Industrial Training

HC Deb 12 March 1987 vol 112 cc579-94 11.27 pm

The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier)

I beg to move, That the draft Industrial Training Levy (Engineering Board) Order 1987, which was laid before this House on 13th February, be approved.

The order requires parliamentary approval because one part of it—that covering site employees in the mechanical and electrical engineering construction industry sector—involves a levy exceeding 1 per cent. of emoluments.

Hon. Members will need no reminding of the importance of the engineering industry, which is the largest manufacturing sector in terms of employment. Engineering output has risen during the past five years by nearly 10 per cent. The increase is most marked in the electrical and instrument engineering sector. Mechanical engineering has continued its growth. Protecting the skill base of the industry is clearly vital. That is why it is essential that this order should be approved so that money is available to the Engineering Industry Training Board to enable it to encourage firms to train in the industry.

I am surprised that the Opposition have put down an amendment to the motion, and, indeed, are asking the Government to give a lead and support to the board. We do give that support, as I shall make clear.

While recognising that it is primarily the responsibility of employers and the board to identify and meet the industry's training needs, the Government also make considerable specific provision for training in the vital engineering sector. In 1986–87 some 25,000 young people were in engineering skills training under the youth training scheme. We expect the new job training scheme to make a major contribution in engineering training across a range of skill levels.

We also very much welcome the board's efforts to meet engineering skill needs. The board is putting an increased emphasis on high technology needs by providing an advanced technology training team. It also offers grants to help to alleviate high technology skill shortages—for instance, by encouraging companies to carry out more training for the conversion of suitable people to work in high technology areas. Accelerated management training and development for promising young engineers is offered through the board's fellowship schemes.

Those measures clearly demonstrate the board's commitment to stimulating employers to invest in training, and the order before us will enable that work to continue.

The board of course recognises that there is room for improvement; that employers must be encouraged to improve the volume of training if the engineering sector is to grow and not be hampered by skill shortages. To this end, the board issued, at the end of last year, an information paper setting out its view that the levy and exemption system now in operation was not bringing about the necessary quantity of training. The paper offered three options to improve the situation: more rigorous exemption rules, a levy-grant system, or a system where the board is funded entirely through a nonreturnable levy of up to 0.2 per cent. of payroll.

I understand that the board agreed earlier today that, before making its final decision, it should develop criteria for a revised levy exemption scheme to deliver an adequate quantity as well as quality of training. The board will meet again in June to consider these criteria.

Technological advance has clearly had a significant impact on the employment patterns of engineers. Engineers are now widely employed in sectors not traditionally associated with the engineering industry. The board is beginning to address this problem by instigating a survey to identify where engineering skills are used and the flows of engineers in and out of the various sectors. This survey will go a long way towards identifying engineering skill needs across the whole of industry and services. Again it has our support—indeed, we are contributing to its cost.

The levy proposals before us now are in the same format as those approved by both Houses last year and are expected to raise just over £19 million. The levy will apply to those firms which are in the industry between the date the order comes into force and 31 August 1987. The levy is made up of two main parts. The first part applies to mainstream engineering, and the second to the mechanical and electrical engineering construction industry.

For mainstream engineering establishments, the board has agreed unanimously to propose increases in the nonexemptable portion of the levy and the following arrangements will apply. Small firms with 40 or fewer employees will be excluded from paying levy. This exclusion level remains unchanged from last year. All other establishments will have to pay a levy of 1 per cent. of emoluments unless their training is judged satisfactory against criteria set by the board. Establishments with fewer than 1,000 employees, who train satisfactorily, will be exempt from all but 0.08 per cent. of the levy. This nonexemptable portion is increased from 0.06 per cent. Similarly, larger establishments which train satisfactorily will be exempt from all but 0.08 per cent. of the levy in respect of the first 1,000 employees and 0.072 per cent. in respect of the remainder. This represents respective increases in the non-exemptable levy from the rates of 0.06 per cent. and 0.054 per cent. that were set last year.

For establishments in the mechanical and electrical engineering construction industry sector, the levy arrangements proposed remain the same as those approved by both Houses last year. The levy is in several parts. For off-site employees, no levy is payable by establishments of up to 30 employees. For establishments of more than 30 employees, 1 per cent. of total emoluments is payable, of which 0.15 per cent. will be non-exemptable. For site employees, no levy will be paid on the first £50,000 of emoluments. On emoluments over £50,000, a non-exemptable levy of 1.12 per cent. will be payable. That is the reason for the affirmative resolution that is before the House tonight.

The employer and employee members of the mechanical and electrical engineering construction industry sector committee agreed to the levy unanimously and the proposals were subsequently approved by the board without dissent. Letters of support have been received from the two major employer organisations in the sector. There is thus consensus in the industry for the proposals as required by the Industrial Training Act 1982.

