INDUSTRIAL TRAINING LEVY

HC Deb 27 June 1979 vol 969 cc600-10

11.4 p.m.

The Under-Secretary of State for Employment (Mr. Jim Lester)

I beg to move, That the draft Industrial Training Levy (Engineering) Order 1979, which was laid before this House on 28 March 1979 in the last Parliament, be approved. This is the second time an engineering industry training board levy order has come before the House for approval. Last year the order was introduced by the hon. Member for Newcastle-under-Lyme (Mr. Golding) and was supported by my right hon. Friend the Member for Lowestoft (Mr. Prior), and I am sure that we can look for the same bipartisan approach today. I also hope that, as last year, the debate—if we are to have a debate—will cover training in the engineering industry generally, because, as my right hon. Friend said then, the engineering industry is one of the key wealth-creating sectors of the economy, and its training arrangements are of great importance in equipping the industry for future needs and growth.

This order is before the House because one part of it involves a levy of 2 per cent. on large employers in the mechanical and electrical engineering construction sector. Under the Act an order giving an industrial training board power to raise a levy in excess of 1 per cent. of emoluments must be approved by both Houses.

The order is identical to last year's. For the main part of the engineering industry the proposed levy is 1 per cent. of a firm's aggregate wage bill, with small firms with fewer than 60 employees excluded. For the foundry sector the proposed levy is also 1 per cent., with establishments with payrolls of less than £25,000 excluded.

For the engineering construction sector the proposed levy is 2 per cent. on large companies and, unlike the other sectors, there is no provision for exemption except in the case of head office staff. The 2 per cent. levy will apply to all site employees of companies wholly or mainly engaged in engineering construction activities and to other engineering companies in respect of workers wholly or mainly engaged on site on engineering construction activities.

That levy will not apply in respect of workers not employed on sites, such as those working in companies' head offices; for them the levy will be 1 per cent. It will be assessed in stages—no levy on the first £50,000 of an employer's payroll for site employees, 1 per cent. on the next £450,000 and 2 per cent. on the payroll above £500,000. This means that only large employers will pay the 2 per cent., and then on only part of their payroll. The board estimates that the average levy on the total payroll of a large employer will be about 1½ per cent.

These proposals follow a period of extensive consideration and consultation. They have been unanimously approved by the Engineering Industry Training Board and by the Manpower Services Commission. The Oil and Chemical Plant Constructors' Association and the Engineering Employers Federation, which represent the majority of employers in the engineering construction sector, were consulted by the board about the 2 per cent. levy and showed overwhelming support, with only eight of the 155 firms consulted opposed.

The reason for the 2 per cent. levy is that in the engineering construction sector training is difficult to organise because of the peripatetic and fluctuating nature of the work force and because the place of work is not normally a permanent one. This has led to a rather poor training effort over the years in the sector—indeed, until recently there was no formal apprentice training—which the Engineering Industry Training Board is seeking to improve through the funds raised by the 2 per cent. levy. For example, in the coming year grants to the sector to be made available from the levy funds will be used to finance first-year craft and technician training, the training of operatives in important skills such as welding, instructor and training staff training, safety training, and fellowships to improve the standard of site management in the industry. The board's efforts will be assisted by the provision of additional funds from the Manpower Services Commission to support training in the engineering construction sector.

I am sure that the whole House will support the efforts being made by the board to improve training in this key sector, whose work impinges on so many parts of our economy—for example, the construction and assembly of power stations, gas works, steel mills and oil refineries, all of which rely on the jobs being done to high standards. Moreover, the engineering construction sector is a high-risk industry in which it is essential that there is proper training to maintain standards of safety. It is also a highly skilled industry with an unusually large proportion of skilled workers where the industry should make a significant contribution to its own skill needs.

As this levy order covers the mainstream engineering and foundry sectors of the industry, as well as the engineering construction sector, I should like to conclude with some more general comments about engineering training. If we are to achieve faster growth, on which rising living standards and more jobs depend, we must improve our industrial performance and competitive position, not least in key wealth-creating industries such as engineering. This is a central objective of our policies. Industrial training, closely related to current and prospective needs for skills, can play an important part in that process.

