§ The Parliamentary Under-Secretary of State for Employment (Mr. Robert Jackson)I beg to move,
That the draft Industrial Training Levy (Engineering Board) Order 1991, which was laid before this House on 21st March, be approved.The proposals before the House seek authority for the engineering industry training board to raise a levy on employers in the engineering construction and steel erection industries, to finance the running costs of the board and to fund a range of training initiatives, including a grants scheme. The proposals do not relate to engineering manufacturing, as that part of the engineering industry will move to independent training arrangements around the middle of this year.The basis of the proposals is a levy of 1.5 per cent. on the payroll of site employers in the industry, although no levy will be paid on the first £50,000. Additionally, there is a levy of 2 per cent. on all payments made by employers for sub-contract labour, and 1 per cent. on the payroll of head office establishments with more than 30 employees. Those head offices that train satisfactorily, however, will be exempt from all but a small, non-exemptible levy. Because of those provisions, 40 per cent. of firms will pay no levy at all, and a further 8 per cent. only a small amount towards the board's operating costs. The proposals have the support of the employers, as required by the Industrial Training Act 1982, and the full support of the board.
The House will know that the Government thought long and hard about their decision to retain statutory arrangements for those sectors of the EITB. In principle, we believe that independent, employer-led arrangements that have the full support of employers, offer the best way forward for industrial training. In general, the track record of compulsion through statutory levies in raising the quality and quantity of training is not a good one. The hon. Member for Fife, Central (Mr. McLeish) and I debated that aspect extensively some time ago, in connection with the construction industry training board, so I hope that it will not be necessary to go over that same ground this evening.
We have retained the statutory principle in the case of this part of the industry because of strong support from employers. The engineering construction industry has particular characteristics that create peculiar training problems. The mobile nature of its work force, both geographically and between employers, together with the large-scale use of sub-contracted and self-employed labour, produce a unique set of circumstances in this sector of the engineering industry. Let me explain and emphasise that we consulted widely with the industry about the EITB. There was a widespread and strongly held view that independent arrangements should be set up for engineering manufacturing, but that statutory arrangements needed to be retained for engineering construction.
We were persuaded to accept those proposals, and we intend laying an order before Parliament around the middle of the year that will remove engineering manufacturing from the scope of the EITB and define the boundaries of engineering construction. At the same time, the board will be renamed the engineering construction ITB to reflect that change.
1056 We are concerned to ensure that statutory burdens on firms are kept to a minimum, and that firms that train appropriately are rewarded. To that end, we asked the new board to replace its head office exemption scheme by a voluntary code of practice based on the "investors in people" initiative, to raise the exclusion level for small firms and to review the effects of its grant scheme on employers' training. I am looking to the board to address these issues in 1991–92.
We intend to keep a close watching brief on the new board. Its powers to raise a levy will be exceptional, and the Government, like the House, must be convinced that they are absolutely necessary to preserve the basis of training in the engineering construction industry. The Government have decided, because of the peculiar nature of the industry, to continue with a statutory board for the time being.
The Government continue to believe, as we argued in the 1989 White Paper, that the most effective incentive for companies to train is a knowledge and understanding of the skill needs, not centralised regulation based on statutory powers.
I believe that it is right for 1991 that the House should approve the proposals before it, and I commend them.
§ Mr. Henry McLeish (Fife, Central)I am conscious that Ministers would like to depart early, so we are considering the possibility of being reasonable this evening and providing that accommodation. However, it is only a tentative proposal at this stage.
I want to discuss the political impact of Prince Charles's speech on the Conservative party, but being a moderate and reasonable man, I will resist. Suffice it to say that I want to put on the record the fact that, while we may agree with his attack on the educational and curriculum aspects of what the Government have been doing, as a Scot and as a cynic, I take some exception to all of our children being exposed to both Shakespeare and Dickens, without a wider literary menu to select from. However, we should get down to this evening's business.
This order is important for a variety of reasons. The Minister has highlighted the technical and procedural elements that we are discussing. One important addition is that, for the first time, steel erectors will be included in the arc of the construction industry engineering board, which will be established later this year, when it takes up its formal responsibilities.
