RELIEF

HC Deb 08 May 1991 vol 190 cc753-83 5.22 pm

Mr. Nicholas Brown (Newcastle upon Tyne, East)

I beg to move amendment No. 14, in page 21, line 14, leave out '1992' and insert '1991'.

Unemployment is rising, the economy is in recession and our trading relationships with our European partners require our economy to be as strong and competitive as theirs. In those circumstances, it is right for us to discuss education and training. It may be commonplace to say that this country's greatest single asset is the skills and abilities of its people, but I predict that over the next decade that will become even more self-evident.

In a timid but nevertheless welcome way, the clause acknowledges the need for education and training. It will allow people to claim tax relief for course fees, assessment, and regulation costs for properly accredited vocational training. It requires a claimant to be a United Kingdom resident who is undertaking a course without any public financial assistance or other type of tax relief to help with its cost. Companies have always been able to obtain tax relief for providing training, and the clause is designed to allow individuals who incur expenses to do the same.

I shall leave to one side for the moment the issues that we want to explore with the Government on other amendments. As far as it goes, clause 31 is welcome—so welcome that our amendment is intended to make the tax relief begin this tax year rather than in 1992, as the Government intend. I understand that the cost of the change that we propose would be about £15 million, although I suspect that it might turn out to be less.

I can think of only three possible objections to our proposal. First, it might be argued that the MIRAS-type arrangements that are supposed to accompany the tax relief cannot be put in place in time. That does not seem to be an insuperable reason for not granting the relief now. It would be possible, by deduction or set-off, to give taxpayers the relief at the end of the tax year.

Secondly, it might be suggested that the regulations for those not liable for tax, but who would nevertheless be able to take some advantage of the scheme, would not be in place in time, so that the arrangement could not start in 1991. That does not seem to be an insuperable difficulty, either. I do not think that many people would come into that category. It may be possible to think of examples of people without a charge to tax who would still be able to pay for their own vocational training, but it is hardly likely that there will be many. I am sure that the Inland Revenue would be able to deal with the small number involved.

The third possible Government objection is that the public expenditure implications of starting the scheme in this financial year rather than the next would be beyond their resources. They may say that they could not possibly spend up to an extra £15 million on training. Such a sum would be slightly more than a quarter of the publicity budget of the Department of Employment, which puts the matter in perspective. We could forgo a little publicity and encourage more training instead.

The real disagreement between the Government and ourselves is whether, in the present economic climate—with rising unemployment and industry complaining of skill shortages—it is necessary for the future well-being of the economy to make training a priority use of public expenditure. Of course, the costs of the scheme are important, but so is the price of unemployment. It costs the state about £8,000 per annum if a person who could be economically productive is kept unemployed.

The costs of our declining international competitiveness are important, too. I welcome the present direction of trade agreements, but they mean that over the next decade our ability to compete internationally is bound to become even more important. To forgo training in those circumstances seems foolish.

Other important costs are those that skill shortages cause British employers, who will rightly argue that skill shortages are not easily met in the short term. It is a privilege of speaking from the Opposition Front Bench to be able to draw on examples from one's own community. There could be no more pertinent example than that offered by Tyneside, where my constituency lies. It is an area noted for its skilled work force. The skills there have been accumulated over generations because of the presence of the shipbuilding and heavy engineering industries. Those industries have endured an enormous, and probably permanent, shake-out, in employment terms, in the past decade. Alongside that, no region has suffered more from persistently higher than average levels of unemployment. Yet, in spite of that residue of highly skilled manual workers on Tyneside, employers are complaining of skill shortages. The high unemployment rates that the Tyneside community is still enduring are composed of unskilled workers more than any other single element.