That is why we support the work of the Engineering Industry Training Board, under its chairman, Lord Scanlon, to secure adequate intakes of skilled workers into the industry and to improve training performance at craft, technician and professional levels. The board is pursuing a number of approaches to achieve these objectives. It is operating the engineering careers information service to publicise to young people the careers available in the engineering industry. It is operating a wide range of advisory services like that for small firms and the export and consultancy service to help firms with the development of their export business. It is providing financial support for group training schemes, which will bring together small firms to share training facilities. It is operating a number of scholarship and grant schemes, including scholarships to encourage girls to train for technician posts in industry. It will also play a major part in the MSC's programme for training additional computer software personnel and in meeting the needs of the new micro-electronics based technologies.

We attach particular importance to the board's work to improve apprenticeship training in the engineering industry. It is playing an important part in the new training for skills programme which is designed to improve the assessment of the needs of industry for skilled workers and the quality and quantity of industrial training. Over the past year, the board has, on its own initiative, issued the important discussion document "Review of craft apprenticeships in engineering". The document proposes some fundamental changes in the apprenticeship system to make it more flexible in responding to the needs of the engineering industry for skilled workers and in preparing youngsters for work in an industry which will be changing very speedily in the future with the pace of technological change.

I understand that some of the board's detailed proposals have proved to be controversial. They will obviously need further discussion, but I am sure that the objectives and principles of the proposals are right—for example, to move away from time serving to achievement of standards at a speed suited to the individual's ability and aptitude, greater flexibility on age of entry to apprenticeships, and better links between school and work. It seems to me that moves in these directions will be essential both to meet the challenges of the future for the industry and also to provide more flexibile training arrangements for young people and other workers in the industry. I therefore welcome the initiative the board has taken and hope progress will be made in consultation with all concerned in the industry and educational world.

In commending the order to the House, I am also glad to have the opportunity to pay tribute to the work of the members of that board, not least to its chairman, Lord Scanlon, and to all its staff and to be able to express the importance which we attach to the work of the board.

11.13 p.m.

Mr. John Golding (Newcastle-under-Lyme)

In this evening's debate about industrial training in the engineering industry, I have to observe once again that good work achieved by the last Government, in partnership with the Manpower Services Commission, is being smashed by the new Department of Employment Ministers. This country needs more industrial training, more skilled craftsmen, more technicians, more technologists and better trained managers, not fewer of them. From earlier announcements, although the Minister tonight has studiously avoided repeating them, it is clear that this Government not only intend to take away opportunities from the young unemployed but also seem determined to cut the industrial training of many of our brightest hopes.

If the Government were cutting classes in Chinese art or Greek, it would be understandable. To cut industrial training at the present time is beyond belief. Do not Ministers understand the importance of industrial training to productivity, to expansion, to efficiency, to modernisation and to enabling our industry to compete at home and abroad in respect of quality, price, delivery and after-sales service? We need well trained managers and operators. Above all, we cannot compete without good technologists, technicians and craftsmen.

There are many reasons for the shortage of technologists and the skill shortage in some areas. The shortage cannot be rectified by training alone. However, there is a need to train if we are to satisfy the growing needs of industry which relies on more and more sophisticated technical systems. Unless there is a big increase in the number of qualified technologists and technicians we cannot hope to compete in the micro-electronic age.

What other country in the industrial world, faced with the microchip revolution, has decided to cut the money spent on industrial training? What a way to go into a new era—an era which will be dominated throughout the world by technicians and technologists.

Ministers will argue that training can be left to industry. But that is not true. Most firms act in their own interests, not in the interests of industry, the locality or the nation. They need strong industry training boards to ensure that the right amount and quality of industrial training takes place.

Some small firms are not able to cope on their own. The engineering industry training board, for example, has done good work helping small firms by the support of group training associations and its manager development service.

The expansion of industrial training under the control of the industrial training boards is overwhelming. Of course, given present thinking, most of the necessary cash to pay for this must come from industry itself. But I do not see why in a society which spends so much on general further education. However, most agree that help has to come from Government. When talking to industrial training boards I found that it was believed vital to their success—to their acceptability to employers—that their operating costs be met from outside the industry. This acceptability also depends on adequate financing because without it the boards cannot be effective.

