhill)

We all seem to be in favour of this order, but I wonder whether we are not expecting far too much of the Engineering Industry Training Board when we talk of resolving some of the many problems which have been raised in the debate.

Dare I admit that I am not an engineer by training? However, I recognise the crucial importance of the industry to our economy. The hon. Member for Truro (Mr. Penhaligon) referred to the development of North Sea oil, but what really intrigued me was the confession made by the right hon. Member for Lowestoft (Mr. Prior). I recall that there was considerable resentment about the levies of the various industry training boards when the Conservatives set to work in devising the 1973 Act, and, in many respects, I think that we are suffering from the way in which that piece of legislation downgraded the individual role and capacity of industry training boards. If we are now suffering from the surfeit of bureaucracy, the Conservatives were largely responsible for it.

I want to take up with the Minister what he said about apprenticeships. The industries which he cited are very largely industries which take up a lot of capital but do not provide many new jobs. It seems to me that in the future increasingly we shall require the industry training boards themselves to foster the employment of young people in their respective areas. Many employers seem to be reluctant, if not loath, to take on more young people. I would have wished that the Minister might have referred to any foreseeable developments of the excellent training awards scheme within the EITB and some other boards.

The points that were made about rewards and status within an industry are all too true. The trouble is that altering the status and social standing of people working in engineering or other skilled occupations compared with those in white collar and professional work will take a long time and largely will have to be fostered in the education system itself. It is far too late to leave it to the industry training boards.

The right hon. Member for Lowestoft was correct in pointing out some of the problems that employers are facing over the skills that young people often lack when they come on to the employment market, quite apart from the relevant shortage of employment opportunities in many parts of the country.

11.27 p.m.

Mr. Alan Haselhurst (Saffron Walden)

The explanatory note has come under attack from the hon. Member for Birmingham, Perry Barr (Mr. Rooker), but at least it says that the purpose of bringing forward this order to impose a levy is to encourage adequate training in the industry.

The Under-Secretary did not really enlighten us on the subject of adequate training in the industry. There are at least two limiting factors which we should bear in mind—particularly as the debate has ranged as widely as it has—about the adequacy of training in the engineering industry, and whether the training board should be casting its eyes on what is happening in schools. I am not convinced that the preparation for work or apprenticeship in engineering is all it might be in some schools. Some schools have people from the industry to train youngsters in the engineering workshop, and this may be beneficial, but I am not convinced that it is happening on anything like the right scale.

When I hear from employers that youngsters who leave school and come to them have to be told to forget what they learned at school, I feel that something is wrong. If we are to get something out of trainees from school we must see whether the initial foundation that they are acquiring is the best as it is at present organised in the schools. This raises wide questions. We must ask whether keeping people in school for the purpose of learning the elements of engineering is necessarily the best way of preparing them for work and of making them the best material for entry into the industry.

The other factor relates to the exemptions allowed in the order. The Under-Secretary would not expect me, from this side of the House, to want to place huge new burdens on small businesses. Rather I would tend to argue that these businesses have too many burdens already from a variety of causes, and that they are not allowed to get on with the job.

However, when it comes to the question of training, I see this in a wider context. We ought to spend more time and effort in training people in the engineering industry and other industries. I am not sure whether we can afford to ignore the potential for training offered by the small employers. I realise that many small employers fight shy of taking part in the training process, sometimes for good reasons and sometimes for not such good reasons. I wonder whether at some stage we shall not have to try to extend the demands that we make upon small employers in the engineering industry. Could not this be done through specialist training associations helping the small employers to carry out training?

I do not say that we should place a great bureaucratic responsibility on each employer, but we could offer him facilities through a group training association, so that there would be a relatively painless way in which he could train one, two or three people. In total, this might make a great contribution to the fund of trained engineers.

This point may be considered somewhat abstruse in terms of the subject that we are discussing—

Mr. David Watkins (Consett)

This is not an abstruse matter. The whole basis of the grant-levy system, which has been in operation in the engineering industry for several years, is to penalise those employers who do not provide training but allow the responsibility to be taken by those firms which have considerable resources for training. That is the basic object of the grant-levy system.