The Swan Hunter shipyard is a good example, as it is not always easy for that major employer on Tyneside to find people to fill skilled vacancies. That might surprise Conservative Members, in view of the shake-out in the shipbuilding and engineering industries, but it is the case. There is a waiting list of about 2,000 people for the occasional unskilled job at that workplace. Those circumstances will be mirrored throughout Tyneside and if they are mirrored there, where there is a residue of skilled labour, how much more likely are they to be reflected in other parts of the country?

5.30 pm

The Government have got their priorities wrong. They are estimating negative growth in the economy for the next year. By implication at least, the Government are saying that, given the country's growth rate, unemployment will be a problem. Therefore the Government should be in a position to do something about it.

The something that they have done is to cut expenditure on training. That is not a minor point of detail which divides us, but an issue of principle. The Labour party's view is that expenditure on education and training will be crucial to our position in the international trading community in the next decade and will be a necessary element in pulling this country through the recession.

Mr. Nigel Forman (Carshalton and Wallington)

I am most grateful to the hon. Gentleman, whose speeches I always enjoy—especially the witty parts. Could he enlighten the House still further on his party's policy in this matter? He has just begun to talk about it. I seem to recall that his right hon. and learned Friend the Member for Monklands, East (Mr. Smith) said that the increased expenditure on education and training which the Labour party hopes for would essentially be financed by borrowing rather than by taxation. Is that still the case? Has the hon. Gentleman made any estimates of the effect on interest rates, were that to happen?

Mr. Brown

Investment in training has to be a priority for the economy. Before the last Budget we did something that Oppositions do not normally do. I am sure that the hon. Gentleman is aware that we set out our own proposals for the Budget. They included the expenditure of about £800 million—if my memory is correct—on training, as well as the training levy; we proposed a 0.5 per cent. levy on the payroll, which we believed would generate more than £1.4 billion. We added the two figures together and said that that amount would be spent on training. Those measures were part of a package presented before the Budget.

When we come to office we shall have to measure our objectives against the changes that have been made in this year's Budget. We shall not come into office with the tax system that we endured last year or the year before. We shall certainly not be able to go back to where we were in 1979. Therefore, I cannot tell the hon. Gentleman that we will definitely spend X amount and that, whatever the position of the economy, so much must be spent on training; nor can I say that rates of income tax will be Y rather than Z. As the hon. Gentleman knows, it is not my prerogative to do so.

The Financial Secretary to the Treasury (Mr. Francis Maude)

Come clean.

Mr. Brown

The hon. Gentleman says come clean, but, assuming that there will not be a general election before the next Budget day, which does not seem to be a very safe assumption, will he stand up and say what the basic rate of income tax will be after the next Budget?

Mr. Maude

I can certainly assure the hon. Member for Newcastle upon Tyne, East (Mr. Brown) that it is our intention to reduce the basic rate of income tax. I take issue with the hon. Gentleman over the fact that he is proposing to spend all that money without giving the slightest indication of where it will come from. The only conclusion we can draw from that is that if the Opposition were elected to government they would increase the basic rate of income tax, as all other Labour Governments have done.

Mr. Brown

I have this in common with the Financial Secretary—we both have good intentions and we are setting out the direction in which our tax policies intend to travel.

Mr. Maude

Yours are up and ours are down.

Mr. Brown

The Financial Secretary says that ours are up and theirs are down and he does not mistake the position, as we see it. We have made it very clear—it is one of the matters that are to be firmly established—that the top rate of income tax under a Labour Government would be 50 per cent. and not 40 per cent. We have said that we intend to introduce a banded system, although we have not said where the bands will sit. Clearly that would impinge upon the prerogative of a Chancellor. We regard the 50 per cent. rate as a firm pledge. Conservative Members argue that that is too much, but Opposition Members view it as trying to arrive at a consensus with top-rate earners. That figure would be the norm, would not move about from year to year, would endure and, in time, would probably be accepted by both Labour and Conservative Governments as a consensus.