I therefore recommend the order to the House. The proposals have been unanimously agreed by employer representatives on the board. They are necessary to help meet the industry's future training needs.

11.35 pm

Mr. Barry Sheerman (Huddersfield)

Having listened to the Minister, one would be forgiven for thinking that all was well with the engineering industry and with training for it. The hon. Gentleman said that he was surprised that the Opposition had tabled an amendment, but the industry has shrunk alarmingly. For example, it provided 3 million jobs in 1979 against 2 million now. There has been a disastrous decline in training, which has contracted to a greater extent than employment in the industry. We are in a perilous position because the industry is not training the skilled employees that it or the country needs. If we do not get engineering training right, what hope do we have as a major manufacturing nation? I was surprised by the complacency that the Minister showed this evening. In years to come historians and others will read his speeches, including the one that he delivered this evening, and they will contrast the decline in engineering and the manufacturing base generally with the Minister's performance. The hon. Gentleman sleepwalked his way through a speech that would cause some to think that everything was well.

I shall spend a few minutes—I know that the hour is late—highlighting the ruinous position in which industrial training finds itself. There are some key issues to which we must address ourselves. The effective training of engineers, both in traditional skills and in the new areas of technology, is at such a low level that the role of training should be seen as a key engine of economic development. If we are ever to put right manufacturing industry and get the economy moving again after nearly eight years in the doldrums, we shall have to invest in the three engines of growth, which are capital investment, research and development and education and training.

A report was issued the week before last by the National Institute for Economic and Social Research. The top 10 British industries are 40 per cent. less productive than their American competition. Our bottom eight industries are 75 per cent. less productive than their American counterparts. This spells ruin for Britain if we are to meet the two challenges of markets and technology. If we do not invest in training, the report to which I have referred states that the shortest way of trying to bridge the gap between our performance and that of the United States and elsewhere will be by investment in human capital. In my part of Britain, that means investment in men and women and proper education and training.

The Government, with their appalling record of mass unemployment, have been forced to skew their training policy at the short term and the superficial. There are now 1 million on schemes that are largely for the unemployed—as many as those who were unemployed in 1979 when the Tories said that Britain was not working. If we are to be truly productive and compete in an increasingly competitive world market, we must train our work force.

The Government have singularly neglected the training of those who are in work. The most recent labour force survey tells us that only 7 per cent. of men and women who are in work are receiving any training. That compares so badly with our international competitors that it is embarrassing to dredge up the statistics.

Rather than there being a consensus on how everything is for the best in the best of all possible worlds, the Minister is covering up a ruinous situation in engineering. Members of the engineering industry training board know that the situation is totally desperate. They are waiting for a Labour Government to put training right, or for the present Government, even at this late stage, to realise the folly of relying on the workings of the free market to determine how many people are trained.

The engineering industry training board is the classic example of how the Government's market philosophy does not work in serving the national interest. The EITB levy exemption system is based on the principle that if we leave it to employers to train for their needs, the total sum will add up to the national interest in engineering training needs. Since 1982, when the engineering industry training board was basically neutered and its ability to raise the levy and ensure that training was done was weakened, we have seen that, compared with a 60 per cent. exemption, 94 per cent. of the engineering industry has been exempted from the levy. What is more, we have the equally grave matter that the Minister glossed over. Fifty per cent. of people who are qualified to work in engineering work not in the engineering sector but in other sectors. The EITB has no responsibility or power to train in such sectors. Indeed, most sectors have no ITBs because they were abolished in 1982.

We have two facts. First, only 50 per cent. of engineering employees are covered. Secondly, firms with fewer than 40 employees—a sizeable 250,000 people—are not covered by the EITB. The system is not training for most of the industry, even before we start to look at the levy exemption. Who blames an individual employer for not training if half the people working in engineering are not covered by the system, anyway? Of course, that makes individual employers in the engineering industry loath to do more than to train for their most conservative needs. That leads to ruin for the planning of training and the equipping of the work force. We need to concentrate our energies on the skills of our existing work force. The EITB could be the organ that pumps the blood around the body of engineering training.

I have three questions for the Minister. I do not suppose that he will answer any of them fully. First, why have we seen the fate of the EITB under the Government? Why has it been brought so low? Why is morale in the EITB so low? How is the EITB, even in its neutered role—it has some excellent men and women working for it—to try to meet the central issues of engineering training? The people in the EITB care about training. They know the scandalous situation that we are in but are helpless to do much about it. What are the Government doing about training in engineering? I do not have to look far for evidence about the parlous state of training. The Minister has access to all the evidence that is being given to the Select Committee on Employment by the EITB and by other expert witnesses who say that engineering training is in a parlous state.

