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§ Mr. Bill Walker (Perth and East Perthshire)I am delighted that I have been given an opportunity to draw the attention of the House to industrial training in the United Kingdom. I have no direct link with the training boards, and consequently I have no interest to declare. However, during the early and mid-1960s 933 I took an active part in the establishment and setting up of national training schemes. I helped to launch industrial training boards.
I note that the Government Think Tank has produced a report that is in part critical of industrial training. I regret that I have not had an opportunity to read it. When my hon. Friend the Under-Secretary of State replies to the debate he may care to make some reference to the report. Industrial training boards were established under the Industrial Training Act 1964. That is a most enlightened Act. Indeed, some may claim that it is one of the most enlightened Acts of the past 20 years. For the first time it has brought together representatives of employers, of employees and of education. For the first time they have had an opportunity to work together and to study the problems of industrial training. On the whole, the boards have done a good job, and it is only right that we should review their position today and consider how they are working.
As a result of pressures from outside Parliament, the 1973 Act came into being. The training boards were faced with changes. In some cases changes were imposed before the boards had sufficient time to become fully established. Industrial and commercial training is no less important today than it was in 1964. Given the present world economic situation and advances in technology, some people may believe that the need for training at all levels is greater today than it was in 1964.
In the national interest, there must be some form of training catalysts. To work effectively those catalysts must have certain characteristics. First, they must be statutory so that they cannot be blown away in the short term by pragmatic or populist change. Secondly, they must have powers to apply sanctions, if required. Thirdly, they must be seen to be an integral part of industry and they must be accepted by industry as such. Fourthly, they must be able to act in accordance with national long-term needs. That will call for financial participation by Government as well as by industry. Fifthly, they must also be able to plan and act on a national basis in respect of each industry and each sector.
The catalysts already exist. They are industrial training boards. It has taken 934 15 years for the boards to achieve general, although qualified, acceptance. Today, they have an established and recognised role.
Few would deny that different boards have enjoyed differing experiences. Some of us recognise that in the normal course of events some boards will have achieved more than others. Any changes that are proposed must build on what has already been achieved and should not disrupt continuing work.
I do not deny and would not wish to deny that training people-I was one myself at one stage-are dedicated individuals, but they often have within their ranks some who are more concerned with the ideal of training and others who are immersed in its mechanics. Often, rather than using training as a vehicle for improving performance and acquiring new skills to improve productivity and profitability, some individuals become wedded to training for its own sake.
I believe that in present economic circumstances and with the record of low profitability that exists throughout British industry, if training boards did not exist we would be busy inventing them now. How else could we actively involve the trade unions, the employers and the educationists if we did not have training boards? If they did not exist, how else-I quote from a speech that the Prime Minister made outside earlier this week-could we invest in
... talent, thrift, business success and the pursuit of excellence "?I submit that industrial training boards have a part to play in creating new wealth and new jobs. They are useful, credible and acceptable. I further submit that any drastic, radical change would not be helpful and could be counter-productive. Indeed, it could be cost-ineffective and a waste of time and resources.I accept that some changes are required. With the passage of time we always require change, and I welcome that. I suggest the merging of the more effective and efficient boards with the not-so-effective and not-so-efficient. That seems to be a logical and sensible way to make the best use of existing talent and resources. I suggest also that the present relationship between the boards and the Manpower Services Commission is far from happy, or satisfactory. In particular, the 935 arrangement whereby the Manpower Services Commission pays board administration and operation costs is disliked by people in industry and on the boards. This causes difficulties both for the Manpower Services Commission and the boards, because it results in Government financial practices being applied to board operations.
Conceivably, the total amount of money spent-about £90 million by the MSC and £100 million contributed by the boards and collected within industry-is sufficient to meet the present training needs of industry. I am not suggesting or arguing that we should spend more money in this area but I am suggesting that we should look at the way in which the money is being spent. How are the funds applied? We may also question the split.