The Financial Secretary has put his finger on the heart of the disagreement between us. Even this Government have benefited from economic growth, and if there are extra fruits to be distributed as a result of such growth, it is our view that the money should be invested in the economy in ways which stimulate further economic growth, especially on training the people of this nation. It should be invested in the work force. As the Financial Secretary has spelt out perfectly fairly, it is the Government's belief that the money should be spent on further direct tax cuts for high-rate and indeed basic-rate taxpayers.

I hope that the Financial Secretary does not disagree with that explanation, because it is at the heart of the disagreement between us. We think that the position of the British economy requires Government incentives to invest in the supply side. We regard training as a special priority.

I am surprised that that is thought to be controversial. It can only be thought so in the context in which the Financial Secretary puts it. There is such a breadth of disagreement between us on that matter that I think it will be a fundamental issue on which the next general election will be fought. We believe that a failure to invest could underpin the existing lack of skills and exacerbate the present situation. As a protest, I shall ask my hon. Friends to join me in voting—if the Financial Secretary does not accept this amendment—to bring the starting date for this modest little relief forward to 1991. The Financial Secretary may well say that it cannot be afforded. However, if he says that even that expenditure cannot be afforded he is saying something very heavy about the Government's commitment to training and to expenditure on training.

Mr. Maude

In moving the amendment, the hon. Member for Newcastle upon Tyne, East (Mr. Brown) has talked as if this measure, in the Budget and now in the Finance Bill, to introduce tax relief for people who pay for their training were the only thing that the Government are doing about training. Clearly that is not so. He has used the debate on this amendment to talk in general terms about training and about what the Government are doing or should be doing and what he believes could be done.

I shall deal first with the specific issue raised in the amendment—whether the relief could be brought forward a year to the 1991–92 tax year. The date has nothing to do with constraints on public spending. I see no need to apologise for exercising tough discipline on public spending, but that is not the concern in this case. There are overwhelming considerations of practicality.

One of the most important features of the relief is its delivery at source, which will allow it to extend not only to those who are working and could benefit from a conventional tax relief, but to those who do not have current taxable income. That feature will give the relief greater impact and flexibility. For a variety of reasons, relief at source requires a long run-in period. The regulations will need to be drafted and brought into force. Administrative systems will have to be designed and put in place. Those in colleges and institutions running the scheme will need to know precisely what to do. We are conscious that the providers of training will have some extra administrative work. We intend to consult widely on what would be the best and simplest scheme for them. We are already working hard on that.

The provision will take time to implement and it would be unrealistic to expect the new relief to begin before April of next year. Even that will impose a strict timetable, but I believe that it can and will be delivered. The delay will allow the accreditation process for the national vocational qualifications and the Scottish vocational qualifications to get further ahead, so that a more comprehensive coverage is available when the relief begins next year. Therefore, the Government are unable to accept the amendment.

The hon. Gentleman talks as though this were the only measure that we were taking on training.

Mr. Forman

Is it true that relief at source—which is the method that the Government have sensibly chosen—has the benefit of not discriminating against the self-employed if they wish to take advantage of the arrangements?

Mr. Maude

Certainly. A person who is self-employed will receive the tax relief at the time of making the payment for training, rather than waiting to obtain it when the final calculation of his tax is made.

The hon. Member for Newcastle upon Tyne, East talked rather grudgingly about the measure, apparently because it encourages individuals. I do not take issue with what he said about the need to stimulate investment in training, to encourage it and to give incentives. That is precisely what we are doing. The measure provides an incentive for investment in training, including a direct incentive for individuals to provide training for themselves.

I freely confess that the measure does not form part of a great national scheme. There will not be a huge bureaucratic organisation or a national body to decide who should have what training. It will be for individuals to decide for themselves. That makes the hon. Gentleman uncomfortable. The Labour party's approach to training is based on compulsion. Why else would it propose a payroll levy in which every employer is forced to pay a levy for everyone who is employed, with all the bureaucratic paraphernalia that that would inevitably involve?