I listened only the day before yesterday to a most interesting lunch time speech. A distinguished gentleman referred to the fact that Governments have a major responsibility to provide education. He said: Unemployment is an intractable problem, with overall 11 per cent. of our labour force sitting on the sidelines. Among youth the figure is nearer 20 per cent…Since 1980, industrial output has grown more than twice as fast in the United States and more than three times as fast in Japan. The Pacific Basin has been attracting investment that we need in Europe…To hold our own against the US and the Far East, our two world class competitors, we need action that creates and sustains the right environment for enterprise to flourish. That is primarily the role of government…A major responsibility of governments is education … Certainly companies have their part to play—a larger part than at present, judging by the fact that, for example, corporate America spends proportionately three times more than corporate Britain. But we look primarily to government to provide Europe's trained base of human resources. I won't join the debate you are conducting in the UK, except to note that your Manpower Services Commission reports a chronically short supply of mechanical designers, engineers (where demand for qualified people doubles every five years) programmers and multi-skilled craftsmen.

That was the president of IBM in Europe, a Swiss national, who knows about industry in Europe, speaking about the state of British productivity and about high technology. What he said at that American chamber of commerce lunch only two days ago would make very good reading for the Minister, after his complacent remarks this evening.

There are chronic skill shortages throughout the country in an industry that is at the centre of our hopes for economic recovery. Unless the Government realise that dramatic action must be taken to provide both traditional and high-tech skills, we shall he in terrible trouble. The EITB has inadequate leverage over the whole system. It does not have the power to do the job. The Minister could give it that power. There could at least be a levy grant, thereby providing more resources with which to do the job. He could also devise a system of training that ensured that employers trained their employees so that firm after firm does not live by poaching off the few firms that provide training.

At a recent conference the managing director of a company that teaches computer skills and sells distance learning packs—it is a reputable and prestigious company that is doing a worth-while job—said that his company offers those packs to the engineering industry and that one of the major engineering employers—a household name—was told that this pack would lead to its employees passing the computer skills course and obtaining a City and Guilds certificate. The company held up its hands in horror and said, "We do not want them to get a certificate. It will make them mobile and someone will poach them." I do not blame the company, but it is terrible that companies should be frightened to give the men and women in the engineering industry certificates because it might make them poachable.

That is the heart of the problem in the engineering and other industries today. No company will train people if it thinks that it will not hold on to its trained employees. Firms cannot be persuaded to take training seriously because they regard money spent on training as a cost rather than an investment. It is a cost if the individual, when trained, is recruited at a higher wage by a competitor who puts nothing into the training pool. We need a Government who take training so seriously as to require every firm to train in the national interest. If not we shall end up an impoverished third order power.

The Minister also glossed over the engineering industry training board consultation paper which has been out for over two months with no response from him, his Ministry or any other Minister.

Mr. Trippier

What makes the hon. Gentleman think that the Government will be included in the consultation exercise? I have already said that we welcome it. The board is supposed to bring the result to Ministers. That is the way these matters are normally dealt with.

Mr. Sheerman

If a major centre of industrial training makes a plea that the system under which engineering industry training is carried out is so hopeless that something dramatic must be done, and says that the industry is faced with three options, one would think that the Minister responsible for training would get involved in the consultation and say, "You ar right. It is disgraceful. We have to do something about it. This is what the Government think." Presumably the Government have no opinion.

Mr. Trippier

The hon. Gentleman's suggestion is ludicrous. He is suggesting that Ministers in the Department of Employment should respond to the consultation document put out by the board prior to the board receiving the clear message from the industry and trade unions, which we want to hear. Is he suggesting that in the unlikely event of a Labour Government ever being returned to office, they would override the decisions made by industry and the trade unions?

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. I have allowed the hon. Member for Huddersfield (Mr. Sheerman) to discuss training in general, but I remind the House that we are discussing a particular point of order which deals with the levy, the way it is assessed and its purpose. It is not a general debate on training.

Mr. Sheerman

With great respect, Mr. Deputy Speaker, I have not at any point in my speech wavered from the levy. The three options that I was discussing before the Minister intervened were the three options put out about the levy only two months ago. The first was a move to a levy grant system; the second was a significantly increased non-returnable levy system; the third was a much stiffer levy exemption system. The decision of a meeting today on the levy, I understand, was in the interim to consider the third alternative which I would have thought was the weakest of the three.

It also set out in the evidence to the Select Committee on Employment all the worries about the levy system and the way it operated and its inadequacy. Tonight we are debating the levy. If the levy is inadequate, the amendment tabled in the names of myself and my right hon. and hon. Friends is absolutely germane to the debate tonight. What we are saying—

Mr. Deputy Speaker

Order. The hon. Gentleman knows that the amendment was not selected because it is out of order on an order of this kind.

Mr. Sheerman

We were quite well aware of that, but I understand that it is our right and privilege to table the amendment to give some indication of our feelings on this matter. We believe that the Government should be moving immediately to correct the scandal that the EITB document has been out for two months and the Government have not responded in any positive way.

