§ The Parliamentary Under-Secretary of State for Employment (Mr. Eric Forth)
I beg to move,
That the draft Industrial Training Levy (Construction Board) Order 1992, which was laid before this House on 13th November, be approved.
The proposals before the House seek authority for the construction industry training board to raise a levy on employers in the building and civil engineering industries to finance the running costs of the board and to fund a range of training initiatives, including a grants scheme.
The basis of the proposals is a levy of 0.25 per cent. on the payroll of employers in the industry and a levy of 2 per cent. on all payments made by employers for sub-contract labour. Employers with a payroll of £45,000 or less will be exempt from the levy. The proposals have the support of the employers, as required by the Industrial Training Act 1982, and have the full support of the board.
The House will know that the Government thought long and hard about their decision to retain the statutory training board. In principle, we believe that independent employer-led arrangements which 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 good.
In the White Paper "Employment for the 1990s", we recognised that the industry has particular characteristics which create peculiar problems for training. The mobile nature of the work of the industry and the mobile nature of its work force, both geographically and between employers, together with the large-scale use of subcontract and self-employed labour, produce a unique set of circumstances.
Against that background, we consulted the industry widely about the contruction industry training board. There was a widespread and strongly held view that the CITB should be retained, but that its management should be streamlined and reformed. In addition, the employers in the industry argued strongly for the retention of a statutory levy because of the largely self-employed nature of the labour force.
We were persuaded to give the industry a chance to reform its training board, to remodel it as an employer-led body and to alter the basis of levy collection. I am happy to say that much progress has been made. The board was reconstituted with a majority of key employers from within the industry, its operations and financial systems have been restructured and a strategic plan has been produced which sets out clear objectives against which the success of the board's actions can be judged. New measures have been introduced to counter the effects of the recession on training, and the board is on schedule to create national vocational qualifications for all major occupations by September 1992.
All the signs are that the board, under its chairman, Sir Clifford Chetwood, is fully committed to demonstrating its value to the industry and others. I especially draw the attention of the House to positive relationships that the board has established with 102 training and enterprise councils and local enterprise companies for the provision of training for about 20,000 young people on its youth training schemes and to the £6.5 million that it is using 84 from its reserves this year to maintain the momentum of training in the industry. The improvement in effectiveness will be taken into account next year, when we review the continuing need for statutory arrangements in the industry.
It is right for 1992 that the House should approve the draft order. I commend it to the House.
§ Mr. Henry McLeish (Fife, Central)
The construction industry is an industry in crisis. The crisis has been created by the Government and it provides the context in which there have been tremendous implications for training. The Minister introduced the order characteristically, outlining the Government's interest in voluntarism and the fact that the order has the support of the construction industry training board. The reality is far removed from his speech.
We have no desire to divide the House, because this is a procedural order. It allows the board to continue with the levy, which ensures that income will be gained and that training can continue. However, important issues should be raised this evening. The order does not command the support of the CITB. A pistol is pointed at its head, because it has been warned that, in the next year, there will be a further review under which it is likely that it will again lose its statutory framework and be cast adrift into voluntarism along with the 22 other boards which have been dismantled in the past eight to nine years.
In that context, it is important to identify the flaws in the order. The crisis in the industry has now been reflected in the near-collapse of skills training in the sector. There is probably no better example of an industry and a sector in which economic policies are causing so much damage. The crisis has been created over the past 10 years, and this is the second recession in which the building industry has been hit hard.
A number of strands to the crisis should be identified. First, there is the recession. It is clear from all those in the industry that the recession has a devastating impact on emloyment and on the ability to train. It is measured in the repossession of houses and in the lack of new house starts.
Secondly, the crisis is measured in terms of Government cuts in training. Over a year ago, just after the autumn statement, the Government cut almost £340 million from the training budget, including the budget for adult training and the budget for youth training. Over the past year, some of the cuts have been reinstated, but the damage has been done. As will become clear tonight, the construction industry still suffers from the irresponsible cuts imposed by the Government.