Mr. Brown

The Minister has a right to indulge in attacks on our payroll levy scheme—that is a matter of contention between the parties. He is entitled to make those points, but many employers have welcomed the scheme. Many employers who invest heavily in training will be beneficiaries under the scheme.

However, the hon. Gentleman is not entitled to say that we have given the substance of the clause a grudging welcome. We have not, but we believe that it is no substitute for a proper commitment to training from the Government. In its own little timid context, the proposal is welcome. It is so welcome that we are trying to introduce it a year earlier. We are not against it, because it helps the individual; I have no quarrel with that.

5.45 pm

Mr. Maude

I did not say that the hon. Gentleman was against the measure: I said that he was grudging about it. If describing it as a "little timid" measure is not being grudging, it would be interesting to know what is. That is hardly fulsome, whole-hearted praise. The hon. Gentleman hardly speaks like a man full of enthusiasm for the measure. I stand by what I said, and stand by my view that the Labour party is only interested in compulsion. It is only interested in training if people are made to do things. That is a sort of puritan ethic: it is good only if it is not enjoyable—if it is not what people want to do.

My mind goes back to the old days of compulsory levies and industrial training boards. There were many bodies, committees and national boards and, in theory anyway, much training was taking place. At the end of it, however, there was no great addition to the nation's stock of skills. We should be considering not how much is put into training, but what extra skills are acquired.

Mr. Bob Cryer (Bradford, South)

The Minister is babbling on in a nonsensical way about training. Does he not realise that the compulsory training schemes were introduced by a Conservative Government, not by a Labour Government? Employers' organisations by the score welcomed them. Without those compulsory levies, many employers bitterly criticised those who poached their apprentices and other trained people after they had taken the time and energy to train them. Those employees were simply sucked away. Does the Minister agree with such practices?

Mr. Maude

I agree with those employers who warmly supported the ending of compulsory levies and the disbanding of the national bodies. In the past decade, the amount spent on worthwhile training for the enhancement of skills has increased dramatically.

I am not just referring to public spending, although I point out in passing that, for every £100 spent on training at today's prices by the last Labour Government, £250 is spent now. I am not talking only about that huge two-and-a-half-times increase in public spending on training. What matters more is the money spent by the private sector. Skills for business are what make a difference to the economy. Sometimes, the Labour party talks as though all that was needed was investment in plant, no matter what the plant was. The same applies to training: it does not matter what the skills are. Labour Members think that all that can be stirred together to make a vibrant economy. Anyone who deals with these matters knows that that is not so.

Dr. Norman A. Godman (Greenock and Port Glasgow)

Was it not Mr. Robert Carr who introduced the Industrial Training Act 1964, which created the industrial training boards? The Minister should not denigrate those industrial training boards. Some of them provided people, especially young people, with first-class training.

Mr. Maude

I am sure that some first-class training was provided. The complaint was that skills were not being enhanced under the old compulsory system of training. We now have a system of training delivery which is employer-led, based locally, not nationally, with the emphasis on training and enterprise councils, which have been a remarkable success. They were in operation well in advance of the proposed timetable, and will make a huge difference. The emphasis will be on what comes out at the end.

The training programmes will focus heavily on qualifications and employment training will focus heavily on getting people jobs. That must be the test of whether training is successful. Youth training should lead to qualifications, and employment training should lead to employment. The funding of training and enterprise councils is designed to fulfil that objective, with a quarter of the funding related to output quality—whether the trainee achieves a job or a qualification.

Dr. Godman

Will the Minister explain why, when we discuss training, hardly any mention is made of the training needs of employees and of our fellow citizens who suffer from physical and mental handicap? Why are they always at the end of the queue for employment training places?

Mr. Maude

I do not believe that to be the case. Ample provision for handicapped people is made within the £2.7 billion of public money which is spent each year on training and enterprise. I do not accept for a moment that they are at the end of the queue or that no thought is given to the trainees. The purpose of the measure we are discussing today is to give trainees an incentive to enhance their skills.