The Minister is looking pained and injured. The Government do not care about training, having allowed jobs in the manufacturing engineering industries to collapse from 3 million to 2 million. Here are a Minister and a Government, knowing how bad the situation is, letting market forces rule. Here is a Minister who will not admit what everyone in the industry and the EITB knows and what his friends in the Engineering Employers Federation must be telling him in private—that this is a very grave situation now.

Heaven knows what it will be like next year, or two or three years from now. This is too serious a matter for the Minister to smirk and look pained about. He is responsible yet he seems not to be taking this situation seriously. He is not willing to take on board the views of the Labour party that we need a national training fund that everyone will pay into and that will put engineering and industrial training in this country on the right footing and re-equip and reskill our country to face the future with confidence.

11.57 pm

Mr. Peter Thurnham (Bolton, North-East)

The last debate on this subject, in April last year, was unique in that it was commenced by the Treasurer of Her Majesty's Household. Perhaps it is appropriate, in view of the events at Truro today, to pay tribute to the contribution made in that debate by the late Member for Truro, Mr. Penhaligon, who, like myself, was a chartered engineer. In that debate he spoke of the need for us to be proud of engineers and not to regard engineering as an alternative occupation. He had served an apprenticeship in engineering, as I have. We have every reason to be proud of engineering as a career in itself and as a preparation for a career in this House or elsewhere.

I listened to the hon. Member for Huddersfield (Mr. Sheerman). It is amazing that people should come into this House and ask for more training when it is so evident that they need training themselves. I was surprised that we have heard no more talk tonight about a 2 per cent. levy on sales. As the labour payroll in engineering is about a third of the total cost, that would be equivalent to a 6 per cent. levy on the payroll. Yet there is no suggestion by the Opposition that we should be talking about a 6 per cent. levy on payroll because plainly that would be a prohibitive burden.

Mr. Sheerman

If the hon. Gentleman waits until next Thursday, he will see the launch of our major statement on training and he will get the answers. Let the hon. Gentleman hold his patience until Thursday.

Mr. Thurnham

If it is anything like the launch of the job package yesterday, some member of the Opposition will put his foot in it and take the headlines from something else which would be far more helpful to Members on this side of the House.

The engineering industry training board submitted a memorandum for the Select Committee a week or two ago. The growth in jobs for professional engineers is shown in the figures prepared by the board for the Committee. The growth in jobs for professional engineers has been quite outstanding. Over the last eight years the total number of professional engineers in the country has grown from 60,000 to 90,000, although employment in the industry has declined from 3 million to 2 million. The loss of jobs has been more in the unskilled sector and the board needs to concentrate on the provision of training for professional engineers.

In the north-west, the number of professional engineering jobs has also grown, from 6,300 to about 7,900 last year, but the increase has been nothing like large enough. I know that my hon. Friend the Minister is as interested as I am in the north-west. Perhaps he will say whether he thinks that more measures should be taken to increase the number of training places, as I believe that there should be at least another 3,000 professional engineers employed in the region.

Other interesting figures provided by the training board show that the number of women taking careers as professional engineers has increased fourfold in the country, from 1,000 to 4,000 last year. In the north-west, too, there has been a substantial increase, but not on the same scale. I draw my hon. Friend's attention to the need for more training places for women in the north-west so that we can have twice as many women employed as professional engineers in the region, not only to provide more employment but because the future prospects and prosperity of the industry depend on having sufficient professional engineers, scientists and technologists who are in such short supply.

Sixty per cent. of the firms surveyed by the training board said that they experienced difficulties in recruiting specialist graduates in areas such as electronics. Does my hon. Friend think that the training board should concentrate more of its resources and time on the provision of those specialist skills rather than trying to provide the whole range of skills? The training board told the Select Committee that it would be making a decision this month on the method of its funding and listed three possible options, including higher levels of mandatory funding. I suggest that if the board were a little more selective there would be no need for higher mandatory funding.

A press release put out the other day by the Engineering Council drew attention to the need for more engineering places in universities and polytechnics. It ended by saying that longer-term measures should include the provision of greater facilities in schools to encourage people to take up careers in education and drawing attention to the need for more maths and physics teachers and the need to broaden the school curriculum so as to encourage both boys and girls to consider careers in engineering. I hope that my hon. Friend the Minister will consider whether more can be done in that respect.

Finally, I draw attention once again to the statement by the Engineering Employers Federation, which was echoed in evidence given to the Select Committee on Employment today by my right hon. Friend the Member for Waveney (Mr. Prior) when he said that the firm of which he is chairman would be pleased to help with the training of more engineers in schools. The federation's annual review, which has just been published, says that it would like the Department of Education and Science to give a clear lead to local education authorities and teachers on ways in which they should be seeking and responding to industry's offer of help. Perhaps my hon. Friend the Minister will draw this to the attention of his colleagues so that the Government can respond more fully to that offer of help from industry.