Mr. Haselhurst

I am grateful to the hon. Member for having appreciated the relevance of what I was saying. But we must attend to the points that I have made if we are to get the most we can in terms of training people for the engineering industry.

I welcome the order, but point out that before long we may have to consider going further.

11.32 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

I share the opinion of my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) in his criticism of the explanatory note, which states that The proposals are for the imposition of a levy on employers in the engineering industry for the purposes of encouraging adequate training in the industry. In fact, the order has a much narrower objective, as was explained by the Minister, since it relates only to certain employers in the engineering industry, and in a rather restricted way, at that. The explanatory note falls short of telling us what the order is all about. Nevertheless, this is an important order, and I support it.

I want to take up a point that was touched on by other speakers concerning the problem of what we should do when boys and girls simply do not come forward for the training opportunities that exist. It is a peculiar irony of the present situation that, although we have a falling level of employment, there is a shortage of skilled workers. This was well brought out in the Sheffield Star of 7th March, only a few days ago, which reported the city's industrial development officer as saying that there could be more than 2,000 vacancies for skilled workers in Sheffield and some firms were wary of taking more orders because of the situation. The president of the Sheffield Chamber of Commerce, commenting on the shortage of skilled labour, said that there seemed to be a lack of desire to take up skilled jobs. Such comments are not simply made by local government officers and business men they are confirmed by the district manager of the Training Services Agency. I want to quote briefly from the report that she presented to the industrial development committee of the city council only last Friday. She said: Despite the efforts of the Employment Service Agency and a large amount of advertising, the training places at Sheffield Skill-centre were underused throughout 1977. The over 90 per cent. occupancy of 1976 was maintained up to the end of May 1977 and then fell steadily to reach a low point of 78 per cent. in September 1977; it remained in the low 80s until the end of the year—a quite unacceptably low figure. In regard to training within firms, she said: Short courses in Engineering were under-used throughout the year in Employer Establishments—insufficient numbers of young persons were interested in undertaking training in this field despite excellent placing results, and some instances of successful transfers to standard craft apprenticeship training schemes in the Autumn. This is a serious problem and I do not altogether agree with my hon. Friend the Member for Perry Barr that it is a crude matter of money, incentives and differentials. How would he deal with the differentials problem? He knows better than that there has been a civil war in British Leyland between the TGWU and the AUEW over precisely the question of differentials. The skilled craft workers want differentials, but as soon as they push for them there is immediate pressure from other workers who want to join in if there is any money going—and I do not blame them.

My hon. Friend made the curious observation, in which there is some truth, that all jobs are skilled. There is some special responsibility and effort in milk rounds just as on production lines or among skilled craftsmen. I am not sure that is merely a question of differentials, though they may have a part to play in solving the problem. If we say that we shall restore differentials in an industry, the backlash from those who will not get increases will destroy what we may be trying to achieve.

Mr. Rooker

My hon. Friend has been a little unfair to me. Because of the time limit, I did not go beyond saying that the problem went much wider than merely differentials. I was going to intervene in the speech of the hon. Member for Truro (Mr. Penhaligon), but, again because of the shortage of time, I did not do so, to point out that, unlike most professions, engineering does not offer a way to the board room to anyone starting from the shop floor. This is because of the elitist attitude of the institutions. People cannot now get to the top through the old path of part-time education. They must have had full-time further education, and this is a barrier to many people. If we opened these avenues from the shop floor, workers might be prepared to make sacri- fices and even to have no differentials for a few years.

Mr. Hooley

That is an extremely important point and I do not dissent from what my hon. Friend has said. That may be one of the ways in which we can persuade young men and women to go more readily into skilled work in engineering. The prospect of the field marshal's baton in the knapsack may help to persuade them.

Another possibility would be to provide greater security of employment, especially for skilled workers. Men with the greatest skills—those aged between 40 and 55—can be thrown out of work in their hundreds by a single decision of a company that takes over their firm and closes it.