The amount of training being provided is increasing in a way that should win forthright and enthusiastic support across the Chamber. Each year, the private sector spends about £20 billion on training. That is excellent news. The training culture is improving hugely. There is no doubt that, in previous decades, many businesses considered training to be a low priority. We have paid a price for that in the past. There is no doubt that, in the recession in the early 1980s, spending on training by businesses fell. A good many businesses considered training to be dispensable. It is a source of considerable satisfaction that that does not appear to be happening in the current recession, although pressure on businesses' costs is intense.

The most recent economic situation report by the CBI, published last month, asked how much companies expected to spend on training and retraining in the next 12 months, and whether they expected to spend more, the same or less than they had spent in the past 12 months.

The outcome was most satisfactory and encouraging. At a time of recession, with intense pressure on costs, 26 per cent. expected to spend more, 49 per cent. expected to spend the same and only 18 per cent. expected to spend less. That means that the attitude toward training in the private sector has improved considerably. When the economy begins to move out of recession, businesses will be very much better placed to recover quickly, and their capacity to produce and to meet renewed demand will be greater than it was in the early 1980s. That bodes well for the future.

The Government have absolutely nothing to apologise for in their approach to training. Apart from the huge increase in public spending on training and enterprise, there has been an enormous improvement in the quality of training. We should be concerned about the output. What matters is not what the Government put in but what those who undergo the training get out of it. There is no doubt whatsoever about the quality of training.

I hope that the hon. Member for Newcastle upon Tyne, East will be big enough to accept that the quality of training in Britain is vastly better than it ever has been. With the introduction of the national system of vocational qualifications and the national network of locally based training and enterprise councils, with all their local links and local knowledge of what is needed and what can be provided, the quality of training is continually on the increase. I hope that, just for once, the hon. Gentleman will be big enough to accept that.

Mrs. Llin Golding (Newcastle-under-Lyme)

I have a letter from the Staffordshire training and enterprise council saying that it would be failing in its responsibilities to the local community if it did not highlight the fact that its adult training budget is totally inadequate for the current needs of the County. I had a meeting with some of the trainees, who are halfway through their training programme and are now going to lose their places and be unable to take part in the vocational training that the Minister is so fond of quoting. What will he do for the people of Staffordshire who are losing out on his training schemes?

Mr. Maude

The hon. Lady refers to particular circumstances and budgets. I cannot comment on the circumstances of one particular training and enterprise council.

Mrs. Golding

Why? Is it too trivial?

Mr. Maude

No. It is not trivial at all, it is a matter of considerable concern, but every organisation paying for training in the public sector is subject to a budget. That is the case under this Government, just as it was under previous Governments.

It is worth making the point again that the budgets for training are substantially larger than they were under the last Labour Government. For every £100 that the last Labour Government spent on training, we spend £250. I am delighted if many people are seeking training in Staffordshire; those people are very much better placed today than they would have been under the last labour Government.

Mrs. Golding

The supervisors who have been supervising trainees for many years are losing their jobs in Staffordshire because there is no room for them. Eventually the Staffordshire training and enterprise council will have to spend money on training new supervisors. It is a nonsensical programme and a waste of money.

Mr. Maude

No doubt the hon. Lady can raise that with the local training and enterprise council.

Mrs. Goulding

I have.

Mr. Maude

It is a matter for the TEC how it arranges its affairs locally, and no doubt it will do so.

Mr. Alex Carlile (Montgomery)

We should start by putting the debate into the context of the United Kingdom's appalling failure to train our young people compared with training in other countries. The Department of Education and Science statistical bulletin issued in January 1990 revealed that the United Kingdom has 35 per cent. of its 16 to 18-year-olds in full-time education or training compared with, at the top of the range, 79 per cent. in the United States of America. At the middle of the range France trains nearly twice as many 16 to 18-year-olds. Those statistics show what a long way we have to go to provide a reasonable level of training in Britain.