12.3 am

Mr. Malcolm Bruce (Gordon)

It is fair to say that this debate takes place against a background of genuine concern about the skill shortages in British industry generally and in engineering in particular. There is no doubt that the method of training had to change because technology was changing, and I appreciate the remarks of the hon. Member for Bolton, North-East (Mr. Thurham) about the former hon. Member for Truro, the late David Penhaligon. In the short and rather unusual debate on the subject last year, the former Member for Truro said: one is tempted to believe that, although the time-serving part of the apprenticeship system has been abolished, the skill acquisition side of it has not been introduced to the extent that is needed."—[Official Report, 28 April 1986; Vol. 96, c. 753.] That is the kind of gap we are facing today.

The engineering industry training board told the Select Committee on Employment that it felt that its pleas for more assistance had fallen on deaf ears—the board's words, not mine — and that the various undertakings given by the Government had not gone anywhere near what was needed to put Britain back on course to be able to compete effectively in manufacturing engineering worldwide.

An article in the Financial Times on 20 February began: British industry's attitude to training remains every bit as vacant as the jobs available for qualified staff. It went on to quote the secretary of the EITB, Mr. Pennant Jones as saying: More and more people are trying to fish talent out of a smaller pond. The Minister will acknowledge that comments such as that, coming from within the EITB, show a real anxiety and crisis. Indeed, the article pointed out that the exemption and the fact that so much of engineering employment was among small companies meant that the levy which the EITB received—because of 92 per cent. of companies in the industry being exempt—amounted to £3 million compared with £160 million.

I am not suggesting that that is anything other than a broad brush indication of the gap. As the hon. Member for Huddersfield (Mr. Sheerman) said, the EITB has put forward three alternative proposals for consideration. All of them show that more than that £3 million is needed. Of course tonight's order should be approved, but it should not be approved on the understanding that it addresses the real problem, which remains to be tackled urgently.

I understand that the position was highlighted at a meeting at the beginning of the month between the Secretary of State for Education and Science and representatives from six leading engineering companies in the United Kingdom, including Jaguar, Rolls-Royce and British Aerospace. They told the right hon. Gentleman of their belief that there was still a 60 per cent. shortfall in engineering graduates required, being 1,700 graduates in addition to the 1,700 graduates whom the Government have agreed to fund under the expansion scheme. I can say therefore at this late hour, in a spirit of generosity, that the Government have moved but that they have not moved anything like far or fast enough to meet the requirements of the industry.

I was given today a statistic which, if it is true, is alarming. I am told that South Korea is currently training twice as many engineering students as Britain, Sweden and West Germany combined. If that is the reality, it is an indication of the desperate position we face in the world and of our need for a more urgent response to our skill shortages, and for a better way of overcoming those shortages than the levy we are debating tonight.

It is clear that the employers in the engineering industry are not shouldering their responsibility to train. There is no doubt that the good companies will do the training. They suffer because they train for the companies that do not, and we must move to a system that ensures that the share of the cost of training is even, equal and fair.

I had a meeting recently with the Industrial Society. At that informal exchange of views I was told about the extent to which the Industrial Society is aware of how many companies have simply pulled out of in-house training. I was told that this was of some benefit for the Industrial Society because it had expanded dramatically, providing services for companies which had previously provided them in-house. On the optimistic side, the Industrial Society said that it noted that there was now a tendency for companies to start to re-establish their training departments. However, I believe that all the evidence shows that there is an enormous gap. Realistically, small companies will not do the training unless they are drawn in under the umbrella of the engineering industry training board.

To return to my earlier point, I do not look back to the good old days of engineering apprenticeships because 1 accept that we have moved on from there. However, I look forward to a time when we shall find a way to train and re-train people that is comparable to what the old scheme achieved, to ensure that we have the skills in the industry that are clearly missing at the moment.

I end by saying that the House should approve the order. However, the Minister should recognise that there is a crisis, especially in the engineering industry, and the Government have not shown the sense of urgency and commitment to solving that crisis that I believe is necessary. As we shall be moving into an election climate sometime in the next few months, it is not good enough for the Government simply to say that they have created the climate which British industry can take advantage of to become competitive in the world if they do not fill the gap and ensure that we have the skills and the means to train and re-train to ensure that we can keep pace with new technology and its application, something which we cannot do now. If the Korean statistics I have quoted are accurate, it is clear that Britain will not end up in the teens, in the league but will fall much further down the list unless we can respond to that. Engineering must be the backbone of our manufacturing industry, and skill training and retraining must be the backbone of the engineering industry.

12. 11 am

Mr. Peter Griffiths (Portsmouth, North)

My hon. Friend the Minister for Trade spoke about a consensus. It is true that everyone is in favour of training. Training is a good thing. The Minister was referring to consensus on the modest changes envisaged in the order. There is not much doubt that all hon. Members in the Chamber will give the order a welcome.