Most training activities are worthy of support, yet we spend 10 times as much money on welfare schemes than on wealth-creating schemes. It is not surprising that intervention is seen as a social rather than an economic environment. Therefore, it would be wise for the Government's contributions to take another form. I recommend a block grant related to the size of the industry and linked to the amount of money collected within that industry. The Government would then be investing in firms and industries that were prepared to invest in themselves. I feel very strongly about that. We should spend money where people are prepared to spend and invest themselves.
In addition, the Government could also invest in specific areas, such as the initial period spent by young people in industry. The Government could develop and encourage recruitment into skilled areas where there are chronic shortages. This could be done by making use of training facilities in individual firms. I suggest that young men who are trained by Rolls-Royce and ICI, for example, are more acceptable to the trade union than individuals trained in skillcentres. We should recommend that young men receive training so that at the end of the day they will be marketable in their own interests. We must look at this whole question more carefully.
I do not wish to make political points;
936 I am simply concerned about young people and the shortages of skills within industry. The present situation in which policy is made by the MSC and interpreted and applied by its staff leaves a lot to be desired. Indeed, the common view is that it does not work well.
We need a restatement that industry is best equipped to carry out its own training. Each industry should determine its own training needs, and the training boards should be run by people in that industry and for that industry. That is the most cost-effective way to provide training that meets effectively the needs of that industry.
I do not believe that we should create training empires, yet to be effective the training boards must have the support of the largest firms within an industry. That is why we must involve the training departments of all firms working in conjunction with the training board in their own industry. That should apply to both large and small firms. In that way training will become credible and acceptable. It was once honourable to undergo training in engineering and other skills in this country. Sadly, that is not so today. We must reverse that trend. I believe that training must be seen as an investment. It must be linked to profits and returns on investment. Therefore, meaningful audits should be carried out and training assessed and evaluated on a regular basis.
I should like to draw attention to what happens in the Royal Air Force. All flying instructional units and instructors of those units are subjected to annual tests and assessments. If that can be done in that highly skilled, technical and professional area, something similar can be done in industrial training. I recommend that the Department of Employment should have an inspectorate to ensure that training within industry is assessed and evaluated on a cost-effective basis.
I turn now to the Manpower Services Commission, which, last year, spent between £500 million and £600 million in support of various training activities. Of this, about 15 per cent, went to the industrial training boards.
It is my view that the Manpower Services Commission is too much involved in the policy-making and day-to-day activities of the training boards, and it is not, in my judgment, the best body to carry 937 out a review of the Employment and Training Act 1973, because it is effectively reviewing itself. I suggest that that is hardly a healthy exercise.
I also suggest that Government agencies, however well run and however well intentioned, are not noted for their determination to reduce their size, scope or influence. Indeed, all past experience in-dictates that the MSC will produce a report that will recommend changes, and the changes, if implemented, will leave the MSC more influential and more dominant than before. Indeed, I recommend that serious consideration be given to the comments and recommendations made by the CBI. In particular, I read the CBI's conclusions and report prepared on this subject. They are as follows:
The primary function of ITBs, if they are to retain to confidence of employers, must be to concentrate on the training needs of their own industries. They must not be diverted from this by being used, as the most convenient organisations on the ground, to further political and social objectives.Basic essentials should constitute the criteria on which exemption from levy is granted. Such criteria should be interpreted flexibly according to the needs of individual firms. Exemption certificates should be issued for three years where appropriate.Exclusion levels for small firms should either be based on numbers employed or on a wage bill minimum which must be adjusted regularly to take account of inflation …The main use of the levy should be to bring levy payers up to exemption standards.Manpower forecasting is being treated by ITBs as too exact a science. Information being called for is complicated, difficult to produce in the form required, and generally quite incompatible with normal company records. Action is required to ensure that the use of statutory powers for the collection of statistics is kept to a minimum.In simple language, I am saying "Let's get rid of some of the bumf." That is the view of the CBI, and it is a view which should not be treated lightly.Today there are 24 industrial training boards. According to my understanding, their estimated expenditure during the year 1980–81 will total about £188 million, of which nearly £84 million will be from public funds. If past experience is a guide, the boards will once again be acting as agents for national manpower policy through the edicts and diktats of the MSC. In addition, the boards will require to set up and run administrative systems to provide the MSC with data that the 938 boards are unable to relate to the training needs of their particular industry—more bumf that we can get rid of.