Thirdly, uncertainty now surrounds the future of the industry. The Minister suggested that the Government had listened to the employers and had decided to provide a statutory framework for the CITB. We welcome that. However, the decision to allow the board to continue was cloaked in Ministers' remarks suggesting that the statutory provision would be short-lived. We have the major problem that one of the key sectors in British industry has hanging over it the threat that, in a year's time, the decision will be further reviewed and the industry will again lose its ability to impose a statutory levy.
Fourthly, the threat is an example of the Government's lack of commitment to training and to skills development. Every other nation in Europe puts that at the top of the agenda, but in Britain training is used as a political 85 football by the Conservatives. The Government have launched TECs, but they have then provided less funding than was envisaged. Morale is low, and many people are disillusioned.
One problem above all is the lack of commitment to sector-based training. The French, the Germans and, increasingly, the Italians value strong sectors producing quality training in which the employers and the trade unions have confidence. That is very different from the approach of the Government, who have not only abandoned a serious commitment to training, but have suggested that sectors do not have a valuable role to play.
We have one of the best construction industries in Europe, but unfortunately, it has one of the worst Governments. In a "State of Trade Enquiry" report published in November by the Building Employers Confederation, we read the outline of one of the bleakest futures for any construction sector in the whole of Europe. The confederation asks why, after two recessions and amid the deepest recession since the war, the Government show no sign of listening to the pleas made, or to the concerns expressed on the training front and, more importantly, on the need for investment.
The Building Employers Confederation had a meeting with the Prime Minister, which was reported on 1 October in The Independent. It was clear that the employers proposed a plan to generate more immediate investment in the sector to provide some stability and to ensure that quality training would be provided. The article says:Mr. Major disagreed with the delegation's gloomy forecast of when the recovery in construction would begin, saying he expected industry to emerge from recession in the middle of next year.Clearly the construction industry has extremely bleak prospects, and the Government do not take its major concerns especially seriously.
We talked about the importance of the sector to the economy. One would not think that it was important from the statistics that have been compiled about the industry under this Government. Over the past 10 years under this Government, the number in employment in the construction industry has declined by almost 250,000. In the present recession, almost 100,000 jobs have gone, according to the Government's figures published in Employment Gazette. The industry says that the figure should be almost 165,000, and that more jobs are threatened to go in the next few months.
Construction output is falling rapidly. We have to look back to the first quarter of 1988 to see a time when construction output was so low. We have to go back to the first quarter of 1986 to see such a low figure for construction output per person in the past decade. Regardless of the statistics used, we now find that one of Britain's greatest industries is threatened by a Government who ooze indifference, and who are not interested in investment or in investment in skills.
We really discover the extent of the difficulties facing the industry when we consider training. Between 1989 and 1991, the number of construction trainees enrolled by the CITB fell by 40 per cent., from 14,385 to 8,500. In the same period, the number of apprentices registered with the council fell by 45 per cent., to just 2,710 starts. That 2,710 starts for apprentices must be set against an industry which employs nearly 1.8 million people, half of whom are 86 employees and the other half self-employed. Those starts cannot sustain the skills in the industry in the decades ahead.
Local authority direct labour organisations are the cornerstones of training in construction. According to a recent survey by the Union of Construction, Allied Trades and Technicians and the Association of Direct Labour Organisations, training places have been cut by 27 per cent. for women and by 47 per cent. overall between November 1990 and November 1991. The construction industry has an excellent provision for youth training, unlike many other sectors of British industry, but by 20 November 1991, only 9,562 young people had started on YT, compared with 11,877 by the same date last year. That is a reduction of 2,315, or 19.5 per cent., in just 12 months. The raw statistics show that training faces a crisis for many reasons.
The Government fail to appreciate—although they are prisoners of their own rhetoric and ideology—several important points which others readily grasp and would clearly like to do something about. The cut in the number of trainees has already been identified. It is also obvious that there are fewer apprentices. One of the damaging implications of the recession is that very few employers are now able or willing to offer employment to trainees. Indeed, very few employers are willing to provide work experience instead of full employment. All that has been compounded by the Government's crazy cuts in youth training, including in the construction industry.