However, it would be wrong for my hon. Friend the Minister to assume that that consensus goes beyond the narrow proposals before us to the unquestioning acceptance of the way in which the levy is utilised by the engineering industry training board. He has said that over the next few months there are to be announcements of changes to the levy and exemptions. Those proposals might not receive a consensus as have tonight's proposals. The reason is that there is hesitation among companies—including the high technology companies in my constituency—about whether the sum of £19 million, which is an additional cost of training incurred by the company, is the best and most efficient way of obtaining an increment for training.

It has been suggested that, in practice, the engineering industry training board is not as responsive as we might expect it to be to the ideas, proposals and suggestions of companies. Firms have been responding — until last month — to the consultation document published in November. The three choices given in the document were of interest and gave cause for concern, but some companies answered the document by saying "Put your own house in order first." Companies have questioned whether the training board is responsive to the demands of the engineering industry today and whether it is capable of looking ahead to the requirements of the industry in future. It should set the pace. While companies are training workers to meet their immediate needs and their needs over the next few months, the industry board could be looking ahead to the requirements of the future.

Some people suggest that the engineering industry training board is administratively top heavy and that what it produces is not as efficient as the type of training provided by the best companies. I do not suggest that we should oppose the order, but I believe that many companies want to be assured that, if there are larger levy increases than those envisaged in the order, and if there are changes in the exemptions during the next few months, the burden on industry—it is already faced with extremely heavy competition in Britain and overseas — will not increase. They want a training system that will be cost-effective and the most efficient that can be devised in this essential industry.

12.16 am

Mr. Max Madden (Bradford, West)

Hanging over the debate is the spectre of the decline in the engineering and manufacturing industry. The fact that we are discussing it after midnight says a great deal about the way in which the Government, and indeed the country, view engineering and manufacturing. It underlines what many of us suspect—that the Government place greater priority on those who make money than on those who make things. My hon. Friend the Member for Huddersfield (Mr. Sheerman) said that we should all be greatly alarmed at the contraction in manufacturing industry, especially engineering. That contraction can clearly be seen in Huddersfield, in the constituency of my right hon. Friend the Member for Wakefield (Mr. Harrison), who is anxiously awaiting the Adjournment debate, and in my city of Bradford, where thousands upon thousands of skilled engineering and textile jobs have been lost in the past 10 to 15 years. There is enormous concern about the loss of skills together with the contraction of Bradford's manufacturing base. There is concern about the deskilling that has occurred. Those who are still in manufacturing industry are very worried about the need for their skills to be constantly improved to meet the challenges of the present and the future.

There is widespread unemployment in Bradford—15 per cent. compared with a national average of 12 per cent., with 28 per cent of those unemployed being out of work for more than two years. In some districts unemployment reaches more than 35 per cent. There are some six unemployed people chasing every job vacancy. Nearly half the unemployed are under 35.

Young people and adults in Bradford and elsewhere want good quality training and genuine job experience. They are wary of many YTS projects and are extremely suspicious about what real training will be available under the job training scheme. Despite the disparaging remarks made about apprenticeships by the hon. Member for Gordon (Mr. Bruce), who is the spokesman for the alliance, most of my constituents regard apprenticeships as a valuable opportunity of the past.

The picture of training in Bradford has been painted recently in a survey by the vocational, educational and training group of the Manpower Services Commission, which has surveyed more than 200 companies in the city and is providing informantion that is regarded as fundamental to any planning process that seeks to equip young people and adults for the world of work. The covering letter distributed with the survey results states: It is encouraging to note that 25% of all companies visited expect their staff numbers to increase during the next 12 months. However, of the companies visited, almost a third of employees received training of some kind; this does mean that two-thirds did not, and whilst almost a half of those in managerial grades received training, this again means that a large proportion did not. The report also highlights likely skill shortages in processing, both metal and non-metal, mainly within larger companies. It identifies, also, a major need for training or future training in computer or computer related skills.

I shall quote briefly from some of the main points made in the survey. On skill shortages and hard-to-fill vacancies it says: The major area of skill shortage is in non-metal and electrical processing with a particular problem in finding skilled sewing machinists. On the future use of new technology the survey says: Although major use of New Technology is still likely to be in information handling it is worth noting the relatively high number of companies likely to be introducing NT in Manufacture and Design. This includes CNC machines in Textiles and CAD/CAM in drawing offices. Of 121 companies likely to introduce new or further NT 11 thought this could create new jobs whilst 13 expected job losses as a result. All the other companies expected no change. On training needs in new technology it says: There is however a significant number of non-clerical workers requiring training including Computer Aided Design in draughting, CNC machines in both engineering and textiles and the use of computer aided point-of-scale systems in retail distribution.

If the decline in manufacturing industry in my city and elsewhere is to be reversed, if the service sector and employment in it is to be sustained, training and retraining are vital. We need a comprehensive national training programme if men and women are to be brought back into work or into work for the first time.