The Minister referred to the quality of training provided through the training and enterprise councils. I would be the first to agree with him that some of the training provided by the TECs is of a higher quality than before, and that is certainly to be commended.

I should like to make a particular point about training in rural areas and the way in which TECs are coping with the requirements placed on them. I have a letter which has been sent out to trainers by the chief executive of Powys TEC, which is based in my constituency. That TEC started with a bang and is already doing good work. One of the problems in rural areas is that many trainees must travel great distances to their traineeships. The public transport—or rather the absence of it—in those areas is such that many trainees cannot take part in such schemes unless they take lodgings during the week.

6 pm

A case was brought to my attention last week of a young 16-year-old girl who had taken a training place with a veterinary surgery in a small town in my constituency. She has been working there successfully for five or six months and has been enjoying her training. Last week, she was told by the training agency that managed the scheme that her training would have to finish within seven days because it was no longer possible to meet the cost of her lodging in eastern Montgomeryshire, where she lodged during the week. She could not travel to work every day because her training place was 45 miles from her family home. No public transport was available and she was too young to drive, so there was no way in which the scheme could continue if the training agency kept to its decision.

Through the intervention of the chief executive of Powys TEC, that training agency was forced—I use that word advisedly—to change its mind and the girl was allowed to continue her training. That happened because her mother contacted me on the day the decision was made known and I contacted the chief executive on the same day. Action was then taken which many trainees would not have the initiative to take themselves.

There must be many trainees around the country, particularly in more heavily populated areas, who are losing their training places halfway through. As a result of that case and another which I shall mention in a moment, steps are being taken by Powys TEC to avert such problems in the future. However, just a few weeks ago, training for a number of ladies and, I believe, one man to provide a day nursery in Machynlleth was brought to an end at a stoke—almost without notice. It was summarily terminated after the expenditure of a large sum of money to provide the equipment and decorate the premises where the day nursery was to be situated. This was a much more difficult problem to handle because the training organisation concerned was losing money on the scheme.

The reaction of the chief executive of Powys TEC, Claire Coates, has been commendable. She has contacted every trainer and urged them to absorb travel and lodging costs where necessary. However, in a letter to them she had to say: In the meantime, travel costs have been included in your contract price which will mean that you are likely to make a loss on some trainees' travel costs and gain…on others". If any group of people understands the market and the balance sheet, it is the Government. What proportion of businesses are willing to make a loss on contractual arrangements? Most businesses, particularly small and medium-size trainers, will pull the plug on contractual arrangements on which they are losing money.

In this instance, it is not merely a matter of a decision not to supply widgets because an organisation cannot make a profit on them or to bring a bus service to an end despite the difficulties that that causes in rural areas. These decisions bring misery into people's lives. I therefore make a plea, on behalf of a rural area, to the Minister to look into the problem and to ask his right hon. and hon. Friends to ensure that training costs in rural areas are fully covered so that we do not run into the problems that were suffered by the young girl whom I mentioned.

Nevertheless, it is fair to give a measure of welcome to a proposal that encourages training. The Minister will expect me, as a Liberal Democrat from a long Liberal tradition, to welcome a measure that places the initiative in the hands of the trainee and lets the individual say, "I am going to better my prospects by choosing my own training scheme." That is an excellent idea.

It is also a good idea that, under the simple scheme that is proposed, tax relief at source will be provided. However, it is extremely disappointing—as has been emphasised by the hon. Member for Newcastle upon Tyne, East, (Mr. Brown)—that tax relief will not become available until 1992. Will the Minister investigate whether tax relief could at least be provided in the current financial year on new courses in which new machinery and new office procedures are being set up anyway? Why cannot tax relief be provided at source to new trainees? Surely the Inland Revenue can cope with those administrative arrangements. A Government machine capable of introducing a 2.5 per cent. increase in VAT across the board in just a few weeks should be able to manage the administrative procedure to introduce this new change—at least in part—in less than 14 months.