There are three other reasons why this order is important. First, the engineering industry training board, as we know it, will change and is changing. Only 40,000 employees will be covered, in relation to the statutory levy, by this order. Secondly, we have some worries about the effectiveness of the replacement organisations which will be established: the engineering training authority and the engineering construction industry training board.
Thirdly, the order almost brings to an end the dismantling of part of Britain's training infrastructure. We started with 23 training boards, which were reduced to seven. Then the construction industry put up a formidable fight, due to its influence within the Conservative party, to retain the construction industry training board. Now we are in the sad situation where, because of Government pressure and diktat, and bowing to the marketplace, the 1057 engineering industry training board is being dismembered into two organisations to take up responsibility in different sectors.
I reiterate that this order goes well beyond being merely technical and procedural as regards the skills issue, which is climbing to the top of the political agenda. Far be it from me simply to accuse the Government of playing politics with the future of the engineering industry, but there are sceptics and cynics who believe that a Government so wedded to the idea of the market can at times be oblivious of the views of the industry, as was the case with the engineering industry training board, when views were offered and some were rejected. We now find that the engineering industry training board has put forwards its proposals, and there is great uncertainty about the two components that are being left to carry on the work.
As we are in the early hours, I shall put it succinctly. This order will result in a 50 per cent. cut in the budget of the new engineering training authority because, with the abolition of the levy, it will mean that its income will drop from about £15.7 million to £8 million, at a time when there is a debate in the United Kingdom about the volume of money that is being spent, the quality of it, and the qualifications that result from that spending.
There is a possibility that a large number of the supply-side initiatives documented in the recent engineering industry annual report will be abandoned. Sadly, where the statutory levy is dropped, the engineering training authority will no longer be able to budget for youth training.
It is remarkable to realise that, in 1968, there were 445,000 apprentices and other trainees in manufacturing industry. After 12 years of this Government, by 1990, the figure had dropped to 87,000. As a proportion of all employees in manufacturing, it has dropped from 5.6 per cent. in 1968 to about 1.7 per cent. These figures are shocking. They are a damning indictment of the Government's policies in relation to youth training. This is an implication of the order that should be treated very seriously.
I want to make a few points, to which I hope the Minister will respond. This order will apply only to the construction sector of the engineering industry training board. By July, we shall have two fully functioning alternative organisations. One is the engineering training authority, to which the Minister has referred; the other is the engineering construction industry training board. The ETA will be responsible for the training of 2 million employees in nearly 22,000 companies; the engineering construction industry training board will be responsible for 40,000 employees. The latter will have a statutory basis; the former will be subject to a voluntary regime.
The matters that concern us are easy to state. First, with regard to the future of the engineering construction industry training board, the levy is necessary. The board feels apprehensive. It is menaced, threatened, by the review that is to take place in 1992. The Minister could dispel its fears by agreeing with us that the review should be positive and that there should be certainty as to the board's future. But, more important, the Minister should underline the fact that training is a partnership between the training organisations and the Government. There is no room for 1058 diktat or dogma. The Government should listen to the key experts who run the industry, and allow those people to judge what is best for them.
Secondly, there is the question of stability. The industry wants an assurance for the period beyond 1992. That could be secured by way of a statutory levy or a voluntary regime. We are fighting to close the skills gap between Britain and its European competitors, and stability in key sectors of our training infrastructure is crucial. This is a demand to which the Government should accede.
The third issue is that of assets. I hope that the Minister will assure the House that, with the demise of the engineering industry training board, there will be a coherent policy on assets. These should be distributed fairly between the two remaining authorities, and the most effective use should be made of what is a very substantial amount of money.
Fourthly, there is a relationship with the training and enterprise councils, which have become the flagship of the Government's training policy. We support the idea of local delivery and the work of the TECs. However, the engineering industry has expressed concern about the councils. The geographical balance can cut across the work of sectors. The Minister ought to reassure the sectors, including the engineering industry, that the role of the TECs will be complementary, that sector initiatives will have equal status, and that there must be dialogue, not only there but also with the Government. It is felt that no such assurance has yet been given.