As I said earlier, this Government have, regrettably, presided over the collapse of good training and the next Labour Government are awaited to repair that damage. It is difficult for us in Bradford to appreciate the priority that the Minister says his Government attach to the need for graduates, when in recent years we have seen significant cuts in the funds for Bradford university and the cuts that Aston and Salford have also suffered.

It is difficult for us to believe that the Government place a high priority on young people who require the skills that Britain will desperately need in future. The Government suggested establishing city technology colleges in cities such as Bradford and Leeds. I gather that there is now considerable uncertainty about whether those colleges will proceed. Certainly, they would cream off the most able young people and the most able teachers, and would be thoroughly unwelcome developments in Bradford and Leeds.

One in five of my constituents is unemployed and desperately anxious to obtain employment. Those people know that their chances will be enhanced if they have training, skills and experience. I would welcome the Minister's comments on this survey by the Manpower Services Commission. I assume that it has been passed to him and I would appreciate any information that he can give about what will be done in Bradford to enable the two thirds of its people who are in employment to obtain the training that they are currently denied. I should like to know what will be done to give those people who are desperately seeking employment the opportunity to secure good training that will improve their prospects for employment, either for the first time or after a long period of unemployment, during which they have wasted their skills, talent and enthusiasm on the dole.

12.24 am

Mr. Trippier

I shall ignore for a moment the vitriol in the uncharacteristic speech of the hon. Member for Huddersfield (Mr. Sheerman). I was flattered to hear him say that historians would read my speech in years to come. No one has ever been so kind to me in any debate. I thank him for that, and I hope that they do. I am glad that the hon. Gentleman has finally decided to line up behind the board's efforts to increase training in the industry. He and his colleagues in the official Opposition have been treading a rather difficult path of late. They have wanted to blame someone for the skill shortages in engineering, but they have also wanted to maintain the ITB system as whole as the way forward. They cannot have it both ways. I made that point to him on numerous occasions at Question Time.

The hon. Gentleman suggested that morale was low within the board and among the staff of the ITB—he really must stop reading The Guardian. It is not true. Morale is not low on the board, and certainly not low among the staff, which is enthusiastic and keen to be involved in the important work of the National Council for Vocational Qualifications. It is keen to develop engineering training schemes under YTS and to play a significant part in it. It is getting more and more involved in these and other initiatives that we are introducing. One has only to speak to the people in the ITB who were involved in last year's "Winning Margin" conference to find out that what I am saying is fact and not hypothesis.

The Government will always try to respond positively to constructive suggestions made by the board—that is the way that the system works. My hon. Friend the Member for Portsmouth, North (Mr. Griffiths), in his effective contribution, made the point that we have to have consensus. We have consensus on the order today, but the board must have consensus within it, and the hon. Member for Huddersfield knows that well. It is a tripartite board, and the three questions that have been put in the form of a consultation exercise by the board to the industry and to trade unions, but not at this stage to Government —1 emphasise that again—are seeking to address the problem that all hon. Members would agree are those confronting the engineering industry. My hon. Friend the Member for Portsmouth, North is right to say that when the board decides to bring its conclusions to the MSC and ultimately to Ministers, we must have a consensus within the industry. That important point was lost in the contributions from the Opposition Benches.

I find it incredible that Opposition Members feel able to criticise the Government's training record, given how well it compares with that of the Labour Government. We have more than doubled our expenditure since we took office, and it is now running at £1.5 billion a year. Raising the skill level of the work force is vital if our industries are to compete in a world of rapidly changing technologies and markets. That is why vocational training and education measures are central to our economic strategy.

Mr. Madden

What about JTS?

Mr. Trippier

The hon. Gentleman is out of step with what his party is saying about that, because it has changed its tune. I hope that he has time to read the new, official Labour proposals, which came out yesterday. I do not seek to rubbish them because some of them seem remarkably like those that we have recently introduced for the job training scheme. Some are exactly the same.

Our introduction of the JTS is not due to complacency. It is not a sign of complacency that we have tackled the problems that arose because schools were not equipping children for employment. We have introduced TVEI. I suppose nobody in the Labour party has thought of knocking that. We shall be spending £900 million on that over the next 10 years. We introduced first the YTS and now two-year YTS. That is not complacency. Young people are now entering the labour market with a sounder foundation of initial training than ever before. We are encouraging the reform of apprenticeship training and doing away with age limits and time-serving, and. supporting apprentices through YTS.

The official Opposition seem keen on traditional apprenticeships. I agree with the hon. Member for Gordon (Mr. Bruce), that things have changed considerably over the last few years. The Labour party is always bemoaning the decline of traditional apprenticeships and we heard it again from the hon. Member for Bradford, West (Mr. Madden). Luckily, an increasing number of trade union leaders — Clive Jenkins and Eric Hammond come to mind — are more enlightened. The other day, Eric Hammond said: Others will continue to cry crocodile tears over the plight of young people, but keep archaic, unused apprenticeship agreements intact.