The Government laughingly refer to a YT guarantee for every young person. However, it is clear that, throughout Britain and particularly in the construction industy, the YT guarantee for many young people is simply not worth the paper that it is printed on. Because of that, the CITB has had to introduce various schemes using its own investment to tide it over what it believed at the outset would be a short recession, but which has now become a very deep and long recession. If the recession lasts much longer, and with present cuts in Government funding, the board will not have enough money to invest to tide itself over this period in which young people face such difficulties.
The board faces a crisis, and the Government are unable—some people would say unwilling, but I would be more charitable—to assist. However, that behaviour is characteristic of the Government. What can we expect from a Government who are dismantling quality training in the construction industry and whose record on training boards over the past decade has been one of failure? There used to be 23 such boards, but 16 were demolished. Of the seven remaining, five were then demolished and the two that remain are now under threat. What next for the training boards?
Skill centres are a key part of the provision in any sector, but the Government have privatised them. That privatisation was ludicrous. Four of the sectors under the TICC consortium have entered receivership, and £2.1 million of public money has simply disappeared. The Government have reneged on all their commitments to the civil servants who were transferred into the private sector. We have lost capacity, skills and people who had some faith in the Government's processes. They have been sold down the river.
What about the Manpower Services Commission? It was charged with the objective of bringing Britain into the 87 premier league for skills. However, the Government nearly abolished it. Many people deplored that. Clearly, our national focus for training has been removed.
The employment service is disillusioned, demoralised and underfunded. In a sense, it is not required by a Government who preach the market model and who see no long-term future for the service. The treatment of training in the construction industry falls into line with the Government's practices over the past decade. The Government have nothing to be proud of over that period. After all that and the investment of nearly £30 billion in real terms, this nation has nothing to show for 12 years of this Conservative Government.
The order refers to the future of the CITB and the continuation of a levy. The Minister said earlier that that is supported. It is not. The Building Employers Confederation and the trade unions—the key providers —do not want a levy at 0.25 per cent. of payroll. That is far too small. They are arguing for a minimum of 0.5 per cent. of payroll. I am sure that the Government were informed of that, but they did not listen.
The Building Employers Confederation wanted no exemptions, because it must be right that every employer should contribute investment to his employees. The BEC must have told the Government that, but they did not listen. Exemptions have been raised from a base of £ 10,000 to £45,000. The industry wanted to be able to use the funds that it had generated to invest in youth training.
§ Mr. James Wallace (Orkney and Shetland)
The hon. Gentleman will be aware that charities are also exempt. Does he object to that?
§ Mr. McLeish
Every employer in Britain, including charities, small businesses, medium-sized and large businesses, must contribute to the skills needs of the country. When we talk about exemptions, the Government refer to them simply from a basis of ideology. They do not want a levy: they want everyone to be exempt. That is the essence of voluntarism. The BEC, which is not a strong supporter of the Labour party, has requested no exemptions, because it sees the benefit of every employer being involved, but the Government ignored that plea. The Government also ignored the Confederation's plea to use its finances to support YT when it saw fit. The Government encouraged heating and ventilating and plumbing and electrical to remove themselves from the scope of the CITB.
Why do the Government preach that we should listen to industry when they ignore everything that industry tells them about training in the construction sector? The simple facts speak for themselves. I received a letter written by Mr. Smith, the secretary-director of the CITB, on 28 November. He made a point about the exemptions from the levy and said:The Board and much of industry considers that there should be no exclusion from levy but that the whole of industry should contribute to the cost of training. However, the current legislation and Government policy requires a level to be set and the present level is reluctantly accepted on that basis.That is the board's view of Government policy—the very same Government policy that the House has been told has been endorsed by all those in the construction 88 industry. I must advise the Minister that that is not what the construction industry is saying to others about the problems that it is facing.
Faced with such a crisis, we need some action. We are facing a loss of jobs, skills and capacity. The prospects for the immediate future are bleak. The Government need to take action on four issues, the first of which is the skills shortage. By instinct and possibly by ideology, the Minister never shows much interest in this subject, but perhaps he should listen to this debate. If we ever climb out of the current recession, the skills shortage in the industry will be a major problem.