The boards cannot be efficient if they are subject to arbitrary cuts imposed from outside without consultation and without regard to the needs of industry and the nation. I gather that when the Government imposed their cuts on the MSC and training the EITB has had to cut its present spending by more than £.2½ million. If one takes into account not only the nominal figure but the effect of the cash limits imposed at 1979 prices, this cut is a nonsense.

The EITB will this year manage to maintain a service similar to last year's. But there is no doubt that the quality is likely to suffer. Certainly in one important area there will be cutbacks—if no one intervenes—in the training of professional engineers. This will be a great setback to the whole of the British engineering industry.

Does anyone really believe that we should cut back on the provision of technologists? In government the Labour Party did all that it could to ensure that there was no hold-up in the training of such key people. Incidentally, I hope that in this context no promises that have been made to individuals will be broken.

Another regrettable consequence of the cuts is that the EITB will be unable to take any major new initiative of its own. In recent years the board has become very responsive to the emerging needs of the economy. It will be a great pity if the shortage of cash prevents it from developing our native potential to the full.

The cuts are totally unacceptable to my side of the House, and so too is the way in which they have been introduced. As far as I know the commissioners of the Manpower Services Commission were not consulted about the size of the training cuts or about the way in which they were applied, industry by industry. Neither was the Engineering Industry Training Board consulted about the alternative ways in which savings could be made, although I know it has its own ideas. This lack of consultation, this arbitrariness, is bound to lead to inefficiency and bad blood against the Commission which is given the job of pruning good work, and to loss of morale on the part of board staff. This blow to the morale of the board has been intensified by the warning of the Commission that this cut may not be the last, that it is not once for all, and that other cuts may be inflicted in years to come.

The Government must not go along this path. The cuts this year have affected morale, general efficiency, the ability to innovate and the training of professional engineers. Further cuts would put in jeopardy craft and technician apprentice training. This we cannot afford. I believe that we shall have to look more and more to the board to deal with the problem of shortage of technicians and technologists—to help us cope with rapid technical change. There can be no microelectronic revolution without a great training effort.

That may in future years require a level of more than 1 per cent.—because it may require changes in the exclusion and exemption conditions for mainstream engineering—because the board is not for the future financially sound. For this year I commend this order to those on this side of the House but in doing so warn the Government that the smashing of the work of industrial training boards through further cuts can only lead to great harm to this country.

11.24 p.m.

Mr. Graham Page (Crosby)

I apologise to my hon. Friend the Minister for not having been present when he began to address the House in presenting the motion. I think, however, that I got the gist of his speech. I would in no way condemn the Government's policy of reducing expenditure on certain of the job opportunities schemes. I certainly would not condemn them generally in the way that the hon. Member for Newcastle-under-Lyme (Mr. Golding) has.

I have just received a letter from the principal of the Kirkby college of further education. Kirkby is not in my constituncy—I was going to say "Thank Heaven" in view of the difficulties in Kirkby with unemployment and so on. But the principal of the college is a constituent of mine and he tells me: We have heard from the Engineering Industry Training Board that they do not intend sponsoring any places at this college for unemployed school leavers. In 1977 we had 30 sponsored places from the Training Board. At this period last year we were informed that it was to be ten places and after protesting … this was increased to 20. To he now informed that there are to be no sponsored places is an appalling decision. I do not think that he is exaggerating in his concern that this training of apprentices—I stress that it is training for apprenticeships—is to cease at this college.

The principal goes on: The Manpower Services Commission runs many schemes for unemployed school leavers and I think that this is the best of all the schemes. In the present year, as mentioned previously, we have 20 sponsored places and at the present moment 14 of these have been placed in apprenticeships. I have no doubt the remainder will be given placements in the near future. They are already on notice of interview. I have often advocated that the job opportunities schemes should be carefully studied and that they should be supported if they really train people. It is significant, though my correspondent does not mention this, that he lives in a part of my constituency called Formby, where job opportunities schemes are being used to build a golf course. That demands only labouring from those employed, with no training at all. They come out with no skill. That kind of job opportunity can be considerably trimmed.