I repeat what I said earlier. The 1964 Act brought together representatives of the employers, the employees and the educationists to work together to study the training needs of industry. Sadly, we are often advised by the pundits and the media that a situation of open war exists between trade unions and employers, yet since the mid-1960s both employers and trade unionists have worked together in industrial training. The record of both sides of industry in this sphere is one that brings great credit to the many individuals representing both sides of industry who have given so much of their energy and their time towards training board activities and industrial training.
I believe that it would be very foolish to ignore the scope that exists to build and develop on the foundations that have been laid by those unsung and often ignored dedicated individuals.
Britain desperately needs this kind of co-operation. Consequently, any changes that may be proposed by the MSC review should be studied very carefully—all the more so if one accepts that the MSC is possibly not the best organisation to carry out this review.
The MSC officially came into existence on 1 January 1974. It is made up of a full-time chairman and nine part-time members, representing employers, employees, local government and education. The 1979 MSC review body on the 1973 Act is chaired by Mr. Richard O'Brien, who is the chairman of the MSC and who, I have no doubt, is a very able and competent gentleman. However, we must look at this matter very carefully because this review report is expected shortly. That is why I took the opportunity to raise this matter today. I thought that it was opportune to do so. It could be called a warning shot across the bows. I felt that before the report was produced we ought to think carefully about the matter.
I remind the House of the terms of reference of the review body. They are as follows:
To review the working of the Employment and Training Act 1973 so far as it relates to arrangements for the promotion of training for 939 employment, together with provision of further education closely associated with industrial training and the links between them, and to make recommendations as to how these arrangements should be altered or developed for the future, having regard to: future needs of the economy for trained manpower of all kinds; the needs of workers, including young people entering employment; the efficient working of the labour market, nationally and locally; the need to ensure the economical and effective use of public funds.Having heard the terms of reference, can anyone now doubt that the MSC review is largely the MSC looking into its own activities, or into the activities of training boards, which in many instances are defined to a considerable extent by the MSC? It is, in fact, looking into itself. That is why I raise the question of the future of ITBs today and question what the future holds for these boards.Without industrial training boards, the MSC would be unable to concentrate its effort into TOPS and other training schemes. Also, it would be unable to bring together both sides of industry and education. I agree that ITBs are far from perfect, but we live in a far from perfect world. In many instances the boards have achieved their primary objective, which was to improve the quality and the efficiency of industrial training and to ensure an adequate volume of trained staff. In some areas that has been achieved, but in others it falls far short of the needs of the nation.
I do not object to the review. It was time for a review, but I question the wisdom of the choice of the body to carry out the review and I sound a warning call to the Government to look at the report carefully.
Britain desperately needs industrial training boards. Our industry needs the co-operation that exists in the boards. Employers, trade unions and educationists need organisations within which they can work together for the benefits of the industry in which they are interested.
I recommend that serious consideration should be given to reducing the size and scope of the MSC. I see it as the dead hand of Government, and I have never felt that the Government were the right people to be involved in profit-making, productivity or finding the answers within industry.
940 I also recommend that an inspection body of the sort used in the Royal Air Force should be established to inspect and monitor training as practised by the various training boards. I suggest that we should reduce the administrative levels of command that are not directly connected with training—get rid of the bumf producers and statistics collectors—and get on with the sharp end of the operation which is training people in industry to meet its needs. Let us get on with finding young people and getting them into the areas in which we are short of skilled individuals. The most effective way of doing that will be to get the MSC off the back of training in industry.
§ The Under-Secretary of State for Employment (Mr. Jim Lester)I am pleased to reply to the debate, because it has given me the opportunity of listening to the knowledgeable speech of my hon. Friend the Member for Perth and East Perthshire (Mr. Walker) on the future of industrial training boards, which is a topical and important matter.
My hon. Friend's speech has shown again the opportunities for a Back Bencher to bring ideas and opinions before the House and before a wider public, and I congratulate him on the clear, forthright and constructive way in which he has explained his views. No doubt he saw me nodding in agreement with a great deal of what he said.