While that situation exists in manufacturing industry, parents may tell their children not to get involved in the industry and to go instead into local government, the National Health Service or public corporations, which have a much better record in this respect. or to somewhere that gives them a reasonable assurance that if they do their job properly the job will remain. While we have the rather crude system in manufacturing industry that allows highly skilled men to be thrown to one side at short notice—or even with no notice—we are destroying the incentive for the most able boys and girls to come into the industry.

Undoubtedly we have a serious problem in providing adequate skilled labour. Even with the appalling 1½ million unemployed there is a shortage of skilled people. Even more serious, there is now an apparent reluctance on the part of some boys and girls to take the vacancies that are offered.

I do not share the criticism made of the Manpower Services Commission. It is an important body and it was right to create it. However, apart from the provision of training facilities, which is extremely important, it must examine a little more carefully why those facilities—this applies at least in the Sheffield locality, and it probably applies elsewhere—are not being fully used, when on all normal calculations it should be a splendid chance, with so much unemployment, for boys and girls to seize with both hands the opportunities that are available.

11.42 p.m.

Mr. Cecil Parkinson (Hertfordshire, South)

I intervene briefly in what I consider to be a most interesting debate. I do not want to introduce a note of acrimony when I say to the hon. Member for Sheffield, Heeley (Mr. Hooley) that I cannot agree with him that businesses are taken over with a view to putting highly skilled people out of work. The most important commodity that most businesses have is the skill of their employees. I have never come across anyone who wants to take over a business with a view to getting rid of skilled people.

I must declare an interest as I have taken over a business or two and have built up a small group of businesses. One of my businesses is in the engineering sector. It is so involved because one of its associated subsidiary activities is in that sector. I am a chartered accountant. I apologise to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) for not being an engineer.

My children will be surprised that I have intervened in a debate about engineering because I am probably the most hamfisted do-it-yourself person in Great Britain. I lay no claim to possessing engineering skills.

Mr. Penhaligon

The hon. Gentleman has summed up the trouble. He is proud that he is in that position in a country that relies on manual skills. In some sections of our society to be ham-fisted is something to boast about, and that is the trouble.

Mr. Parkinson

The hon. Gentleman is totally and utterly wrong. I have been an athlete. I used to run 400 metres. The fact that I could not run three miles never troubled me because I had a skill that I used. I have a skill now because I am a chartered accountant. We need a variety of skills. It is not necessary to apologise for not being an engineer if one has a skill and makes a useful contribution in other ways.

There is an air of unanimity about the debate that is welcome but in a way slightly troublesome. The Engineering Industry Training Board is not entirely without criticism. I welcome a great number of its activities. I was proud last year to preside over the presentation of the awards at the Craftex exhibition. The EITB had sponsored a competition among apprentices in which skill in finishing a job on time was put at a premium. I was impressed by the work that the board had done and with the work that was being done to lay the emphasis on skill.

I was, however, a little critical that two highly skilled people travelled all the way to London to present me with the programme for the day. I thought that it was unnecessary that so much skilled time should have been lost in delivering something that the Post Office could have delivered for 9p. There is a feeling among the engineering industry that the EITB does things on the grand scale and that it is rather extravagant. The EITB will have to guard against that. Certainly it is extravagant for two highly skilled people to travel to London just to deliver a letter. I am repeating remarks that have been made to me by engineering employers in my constituency. They think that there is a certain amount of waste in the machinery.

One must welcome the fact that the order exempts the smaller companies. It is sometimes very difficult for small companies that have specialist areas for which they are responsible, where they do on-the-job training, to find themselves being levied. I remember one of my constituents coming to see me about this. He was absolutely incensed by the fact that he had been forced to pay a levy when he did all his on-the-job training. When he said to the board "How can I get something from this? What can you contribute?", the board's only suggestion was that perhaps he would like to go on a management course himself. As he was a one-man manager who had run a business very successfully for about 15 years, he did not take too kindly to that suggestion.

However, on the whole, the board does a first-class job. In this country there is a very big need to put the emphasis on training. Last week I talked to a representative of MITI, the Japanese Ministry of Industry. He was saying that the key to Japan's success is the fact that people accept that they will have to retrain perhaps once or twice, or three times, in their lifetime. He said "We in Japan do not understand the British saying 'A rolling stone gathers no moss'. We think that a person being fixed in the same place and not changing is unhealthy.