We are contributing directly to skill supply through adult training programmes such as the new JTS, which will help up to 250,000 unemployed people per year to train in the skills that industry needs. We are widening access 1 o training through the Open College, training access points and career development loans.

The hon. Member for Huddersfield asked what role the Government were playing in that, in addition to the support that they are giving to the board. That is the question that I am now addressing, apart from the first question that he asked about low morale. We are seeking to create the right framework for cost-effective training investment by employers and individuals by reforming the qualifications structure. That is not complacency. We are promoting collaboration between employers and training providers by the development of more cost-effective methods such as open learning and by providing better information on training needs and provision.

All the measures that I have mentioned directly address the central issue, on which we all seem to agree, that many British employers do not do enough training. They do not recognise that it should be regarded as an investment. Most of them regard it as a cost. Laying the foundations of initial training for new entrants to the work force is the most effective strategy that can be introduced for encouraging employers to take on young people and train and update them through their working lives, since it gives them a basis on which they can build cheaply and cost-effectively. We do not stop there.

Mr. Sheerman

Will the Minister answer the central point that hon. Members have asked, about how much is spent on training people in the work force? The Minister has given us a catalogue of income support measures for unemployed people. Most of the money is spent on income support, not training. The Government have spent a little on training, but almost none on training people in work. Will the Minister answer that?

Mr. Trippier

That is the point that I was seeking to make earlier. The hon. Gentleman cannot have it both ways. The Government responded positively—I assume the hon. Gentleman agrees with that—in retaining the statutory training boards for certain industries because the employers wanted to keep them. If we have a system such as that, they should be responsible for training in that industry and, as I have already said, we respond positively to the constructive suggestions that they make to us. That is the system that we have supported and the hon. Gentleman cannot knock it. It is working.

If the hon. Gentleman is saying that the statutory board system is not working effectively, what does the Opposition propose to do with statutory training boards? I thought that the hon. Gentleman supported them. The statutory training board has been responsible for training in the engineering industry, and it is up to it to deal with the problems of skill shortages, which all hon. Members have identified in their speeches this evening. It has to identify them and deal with them effectively through consensus.

My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) drew the attention of the House to another problem. We recognise the challenge that is posed to employers by new and high technologies and our work force must be skilled in those if we shall compete in world markets. Some £30 million of the MSC's adult training expenditure is in that high technology sector. That is a good example of training that we are giving to people who are already in the work force. Examples include the leading edge technology programme, in which the vast majority of the courses funded are in information technology skills. There are local collaborative projects in software engineering, OpenTech packages and electronics. We also spend £43 million under the Switch programme to provide extra places in higher education on courses in engineering and technology.

Labour Members are fond of talking about skill shortages, but they are now far less severe than they were when we took office. In 1979 over 15 per cent. of manufacturing firms were expecting output to be constrained by shortages of skilled labour, but now the figure is 9 per cent.

What is the Opposition's proposed solution to the problems? I find it difficult to comment on that on the basis of the document entitled "New jobs for Britain" which they published yesterday, which seems to have been eclipsed by certain other matters which have arisen both in the House and outside. From what I have seen so far, the proposal for training places looks remarkably like the Government's policies which have already been implemented. One would be hard-pressed to spot the divide. But we are a little confused and we hope that that confusion will be cleared up when the final package comes forward next week.

We want to know whether the 300,000 training places referred to in that document are in addition to the 300,000 young people and 300,000 adults whom we are already training, or whether they are in place of them. If they are in addition to, I can only welcome the fact that the Labour party has suddenly recognised the value of our policies and seeks to build constructively on them. If they are instead of, I can only say that I am sorry that it is proposing to cut training provision in half.

What about mobilising employers' contribution to training? Again, I cannot wait to see the removal of the veils. Have the Opposition abandoned the solution preferred by the hon. Member for Kingston upon Hull, East (Mr. Prescott) of bringing back all the industrial training boards or replicating the ITB system across industry, trade and commerce? Have they abandoned their proposal for a 1 per cent. levy? That has been said, but it has not been said again today. It was not mentioned yesterday. Will that be referred to in the document? What will the 1 per cent. be on? Will it be on turnover, payroll, or what? That would act as a significant brake on enterprise — an increase of 15 percentage points in corporation tax.

Do the Opposition propose to hide behind the Manpower Services Commission's forthcoming study, as they seem to have suggested in their document yesterday? If that is the Opposition's alternative, I do not see how the House can do anything other than support us in our policies on training in the engineering industry and in industry as a whole. I recommend the order to the House.

Question put and agreed to.

Resolved,

That the draft Industrial Training Levy (Engineering Board) Order 1987, which was laid before this House on 13 February, be approved.