However, my hon. Friend's "warning shot" places me in a dilemma, because I do not want to pre-empt or anticipate the outcome of the MSC review. On the other hand, it would not be fair to leave unanswered some of the issues that my hon. Friend has raised. I hope that I can safely steer a middle course, first by taking a long perspective on our training needs in the 1980s and the problems that we must tackle if, as a nation, we are to adapt satisfactorily, and then by fitting the MSC's review into the broad picture in order to discuss some of the issues at stake.
One theme that emerged insistently in my hon. Friend's speech was the importance of the training issue. I strongly support that view. We must not deceive ourselves into believing that training is a panacea for all our industrial ills, but 941 it is not too much to say that a healthy industrial future depends critically on whether we get our training right.
Before assessing the performance of the training system and whether we need changes in it, let us consider what exactly are our training requirements. We face a decade in which technical and industrial change will accelerate in pace. In examining the case for training and retraining, the need above all is to meet emerging circumstances rapidly and effectively, and we must therefore seek to ensure that our training arrangements are flexible and responsive so that the labour force can adapt successfully when change occurs. In particular, the changes that we face present a situation in which, as existing jobs vanish, adults increasingly need reorientation and retraining in mid-career in order to acquire the new skills of the 'eighties.
I do not pretend, and my hon. Friend did not pretend, that present arrangements are perfect—not by any means. Although not all skill shortages are caused by inadequate training, the fact that we have skill shortages, even at present levels of unemployment, suggests that considerable scope exists for improving our training arrangements. We require imaginative and radical thinking, in the Government and elsewhere, to ensure that industries and individuals are equipped with the skills that they will need in the decade ahead. Both industry and the MSC, in partnership with the industrial training boards, have a part to play in that training effort.
The great majority of training in this country is provided by employers. Industry and commerce must, both now and in the future, take the lead in planning and providing enough training of the right sort. Firms are the best judge of their own interests and better able than the Government to anticipate future needs. That is how it should be, and they must continue to bear the main responsibility.
But the Government and the MSC will bear their responsibility to help industry where help is necessary to assist the national training effort. A principal need is to provide support for industrial training, and it is here that the MSC's training for skills programme is a foremost priority. It is a comparatively new 942 approach and has hardly had time to take effect.
The programme involves national training bodies, including ITBs, making systematic assessments of future manpower needs of the sectors that they cover, and taking action to head off damaging skill shortages. Government funds are available to help through the MSC—£55 million is available in the current financial year through the training for skills programme, for allocation towards the support for industries' training plans. In future, MSC grants will be more precisely directed, through ITBs and other training bodies, towards meeting key skill needs and towards the reform of training systems, with special emphasis on problems which are common to a number of industries; for example, training for microelectronics and for computer software functions, training of instrument maintenance personnel, and training for design, development and maintenance engineering skills.
High priority will continue to be given to MSC support designed to secure an adequate intake of young trainees for skilled and technical occupations. Furthermore, there will be a greater emphasis on support to encourage adult training, especially in craft and technician occupations where there are skill shortages.
I believe the training for skills programme to be a crucial initiative, for two reasons. It offers the opportunity, first, to remove some of the apparently insoluble restraints, such as skill shortages, on our capacity as a nation to pursue industrial growth, and, secondly to ensure that our work force, consisting of both young people and adults, is able to make the most of its talents at work.
These are important and encouraging developments, but we must ask ourselves whether enough is being done to point our industrial training arrangements towards the needs of the 'eighties and 'nineties. This, of course, is where the MSC's review of industrial training, including the operation of the ITBs, becomes highly relevant.
In all quarters, including I suspect in this House, there is little dissent from the proposition that we need much more flexible arrangements. It is hardly an exaggeration to say that we embark upon the 1980s with a training system rooted 943 in the Victorian era. It is a system which is rigid, hidebound by tradition and custom, and far too slow to respond to change and challenge. As a nation, we devote disproportionate resources to apprentice training, restricted as it is to a particular level of skill acquired at an early age and a limited number of occupational areas.