Will the Minister explain why the proposal is limited? Why does not it include national vocational qualifications and Scottish vocational qualifications at the highest level? Why does it discriminate against professional qualifications? Will it include relief for distance learning qualifications, such as those provided by the Open university and elsewhere? It should do so but does not.

The Government's measure may be wise but it is not generous. The cost of relief will be nil in 1991–92—the scheme is not yet effective—and will cost £20 million in 1992–93, including a public expenditure element of £5 million in respect of non-taxpayers. When the NVQs and SVQs are fully developed, the cost is expected to rise to £40 million, including a public expenditure element of £10 million. What is £10 million? How many yards of motorway can be unrolled for £10 million? It can probably be measured in hundreds of yards, but certainly not in miles. Surely the Government can find more than a mile or two of motorway to support training for national vocational qualifications. The Government should be funding training much more generously and considering a far more extensive scheme. There is nothing wrong with requiring companies to provide a small proportion of their payroll to train people between the ages of 16 and 19. We believe that, probably on the basis of asking too few or the wrong people, the Government have grossly overestimated industry's reaction.

The Government are particularly failing to support training for the unemployed to any reasonable extent, either in this proposal or elsewhere. Unemployment is increasing at an alarming rate. In the past three years, year on year, redundancies have increased. Today, we heard the shocking news that 3,000 people are to be made redundant from the aircraft division of Rolls-Royce. That is but one example of what is happening.

There is a catalogue of companies that are currently making people redundant. It includes Marks and Spencer and Rolls-Royce, which are at the top of the class in British industry. As an hon. Member from the Labour party said——

Mr. Ian McCartney (Makerfield)

The hon. Member for Makerfield.

Mr. Carlile

Yes, the hon. Member for Makerfield may have his credit. The hon. Gentleman made a good point when he said that those companies are also major trainers.

Mr. McCartney

I always do.

Mr. Carlile

I will not accept that every point that the hon. Gentleman makes is good.

Major trainers are now making people redundant. This highlights the need for much greater support for training, particularly for those who become unemployed as a result of the Government's economic policies and their failure to introduce a real strategy for manufacturing industry. Last month's trade figures showed beyond doubt that imports are rising relative to exports. That tells its own story.

In the past, the quality of training schemes provided for the unemployed has not been good, as the poor attendance rates demonstrate. One cannot blame the trainees. If the training programmes were good enough, the trainees would turn up for them in much greater numbers. When unemployment fell and resources were freed, resources could have been used to increase the quality of training; but the Government simply cut the training budget in 1991–92 by £350 million.

Now that unemployment has begun to rocket again, the Government still continue to make insufficient provision. The recent announcement by the Secretary of State for Employment of another £120 million for the main training schemes operated by the training and enterprise councils not only failed to restore the cuts of last summer and preceding years but failed to allow for the size of the increases in unemployment. That funding failure is especially regrettable when TECs are attempting to establish themselves in the face of many functional difficulties, such as those I mentioned at the beginning of my speech.

We believe that extra resources should be devoted to starting the transformation of Government training schemes into quality programmes, which would be well regarded by participants and employers alike. The Minister referred to payroll requirements. Employers would not complain if they thought they were getting "value for money"—I believe that the Government understand that phrase. I support schemes that give value for money, as do, I believe, all responsible companies in this country. Many of those schemes could be provided by companies in-house, provided they met the requisite standard. That is the sort of philosophy that should be guiding the financing and devising of training schemes. I fear that, as yet, that philosophy has not led the Government's thinking.