Some forecasts suggest that, by the turn of the century, 250,000 skilled people will have been lost to the industry. That is a product of the present lack of interest in the construction industry which the Minister must address, because the skills shortage is of crucial concern not only to those in the industry but to Britain, because we must invest in training in the 1990s if we are to survive.
Secondly, there is a widening trade deficit in building products. Why, in 1989, did we have a £3 billion trade deficit in building products against the background of building firms, building material producers and brick-makers all going to the wall? It does not make sense to squander important resources that the nation can ill afford to lose.
The third issue is our failure to meet the demand for new housing. Is the Minister interested in building homes in Britain not only to tackle the problem of homelessness but to allow peple to move within the private sector? Is he not interested in ensuring that building skills are available and, more importantly, that homes are made available in the right place and at the right time?
The fourth issue is something in which the Minister will not be at all interested—European competition in the 1990s. Whether the Minister likes it or not, we must be prepared to face such competition, because major European contractors are already in Britain, winning contracts and using skilled labour from their own countries in which there is better investment.
Those are some of the important reasons why the Government should be alive to the problems faced by the industry and the challenges that lie ahead. The first thing that Britain needs is a new model for sector skills training. We need to take advantage of the European experience. We need strong sectors and effective organisations that are widely representative of their members. We also need organisations that are free to determine and to organise the most effective way to tackle those needs. We need sectors that will work in partnership with Government.
Secondly, along with the development of the training and enterprise councils, Britain's sectors should be given a key strategic role. We need national coverage in key sectors to provide skills and company-specific training. There should be an interface with the delivery of local training through the TECs, which can provide an intimate local delivery mechanism based on their own activities and local intelligence.
Thirdly, we need a CITB and engineering construction sector from which the heavy hand of conservatism has been removed. If the industry wants a levy, it should have one. If it wants to decide on the level of that levy, that issue should also be left to the sector. If the industry does not want to have any exemptions from the levy, it should be able to undertake such a policy in partnership with Government and the TECs. That is what we mean by 89 freedom from increasing centralisation and from the Government's highly prescriptive policies. Industry should be allowed to fashion and to shape its own policies based on the needs of the employer group companies.
We need a sector policy that will look closely at the Engineering Training Authority, which was also dismembered by the present Government. The construction industry's authority should remain a statutory body while the Engineering Training Authority should be allowed to take over the functions of the old engineering industry training board. Because of the importance that we attach to their manufacturing activities, we should take an early look at those organisations' progress and performance within their sectors.
That amounts to an important step forward for the sectors. I am sorry that the Minister finds this subject uninteresting. In the past decade, it has never been clear whether the Government have found satisfying their own political philosophy more important than satisfying the training needs of the nation. In the last two or three months before they leave office, they have an excellent opportunity to mend some of their ways and to start to take the construction sector seriously. They should embark on the programme and policy that Labour will certainly pursue when we are in office.
Finally, it has been said that the Department of Trade and Industry bears the mantle of the most unsuccessful Department of State. However, the Department of Employment shows no leadership, no understanding, no commitment and no real interest in training. It contains a "hands off—do nothing" set of Ministers. Time is running out for them, but, fortunately for the sectors involved, we will invest in them when we take office and will start to do the things that are being done in Europe which have made companies there so successful and so much more competitive than ourselves. That is the way forward. That is what we intend to do when we remove the Government from office at the earliest opportunity.
§ Sir Michael Neubert (Romford)
I must declare a new interest at the outset of my speech in that I have recently become the parliamentary adviser to the Federation of Master Builders.
As the order's reference to the 27th levy period suggests, the motion is not a great parliamentary novelty. The previous 1991 order was discussed at a slightly later time of night, but on the same day of the week nine months ago, since when there has been no significant change in the construction industry's circumstances. Times are still hard, not to say very hard.