We in Japan, with our company unions, accept that one of the things that we cannot discuss is unemployment. The union is firm about it. It will not allow us to talk about sacking people but, in return, the employees also accept that they will have to face retraining and that they cannot hang on to jobs for which there is no longer a demand. They have to be prepared to move on, retrain and take the new job, and not try to hang on to the old one". That illustrates one of our weaknesses in Britain.

I recall being lobbied a few months ago by a group of printers from my constituency. One of them said "I did a five-year apprenticeship. Now, 10 years later, the machines are such that an intelligent person with a few months' training could do my job, yet I spent five years training to do it". I said "This is very sad for you, but let me put it to you another way. How old are you?" He said "I am 36". I said "Do you really think that between now and retirement age you will be able to hang on to a job for which, by your own admission, there is no real demand, because, 10 years ago, you had five years' training? It is sad, but you have to think about the next job, and not worry and become bitter about the fact that your old one might be getting out of date".

I am sorry that the Minister is agitated. I want to put forward a few points, and I intend to do so. It is our bad luck that we shall not be able to listen to too much of the Minister.

Mr. Tony Durant (Reading, North)

Following the point that my hon. Friend has been making, does he accept that titles are very much in line with what he has been talking about? People get stuck with titles to certain jobs and, therefore, find difficulty in being flexible and changing on the lines that he is suggesting.

Mr. Parkinson

That is quite an important point.

The reason I wanted to intervene in the debate is that in my constituency now, at a time of high unemployment, there is a chronic shortage of skilled people. One company there alone has vacancies for nearly 1,000 people. My local newspaper, the Boreham Wood and Elstree Post, could not believe that this was a fact. It sent representatives all round the fac- tories in my constituency to see whether this was unusual. Every employer in my constituency now has vacancies for skilled people. At a time of recession, we have a chronic shortage of skilled people, mainly engineers. What will it be like if we have a boom, if we ever have one again? At a time of deep recession, with 1½ million out of work, many highly paid jobs are going begging because there are not the people to fill them.

My right hon. Friend the Member for Lowestoft (Mr. Prior) mentioned several matters which my local newspaper has found out for itself. It has found that housing is a problem, that there is no flexibility in housing. It has found that there are transport problems and that the tax rates make it not worth while to become highly skilled. It has found that the education system results in children not wanting to go into industry. Local schools are sending their brightest children to universities and few are going into the craft skills. I was interested in what my right hon. Friend said, because my experiences in my constituency confirm it.

I spent this afternoon at the Thames barrier watching the work by people in my company on that interesting project. The lowest paid man on the site is the site manager. He is the most highly skilled man on site and yet not well paid. The Government have made it impossible to give him a rise. We are not allowed to do that. If we did, since this is a public contract, we should be subjected to the sanctions. I often wonder whether Government Ministers understand half the policies that they support. This highly skilled man is not as well paid as some of the labourers on the site.

I could launch a debate on that project. Suffice to say that, for various reasons, it will be a very expensive barrier by the time it is finished.

Until differentials are restored and the tax system restores incentive, skills will be downgraded and skilled jobs will remain vacant. That is a serious problem.

11.52 p.m.

Mr. Golding

I shall have to hurry or my right hon. Friend the Member for Wakefield (Mr. Harrison) will be upset if I talk the order out.

My hon. Friend the Member for St. Pancras, North (Mr. Stallard) has the best qualifications to take part in tonight's debate but, being a Whip, he has not been permitted to speak. He is a member of the Institute of Training Officers.

I apologise for not being able to reply in the detail which the debate deserves. It has been a thoughtful debate. I appreciate the thoughtful contribution by the hon. Member for Lowestoft (Mr. Prior). He said that we did not pay enough attention to the industry. That cannot be true of the Department of Employment. Both of my senior Ministers are trained craftsmen from the engineering industry and are conscious of the problems.

I join in the right hon. Gentleman's tribute to Hugh Scanlon. We hope that he will continue to head the Engineering Industry Training Board for a long time. I am impressed by his grasp of the industry's problems. Certainly he is aware of the need to examine the structure of apprenticeships.