I do not believe that this is a sensible approach to our present-day needs, to say nothing of the rapidly changing future. The skill needs of traditional craft occupations change with technological development. Even where they do not, can we honestly claim that those skills can be acquired only through three to four years of time-serving? Furthermore, is it sensible that anyone who misses the boat at the very early age of 16 cannot later seek access to the apprenticeship system? It just does not make sense that entry to so many skilled jobs is barred to those who have not been through this highly specific form of training.
We need less rigid apprenticeship arrangements, with more flexibility in arrangements on age of entry, and also on the duration of apprenticeships. We need more importance given to the achievement of standards and less to timeserving. We need to extend and improve training arrangements outside the narrow field of apprenticeship, providing more opportunities for upgrading, converting or retraining adults for craft and technician occupations and giving more attention to the vocational preparation of young people who do not enter formal apprenticeships.
In this context I might mention, as my hon. Friend did, the timely report by the Central Policy Review Staff, published yesterday, entitled "Education, Training and Industrial Performance ". Like my hon. Friend, I have not yet had time to read the whole report, but I very much agree with much of the summary of its conclusions. There is an urgent need to loosen our training system not only to assist economic recovery, but to provide more opportunities for young people and adults to make the most of their talents.
I believe that those are our requirements, and that is the context in which the MSC is conducting its fundamental review of industrial training arrangements. 944 We are currently operating on the basis of the 1973 Employment and Training Act, which amended the 1964 Industrial Training Act. The review body is considering a range of possibilities,
I have already said that I do not think that this is the moment to predict the results of the review or to make guesses about the future of the industrial training boards. I ask my hon. Friend to be patient and await the report of the MSC's review, which is expected in July. However, I think that what I have already said makes it clear that the Government attach considerable importance to this review. We shall, as my hon. Friend requests, look very carefully at the recommendations which emerge. No options have been ruled out.
I am aware, from talking to people on both sides of industry about training, and from the mail that we receive as Ministers, that there is a wide spread of views about the industrial training boards—much support and many criticisms. The MSC review body has been busy collecting and collating evidence from a wide range of interests, and we can expect its report to summarise the views sent to it. I do not propose to dwell on those views and criticisms now, although I take careful note of those that my hon. Friend has reported to me about the system. I shall certainly see that the review team is made aware of the points made in the debate.
There are a number of general points that I should like to make, which bear on the review and its outcome. First, we need to look very closely at the cost-effectiveness of the present arrangements and their ability to deliver the more flexible training response required to meet the rapidly changing skill needs in the decade ahead. One of the key questions that the review body will naturally consider is how, if the review recommends their retention, ITBs should be funded. One possible option is that industry should once again pay the running costs of the boards through a levy. I welcome my hon. Friend's comments on that.
Another point that I should stress, as my hon. Friend did, is that some boards are doing extremely good work. If future proposals recommend the option of substantial changes, we must ensure that we do not lose the baby with the bath water.
945 There is a further point that underpins many of the issues being considered by the review body. It is that a system which is industry-based, like the ITB network, inevitably has some difficulty relating the needs of occupations common to more than one industry, and to the needs of local labour markets, which have very diverse characteristics. Of course, this is not a simple matter to resolve. Occupationally-based or geographically-based arrangements would present the same problems for the needs of industry sectors. Nevertheless, I mention it as one of the wider questions to which the review body must address itself, because, as I have already told the House, the flexibility of our training arrangements will be of critical importance in the years to come.
I assure the House that in restricting my remarks to the question of what our general training needs are I am not seeking to evade the points that my hon. Friend made. It is these general issues that the review body will be seeking to get right and that must provide the context for future decisions.
I very much welcome having had the opportunity to hear the detailed points that my hon. Friend has made, and I welcome such a thoughtful and considered contribution to the wider public debate about the future of our industrial training system. I share my hon. Friend's objective, which is for our training arrangements to meet in the most efficient way the needs of industry in the decade ahead. There are encouraging signs that important steps forward may be possible before too long. I look forward, with him, to seeing these developments reach fruition.