Although the order does not propose any great innovations, it is worth making some brief comments on its background. I hope that the hon. Member for Fife, Central (Mr. McLeish) will understand that I do not intend to follow what he said in his long speech—it was almost the same length as his speech in our previous debate on the subject—or his wide range of criticisms of the Government's policy. This is not because I share his criticisms—quite the opposite—but because, like him, I anticipate and relish the prospect of my hon. Friend the Minister replying to the debate, when I hope that he will give a robust rebuttal of the hon. Gentleman's criticisms.
As far as it goes, the order has the support of the industry, although that support is not unreserved, does not 90 come from all quarters and does not relate to all aspects of the provisions. Like the hon. Member for Fife, Central, I refer to the exemption of small employers with a payroll of less than £45,000. The advantages of exemption can be easily seen, if only as an illustration of the de minimis principle.
However, things can look rather different from the angle of those just above the exemption limit. At the best of times, the industry is very competitive, but this is not the best of times. When price competition is at its keenest, the extra on-cost that is entailed in the payment of a statutory training levy can be unwelcome for a company that is competing with a slightly smaller concern which enjoys the exemption.
The same factor comes into play with value added tax, in which there has been a change as a result of last spring's Budget. Those just below the VAT level can have a clinching advantage over those just above it, but that is the nature of thresholds. Such considerations may appear comparatively unimportant in other industries, but the construction industry contains many small firms, more than 23,000 of which are likely to qualify for the exemption that is provided in the order. However, as I said, the industry broadly goes along with the CITB's proposals and with this order, which embodies them.
The dominant day-to-day concern of the industry is naturally the recession. Technically, it may have come to an end, but recovery will be slow, sluggish and patchy. By tradition, the construction industry is the first to feel a recession and the hardest hit—and this recession is no exception. In his statement on public expenditure—in part, this refutes what the hon. Member for Fife, Central said —my right hon. Friend the Chancellor announced increased programmes in a number of Departments which will provide substantial work for the industry. Of course, for the next financial year that is still some dark winter months away.
When the upturn comes, there will be a renewed demand for skills. It has been estimated that the industry may be short of some 50,000 skilled craftsmen in the next two years. That is a round figure subject to the hazards of forecasting, but no one should doubt that, among the quarter of a million people who lost their jobs in the recession, there will be many craftsmen and trainees, who will be permanently lost to the industry. That puts the importance of the order in sharp focus.
Unless training continues, the future of the construction industry will be in jeopardy. Wage inflation and overheating will be in prospect as employers chase scarce skills with higher payments. That underlines the importance of the construction industry training board. The Federation of Master Builders fully supports the board and believes that the special character of the industry justifies its continued role and its statutory powers to collect a levy and pay grants for training. It is difficult to see how the training function could be guaranteed otherwise.
The construction industry is different. In a competitive climate, it has short-term objectives. In good times, the timespan can be as much as three months. In any other times, it can be less than a week. In those circumstances, it is not a realistic option to take the long view which is characteristic of other industries and to invest in benefits that are achievable only years ahead. So a statutory levy makes sense. Without it, the short, cheap cut would almost always be taken.
91 It has to be recognised that the construction industry consists of a large number of businesses which are mainly small. They are widely dispersed and are engaged in a wide variety of activities. The workload is cyclical, vulnerable to changes in economic policy and economic performance, and often subject to the late award of contracts. In those circumstances, forecasting of manpower requirements a matter of weeks or months ahead, which might be typical in other industries, is impossible.
Large projects can distort the skills requirement in a locality for short durations. The construction industry is a mobile industry. The site is the working place and the working place is the site—and for short periods at that. Businesses come and go with alarming frequency. Well established firms are relatively few. However, it is all to easy for a person to establish his own business or become self-employed, however inadequately trained or qualified. Yet in one respect, training in the building and construction industry is particularly important. The nature of the work means that the industry has a high risk of accident and injury, so safe working practices are imperative. They can be inculcated only as part of proper training.
My last point is realistic and understandable. No employer will willingly train a craftsman only to see him go down the road to work for another employer who has invested nothing in training. In those circumstances, a central statutory requirement for a training levy is absolutely necessary. Contrary to the assertion of the hon. Member for Fife, Central, the Government have made the judgment that an exemption is warranted. It is clear from my brief remarks that I endorse the Government's judgment. The purpose of the order is of high importance and it deserves the support of the House.