Finally, I want to make yet again a point that has been made repeatedly by the Opposition. The Government seem to be obsessed with the idea that a levy must be bad if it is statutory, and that all these organisations must be intimidated into accepting a voluntary way forward. When we lag so far behind our competitors, when there are such skills gaps between the regions of Britain, and when there are such gaps between various sectors of industry, is it right to continue to dictate from the centre? The industry wants to be assured that the Government will not be dogmatic. That will take some doing.
In the engineering industry, we have the way to Britain's future. The matter cannot be taken lightly. The problems that the industry faces are immense. The issue which dominates its concern is how the Government, if they are still in power in two or three years' time, will respond to the view that the voluntary way, which has been tried for about 150 years, is not working.
The Opposition do not intend to oppose the order, however, we have welcomed this opportunity to highlight some of our concerns. I hope that the Minister will respond to them.
§ Mr. Lewis Stevens (Nuneaton)I welcome the order. The engineering construction industry training board will have an important role to play. I welcome the fact that the Government accepted the recommendation that such a training board should be retained. Both employers and clients recognise the need, due to the peculiar nature of the industry, for a central organisation that can provide training for those working both on and offshore and for those involved in building power generation, oil, chemical and most other major processing plants.
An apprenticeship scheme already exists and is soundly based. Provision must also be made for the training of 1059 supervisors and senior managers. An important point that is frequently overlooked is the need for the continuing education of senior engineers and management.
The hon. Member for Fife, Central (Mr. McLeish) referred to the training and enterprise councils. The national skills development scheme that is used by the industry has many advantages. People, either skilled or unskilled, can enter the industry at any age and receive training in particular trades. However, the TECs do not cater for this industry's needs; people cannot be drawn from wide areas and trained to cater for specific needs.
Unemployed people who require training could enter the engineering industry if money were ring-fenced specifically for people on ET in specific trades. There will also be a need for people to learn new skills. Refineries and offshore installations will have to be dismantled. Nuclear plants will also have to be decommissioned and dismantled. Specialist skills will be required and few people possess them. They will have to update their skills.
We shall also have to cope with demographic changes and with the need to compete for those leaving school and for graduates. The new board will, I believe, adopt the right approach and provide the necessary training so that the industry can cater for specific needs. As the Minister said, the work force is more mobile than is normally associated with engineering activities. When the industry is involved with large installations, a rapid growth in a particular skill is demanded. That means that there needs to be an ability to train many peope in a relatively short time to the level of competence that is required.
The House set up a structure that will perform that task. The order will provide a training system for the clients and for the people in the industry which will take them beyond the two years that they have at present well into the future. The order will ensure a basis of training that will make a great contribution to industries that are vital to those involved.
§ Mr. Richard Holt (Langbaurgh)I apologise to my hon. Friend the Minister for not being here at the beginning of his speech.
I want to make a point about the number of apprentices today. The decline in the number of apprentices began when there was a pincer movement with the raising of the school leaving age and the reduction of the age at which full pay was given. When the industry had young people for five years from the ages of 14 or 15 to 18 and 19, it had long enough to give proper apprenticeship and training. Today, when people cannot leave school until 16 and have to be paid full wages at 18, there is only 18 months in which to try to bring people into the industry.
I smiled to myself when I heard the hon. Member for Fife, Central (Mr. McLeish) talk about not wanting centralisation. That is what existed when we had a plethora of training boards. We had centralisation by the Government, which caused industry a great deal of wasted expenditure and which trained few people. The number of apprentices has declined and will continue to decline because that is the nature of things today.
The country could help to reverse the trend if it could get away from the position that I have been trying to bring to Ministers' attention for almost two decades. We should stop the artificial divide between education and training. The sooner we adopt the system in vogue on the continent 1060 the better. We must recognise that people are different—that they have different aspirations, skills and abilities. We should cultivate education and training for them and we might then find ourselves in a position like that in France.
In France today, people can start an apprenticeship at 14. Some 12 per cent. of all youngsters in France follow that route. Some 23 per cent. follow the next route of super-apprentice, which starts at the age of 15. In that way, France has the apprenticeships, the training and the skills. The youngsters continue to have education at the same time—there is a mix of education and training.