But that does not apply to colleges which are training people for apprenticeships. I ask the Minister to look at this matter which may be an example of what is happening at colleges of further education throughout the country.

The final paragraph of my constituent's letter reads: I am sure that you are well aware of the unemployment in the area and as yet there are no signs of any improvements. The course attracts potential apprentices from the Sefton area. If it is attracting apprentices in that way, it is a pity that any support for that scheme is being withdrawn, while support is given to schemes on which those concerned learn nothing and receive no training in a skill which they can use. I support training for an apprenticeship. If a scheme is merely manual labouring to keep people busy and off the dole, that should be studied, and that is where cuts could be made.

11.29 p.m.

Mr. Jim Lester

With the leave of the House, I thank my right hon. Friend the Member for Crosby (Mr. Page) for his question. I shall look at the points he has raised. I am sure that he will accept that when there are many thousands of young people in the job opportunities schemes, there will be anomalies such as he has described. But I undertake to look at that.

The hon. Member for Newcastle-under-Lyme (Mr. Golding) mentioned the reduction in expenditure on training boards. As he said, for the Engineering Industry Training Board, the cut amounts to £2½ million on an original sum of £91¾ million. So the MSC will still be providing over £17 million to the board in 1979–80.

I stress that the cuts to the programme do not mean that we do not attach importance to having sufficiently highly skilled workers in key wealth-generating sectors such as the engineering industry. On the contrary, we regard them as an essential part of improving our economic prospects and wealth. But pumping more and more public money into training programmes is not the only answer to the problem of skill shortages, which is expensive.

I remind the hon. Gentleman that in the debate on this subject last year the hon. Member for Birmingham, Perry Barr (Mr. Rooker) made this point very forcefully when he said: It is no good my right hon. and hon. Friends —he was talking about the previous Government, not this one— 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."—[Official Report, 14 March 1978; Vol. 946, c. 384.] That is true, and that is why in the Budget we have sought, through income tax reductions, to improve incentives and differentials, not least for skilled workers. It is also why we have sought to reduce the burden of financing the public sector so that industry and commerce may flourish and grow. In this context, it is surely reasonable to expect industry to bear a rather greater proportion of the costs of training.

Mr. Golding

The hon. Gentleman should be aware of what I said. The cut will lead this year to a reduction not in technician or craftsman training, to which he has referred, but in the training of professional engineers, to which special circumstances apply. We on the Opposition Benches think that it is criminal that after all the effort that has been put in to attracting able people into the engineering industry there is to be a cut in the training of technologists and professional engineers.

Mr. Lester

My information is that the engineering industry training board has yet to make its dispositions about how it will manage the reduction in the grant. We shall have to wait and see what the board proposes.

I do not share the view that the cuts will damage industrial training because, as I said a moment ago, industrial training boards have discretion to allocate cuts in the ways least damaging to their training objectives, and they can be applied to the operating costs of boards as well as to their training activities. In the case of the EITB, as I understand it, the board has not yet decided how its savings will be affected, but they will be determined in the light of the board's priorities.

As regards apprentice training, the majority of craft and technician apprentices are recruited and trained by companies, and it is hoped that the increase in recruitment by companies noted last year will continue to expand this year and make it less necessary for the EITB to supplement the industry's efforts by premium grants and training award schemes.

The comments made in this debate by the hon. Gentleman demonstrate that he still holds the view that ever-increasing levels of public expenditure is the only way to tackle industrial problems. We believe that the way to achieve faster economic and industrial growth is to reduce the burden of public expenditure and to improve incentives and differentials. This should not only encourage more firms to make greater training efforts but should help to reduce the wastage of skilled workers into other occupations, which has been one of the major reasons for skill shortages.

The cuts in expenditure on the MSC's programmes are not at all inconsistent with our desire to see improved industrial training related to the future needs of our industries and workers. Nor are they inconsistent with our support of the work of the Engineering Industry Training Board, whose levy order is now before the House and which I now invite the House to approve.

Question put and agreed to.

Resolved, That the draft Industrial Training Levy (Engineering) Order 1979, which was laid before this House on 28 March 1979 in the last Parliament, be approved.