I am not convinced that a lack in educational standards always leads to difficulty in recruitment. I have been a full-time officer of a union which in the last few years has been proud of the level of its recruits into craftsmen technician apprenticeships in the Post Office.

Indeed, I take the point made by my Friend the Member for Birmingham, Perry Barr (Mr. Rooker). What I find disturbing on factory visits is the difference in status between the 16-year-old girl in the office and her prospects and those of a craftsman on the shop floor. I think that a lot of the movement away from skilled trades—and that is my family background, because my uncles were skilled workers—and a lot of the erosion of differentials could be prevented if we could return to the situation where the craftsman is given more status, more security and the possibility of promotion—all of which are denied to him at the moment.

The right hon. Member for Lowestoft referred to the weakness in the Engineering Industry Training Board set-up and said that difficulties sometimes arise in getting maintenance engineers in other industries. I am conscious of this, and the district officer of the AUEW in North Staffordshire has drawn my attention to the way in which poaching takes place from mainstream engineering into other industries.

I think that one matter to which we have to pay careful attention—and I have discussed this with the Manpower Services Commission, the EITB and other training boards—is that too often we see training in a national rather than a local context, and people work locally rather than nationally. I think that there must be a closer relationship between the various industry training boards in order to get over some of the problems that we have been debating tonight.

I do not think that any complaint of bureaucracy stems from the creation of the Manpower Services Commission as a body independent of the Government. I think that Conservative Members were right to hand over training and the employment services to employers, the trade unions and the local authorities, because when they have taken decisions they are able to deliver in a way that the Government cannot do. However, I agree that there are problems, and the right hon. Gentleman has spoken of them in a different context.

One of the difficulties that we have in a long chain of command is that we are trying to control the use of public money and therefore introducing mechanisms of accountability which in turn become bureaucratic irritations to people in the front line trying to get on with the job of training. I think that the Manpower Services Commission has to look carefully at its relationship with the EITB and others to make certain that there is no more bureaucracy than is needed to give us a reasonable degree of accountability.

I accept the criticism that has been made, particularly by my hon. Friend the Member for Perry Barr, of the explanatory note. I shall accept responsibility for that rather than push it over. My hon. Friend referred to mumbo jumbo, and we shall look at the explanatory note to see whether something more adequate can be prepared. It may be that it will not be possible to do something on this occasion, but the point is well taken.

Let me make it clear that the order covers the whole of engineering. I talked of the constructional section particularly since it was because there was a demand for 2 per cent. rather than 1 per cent. that we are having the debate tonight. The level of exemption for construction is determined more by the payroll than by the numbers involved on site. I agree with the hon. Member for Hertfordshire, South (Mr. Parkinson)—this is about the only matter on which I do agree with him—that there are problems in not exempting small firms. I recently spoke to the EITB about this. If the cost of collection exceeds the amount that one collects it is bureaucratic nonsense not to exempt. The test that I always apply is whether it is worth spending money to collect money.

I do not accept the description of the gravy train and bureaucracy. The right hon. Member for Lowestoft did not use that expression.

Mr. Rooker

Neither did I.

Mr. Golding

My hon. Friend attributed that expression to the right hon. Gentleman. I do not think that he said that, and it is not an apt expression.

I was interested in the contribution made by the hon. Member for Truro (Mr. Penhaligon). I think that he was probably elected on the Holmans vote. Snide remarks in elections always tend to backfire. I accept the spirit of what he said.

My hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen), in an interesting contribution, asked about the future of awards. The Government are determined to maintain support for apprentice training. We shall have to consider in what ways we can do that in future.

I am afraid that I shall not be able to reply to all the points that have been made. I am conscious of the comment by my hon. Friend the Member for Sheffield. Heeley (Mr. Hooley) about the shortage of skilled labour. There is a skill shortage in certain places. It is sometimes difficult to fill engineering places in skillcentres. As a nation, and certainly as a Government, we must tackle that problem.

Question put and agreed to.

Resolved,

That the draft Industrial Training Levy (Engineering) Order 1978, which was laid before this House on 22nd February, be approved.