Yet in this country, because of the way in which the law is framed, no youngster can embark on a City and Guilds or a Royal Society of Arts course, or on any other formal vocational qualifications, which are accepted and known throughout the industry, and we wonder why we lag behind those on the continent. We lag behind because, as someone said recently outside the House, those who theorise in education have said that if one attempts to keep youngsters in a building and is supposed to be teaching them something, one is giving a service to them. One is not. The youngsters would be far better served if they were allowed to undergo vocational training in a mix with education. That would help the problems of truancy, and pof law and order.
I hope that the Government, at long last, will begin to listen to the voices outside which have been saying that there is no need for the artificial divide in the engineering or in any other industry. We should get back to the recognition that all youngsters are not the same.
In France, by the time that youngsters reach the age at which they transfer from primary to secondary school, no fewer than 50 per cent. are not in the same year group in which they began their education at the age of five. Some 25 per cent. of them have accelerated by gaining a year, and 25 per cent. have slipped a year. The French see nothing wrong or unusual in that; it is the norm. In this country we should head in that direction so that, ultimately, we shall have a better educated and trained work force.
I commend what we are doing within the engineering industry because I think that it is an essential prerequisite, but I hope that wider points will also be looked at by my hon. Friend.
§ Mr. JacksonLike the hon. Member for Fife, Central (Mr. McLeish) and my hon. Friend the Member for Nuneaton (Mr. Stevens), I and the Government agree about the importance of the engineering industry in general and the engineering construction industry in particular, which is the subject of our debate.
I remind the hon. Member for Fife, Central that we had an extensive debate in February on the construction industry training board—a very similar proposition—when the hon. Gentleman raised his concern about the Government policy that underlies these proposals in respect of levies. Hon. Members who wish to look this up can do so by consulting Hansard of 25 February, columns 755–69. I do not think we need go over that same ground again tonight. I agree with the hon. Member for Fife, Central, who did not dwell on that point.
The hon. Gentleman referred to cuts in the funding of engineering training, but I think that he gave a rather selective figure, because he omitted completely the income 1061 coming to the new engineering training authority from voluntary subscriptions, and, indeed, the expenditure that will be undertaken by the engineering companies. We have lots of reasons to believe that that has substantially increased in recent years, along with an overall increase in expenditure by employers on training. The House might like to know that the Government's labour force surveys show that more and more people are receiving training. The numbers in training during the same four-week period increased by 85 per cent. between 1984 and 1990 and by 8 per cent. in the most recent year alone.
My hon. Friend the Member for Langbaurgh (Mr. Holt) put in perspective the points made by the hon. Member for Fife, Central about apprenticeships. I agree very much with him about the need to overcome the traditional divide between the academic and the vocational, between education and training. He may have seen the piece that I did on the subject in The House Magazine recently. I can assure him that his 20-year campaign on this subject will bear fruit. The Government have announced that there will be a White Paper shortly on the 16 to 19 age group, and when my hon. Friend reads that White Paper he will find that we are addressing this issue which he has been pressing so hard on us over the past 20 years.
The proposals before the House are, I emphasise, particular to the engineering construction industry. They do not represent a change in the Government's view that independent, employer-led and employer-supported arrangements are in general preferable to compulsion. The hon. Member for Fife, Central spoke about the 100 years of the voluntary system. I have to remind him—we covered this topic in the previous debate—that we had an extensive system of compulsion operating in this country for some 20 years down to the early 1980s, and it did not work very effectively. We believe, like most of the other countries that train effectively, that the best way is the voluntary way.
The hon. Gentleman asked me for some assurances about the review that we propose to have in due course to see how this system is operating and whether we should continue with it. I can certainly give the assurance that we will be open-minded in that review, and in that sense it will be the positive review that he seeks. Certainly we shall bear in mind what he says about the need for stability, but, on the other hand, we want to ensure that we have proposals that will work over the years ahead.
As my hon. Friend the Member for Nuneaton (Mr. Stevens) pointed out and as we recognise, the engineering construction industry is different from most, if not all, other industries and it therefore needs to be treated accordingly. The proposals before the House have the support of the employers in that industry. They have been approved by the board. That they should be approved by the House is not in dispute—the hon. Member for Fife, Central has said that he does not intend to divide the House. I therefore commend them to the House.
§ Question put and agreed to.
§
Resolved,
That the draft Industrial Training Levy (Engineering Board) Order 1991, which was laid before this House on 21st March, be approved.