§ Mr. James Wallace (Orkney and Shetland)
I agree with many of the comments of the hon. Member for Romford (Sir M. Neubert). He explained why a training levy is important, especially in the construction industry. Plenty of studies, and my own experience of talking to people in the construction industry and especially small businesses, have shown that the fear of poaching is constant. It is the reason why people do not invest as much in training as they should. They feel that the benefit of any investment that they make will be enjoyed by someone else.
The hon. Member for Romford was also perfectly right to point out that, in the construction industry perhaps more than in most industries, health and safety are of considerable importance. Regrettably, the number of deaths and injuries is far too high. The importance of training in health and safety cannot be overestimated.
As the hon. Member for Fife, Central (Mr. McLeish) said, it is a disappointment that the number of people engaged in training in the construction industry has steadily declined. The number of youth training trainees on the construction industry training board's programme dropped from 14,385 in 1989 to 11,379 last year—a fall of 20 per cent. A further fall of 20 per cent. to 8,500 is expected in the current year. That is clearly related to the recession, which has hit the construction industry particularly hard.
92 It has been a severe recession for the construction industry. Whatever the technicalities of coming out of the recession, to those engaged in the industry it does not appear to be over. If there is any upturn, people wonder when it is going to benefit them and whether it can be sustained.
My hon. Friends and I have proposed some measures, which we accept will not slash the unemployment figures but which would be helpful. The receipts from council house sales should be unfrozen to be invested in housing. More should be invested in the fabric of our schools. We should engage in more energy efficiency projects such as draught-proofing and insulation. Such projects are all worth while in their own terms, but they would also bring direct benefits to the construction industry and should be introduced and stimulated.
The chairman of the CITB, Sir Clifford Chetwood, made a statement in July this year in which he announced some of the board's projects to stimulate training. He bemoaned the recession, and said:The government does not appear to be aware of the seriousness of the situation, especially with respect to smaller builders who are on short term jobs. Amongst them bankruptcies are up 100 per cent. this year compared with last year. It is now a question of survival. Mere exhortation to train is not enough.When one criticises the exemption, as some hon. Members have done tonight, one must bear in mind the fact that, for many small businesses, survival is of the essence.
I regret that I do not know at what level the exemption was first introduced. I think that it was originally about £10,000. I cannot recall whether it was a Labour Government who set it at that figure. If it had been index-linked, it would now be about £100,000. At £45,000, only the smallest of businesses are affected. I take the point made by the hon. Member for Romford—that any threshold gives rise to feelings of unfairness. I suspect that it might be administratively difficult to have a sliding scale from £45,000 to 100,000, but a levy of 0.15 per cent. or 0.25 per cent. might be worth considering. The jump would not be as high as is implicit in the order. I understand why the Government have maintained an exemption for small businesses, for which survival is of the essence.
There is another unfairness in the system. I have found that employers who are registered with the CITB feel that it is unfair if other companies which have set up just down the road do not appear to be on the board's records. What steps have been taken by the CITB to ensure a maximum register of employers and that none slips through the net? As all hon. Members who have spoken have said, training is exceptionally important in the construction industry. Another relevant factor is the sense of unfairness and the feeling that some employers seem to get off free. I hope that the Minister will deal with enforcement when he replies.
§ Mr. Den Dover (Chorley)
I came to the House 12 years ago. In my first few years in Parliament, the building industry experienced a tremendous downturn in its work load and was worried about its future. However, from about 1982 to 1989–90, there was a tremendous increase in building and civil engineering activity in Britain. The industry is comparing the biggest boom it ever had—the peak in 1989–90—with today's admittedly lower level of activity.
93 In recent months, the industry has been whingeing and moaning. I agree that there has been a drop in investment, but this is a good time to invest in building—whether in property, in house building, for industry, in extensions or in repair work.
I am delighted to be able to say that I have just received notice from the Department of the Environment that Chorley is to be allocated an additional amount for doing up old housing—nearly £0.25 million. That will have a fantastic effect on local housing and the lack of facilities in my constituency. The money will be put to good use, and the work is labour-effective. A great deal of labour is required for repair work and for such fiddly jobs as roofing, installing an extra bathroom, or for mechanical, electrical and plumbing work.
The present recession is a complete about-turn. Normally, the regions and the north-west suffer badly, but at the moment the south is suffering. In my patch, many small builders are doing well and are struggling to find enough labour to keep them going in today's market. However, it is impossible for small builders to take on trainees. They do not have the wherewithal to carry out the administration and paperwork or to watch over them and ensure that they learn on the job and produce an effective piece of craftsmanship. Only the medium and large builders can mount a training campaign and ensure that it is effectively carried through.
I have no interest to declare in the construction industry, but during my first 10 years in that industry I worked for John Laing, then I worked for Wimpey for about eight years, and I was the head of the largest direct labour organisation in the country—the Greater London council—for nearly three years. I speak from hard experience at the workface. Mention has been made of direct labour and of how such organisations have reduced the number of trainees by about 40 per cent. in the past year.
In a downturn, it is inevitable that there will be fewer trainees, but in the boom years of the mid and late 1980s, much good training took place. That is why the industry was able to cope with its highest work load ever in real terms, and did not suffer the labour shortages experienced in the 1960s.
I am delighted that my hon. Friend the Member for Romford (Sir M. Neubert) said that the Federation of Master Builders—it is composed of small builders, and there are a large number of them—fully supports the order. Small builders cannot see their way to take on many trainees. It is right and proper that the medium-sized and larger building firms should carry out proper training. Admittedly, they are training on behalf of some of the smaller firms, but it is in the interests of the industry. Many of those trainees go to smaller firms, perhaps taking over positions of responsibility or even taking over from the owners when they die and thus continuing the industry's good work.
I fully support the order. A levy of some sort is essential, so that the industry plays a major part in all training. I pay tribute to the efforts of the construction industry training board. However, small builders need to be exempted. I am delighted that the value added tax position was eased in the last Budget. That has made an enormous difference, and has replaced a lot of penpushing with bricklaying and planning.
§ 7.8 pm
§ Mr. Forth
This has been a useful debate on an important subject. The knowledgeable contributions made by hon. Members—certainly those made by Conservative Members—have added greatly to the value of the debate.
I take issue with the hon. Member for Fife, Central (Mr. McLeish). It is all very well for him to pepper a debate with the emotive terms to which he is addicted, such as "crisis" and "collapse", and to describe the board as having "a pistol to its head". That sits oddly with the fact that the board was reconstituted as recently as May 1990 and has been rationalised, streamlined and reinvigorated since that date. To suggest that the board was cowering timorously before the Government is ludicrous and pays no tribute or attention to its good work and to the robust way in which it represents its interests and those of the industry.
I should be surprised if many Conservative Members opposed a review, although Opposition Members seem to be suggesting that reviews are a bad thing. I should have thought that it would be common ground that it is right to review such organisations from time to time to establish whether they are achieving their objectives. If the hon. Member for Fife, Central dislikes the idea of reviews, it suggests that his attitude to public expenditure is less rigorous than I would have expected.
§ Mr. McLeish
Will the Minister acknowledge that, if the review takes place next year, the construction industry training board may say that it wants to retain a statutory levy, to determine the rate of levy imposed and also wants flexibility on exemptions. Will the Minister respond positively and allow the board to do what it wishes?
§ Mr. Forth
That is hardly my idea of a review. A review is what it says. I confirm that, when undertaking a review we would consider what the board has done, how it has done it and whether it had achieved its objectives and we would draw the appropriate conclusions. To ask me to give commitments in advance of the review is an outrageous request, and I cannot meet that commitment for the reasons that I have given.
Another criticism was about levels of expenditure. Given the robust level of reserves that the board has enjoyed, and given that about £6.5 million of the reserves is being drawn down by the board to ensure a continuous and constant level of training, I should have thought that the board was exhibiting a responsible approach. Having built up the reserves, it is prepared to use them in difficult times, and that is the right thing to do.
As for the comments made by Opposition Members about the reduction in the number of trainees in the industry, regrettably that has to be explained by the fact that the industry has been going through an especially difficult time and still is. My hon. Friends, from their knowledge and connections with the industry, pointed out that fact.
The fact that the numbers of trainees have been maintained at present levels, despite the difficult times that the industry is experiencing, is a tribute to the continuing commitment in the industry to such levels of training, assisted by the board and the work that it is doing. I should have preferred that to be put in a more positive light than the hon. Member for Fife, Central was able to do.
Several hon. Members referred to the exemption provisions. They drew an interesting distinction between 95 the Government and Liberal Democrat approach, and that of the official Opposition. We fully recognise the need for an exemption provision. We believe that the level is about right, although in a sense it always has to be arbitrary.
I confirm to the hon. Member for Orkney and Shetland (Mr. Wallace) that the exemption level was introduced at £15,000 many years ago and was only recently raised to £45,000. That was not indexation but a recognition of the fact that, if an exemption is to be made, it should be at a sensible and workable level. It is worked out at broadly the level of a payroll of three employees. In the circumstances, that is about right.
The fact that the Opposition seemed to find exemption so objectionable was interesting. With my responsibility for small firms, the House will not be surprised that I for one would robustly defend the exemption level and the fact that it helps small firms in the industry. I would applaud that.
§ Mr. McLeish
The Minister misses one essential point about the changes in the labour market. The construction sector employs under 1 million people at present and there are 800,000 self-employed workers in the industry. The nature of the sector is changing dramatically. If the exemption policy continues, one will probably find that the group of people one wants to bring into training is completely outwith the scope of the board.
In 10 years' time, the balance between the self-employed and employees will have altered significantly and we shall have to think up new methods of bringing the self-employed and the small business sector into training. That is the crucial issue—not the politics of whether or not there are exemptions, but the fact that the labour market is changing and the Government must deal with that as other countries such as France are doing.
§ Mr. Forth
That is a tortuous argument. Considering the number of small employers—now ably represented by my hon. Friend the Member for Romford (Sir M. Neubert), whom I congratulate on his association with that key part of the industry—to play fast and loose with the future of such companies, which are under pressure from the recession and have other difficulties, would be a risky approach, and I am surprised that the hon. Gentleman is taking it.
§ Mr. Wallace
Will the Minister confirm from his experience that just because certain firms will be exempt from the levy does not mean that they are not training? Some firms to which the exemption might apply will have an apprentice or trainee, and may therefore have training expenditure, albeit they are not paying the levy.
§ Mr. Forth
Yes. I am glad that the hon. Gentleman made that point, which is obvious but important.
Hon. Members have spoken about the potential loss of skills to the industry and the need to maintain a commitment to training. The board attaches importance to that. The activities that the board is pursuing, and the use of its funds, are in many ways directed to addressing that very problem, compensating for the fact that in times of difficulty and recession, with the sort of pressures being faced by the industry, there is need to compensate for the natural, if regrettable, loss of skills to ensure that the training commitment is continued so that when recovery comes, as it undoubtedly will, the industry can recover quickly.
A similar point was made about the connection between health and safety requirements—which are paramount in an industry whose record in this regard is not of the best—and training. Wearing my health and safety hat, I appreciate that connection. It is essential to maintain a commitment to, and resources for, training so as to give the industry the best possible chance to develop and maintain an acceptable record of health and safety which many, even in the industry, agree is not and has not been the case.
We are debating an important matter. It comes before the House each year and gives us an opportunity to review the activities of the CITB. We are satisfied that the board is in good health, is doing good work and, since its reconstitution and redirection, has achieved a new sense of dynamism and effectiveness. We shall be reviewing it next year, and I look forward to that review in a positive way, as it makes a major contribution to the efforts of the CITB and the support that it gives the industry in these difficult times.
§ Question put and agreed to.
§ That the draft Industrial Training Levy (Construction Board) Order 1992, which was laid before this House on 13th November, be approved.