6.15 pm

Mr. Tim Smith (Beaconsfield)

I welcome clause 31, which introduces new tax relief for vocational training. It recognises that it is not just the Government and employers who have responsibility for training, but individuals, and that it is right to give individuals some incentive to better themselves. The new tax relief, modest though it may be, is most welcome. I believe that, in future, it may cost more than the Treasury has estimated because there will be a wide take-up as people seek to take advantage of the new relief.

When I looked at amendment No. 14 I had some sympathy with the suggestion that the relief should be introduced immediately. After all, if it makes sense to introduce a new tax relief, we should make it available to taxpayers and others at the earliest opportunity. However, I understand that if we are to adopt the approach chosen by the Treasury, of allowing people to deduct the tax from payments that they make, it will not be practical to introduce such a change until the beginning of the next tax year. My hon. Friend the Financial Secretary to the Treasury said that adopting that approach would allow non-taxpayers as well as taxpayers to take advantage of the relief. That is welcome and I was interested to hear the hon. and learned Member for Montgomery (Mr. Carlile) say that that part of the proposal will cost £5 million, which is a lot of money. After all, we are talking of £5 million of relief, so that means £20 million of expenditure by individuals with no taxable income. That seems quite a lot of money, and if the Treasury is right, I welcome the fact that people without a taxable income will

spend on training at that rate to improve their chances of acquiring taxable income—that is what the proposal is all about.

Another advantage to the approach adopted by my hon. Friend the Financial Secretary is that relief is available immediately, both to taxpayers and non-taxpayers. It is not necessary for them to pay the fees and then wait for a considerable period before receiving tax relief. The alternative would be simply to make the relief an allowable expense, so that there would either have to be an adjustment to people's PAYE codes, which would be difficult, or people would have to wait until the end of the tax year before they could claim back the money. The Treasury have adopted the right approach, and I note that it has adopted the same one in relation to a number of new tax reliefs. I accept that it means that we cannot introduce the relief until 1992 because we must set in place the necessary arrangements, introduce regulations and ensure that the people to whom the money is being paid are able to get the tax back from the Treasury.

The hon. Member for Newcastle upon Tyne, East (Mr. Brown) said that we should ask whether training should be a priority for public spending. Earlier this week, I received a leaflet from Battersea Labour party, which stated that the priorities for a Labour Government would be a massive increase in spending on education and training, and on public transport. Leaving aside the question of where the money will come from and other such issues—although it is important to recognise that both those proposals, however commendable, have long lead times in terms of improving the country's economic performance—it is nonsense to say that we can make an investment on day one and achieve economic growth on day two.

I recall saying in a debate in the House late last year that one reason why the performance of British management had improved during the 1980s was the expansion of university education in the 1960s. There are long lead times on investment in education and training. The Labour party is misleading the country if it is suggesting that the increased investment in education and training will, overnight, lead to an improvement in our economic performance. I am afraid that life is not like that. The hon. Member for Derby, South (Mrs. Beckett) must answer the question: "How does she square that circle?" I think that she and the right hon. and learned Member for Monklands, East (Mr. Smith) have both said on many occasions that their first priorities for public spending would be to increase pensions and child benefit and that all other increases in public expenditure would have to wait until we had improved our economic performance. They tell us that in one breath and then, in the next one, they say that, in order to improve our economic performance, we must have a massive increase in investment in education and training, transport infrastructure and all sorts of other things. Whom are we to believe? Perhaps we shall have a better idea when we have had a chance to read the text of the speech that the Leader of the Opposition is making on this subject today.

Apparently the right hon. Gentleman will tell us that, under Labour, there would be no tax reductions for five years. He assumes—I hope that hon. Members will note this—that, come what may, we shall have economic growth of 2.5 per cent. per year. Clearly, he has decided in advance how the extra £20 billion of tax revenue generated by the economic growth would be spent.

People are naturally very suspicious of the Labour party when it comes to questions of taxation. Indeed, they would do well not to listen to the Opposition. On that score, of course, there is cause for considerable concern, as the Labour party has already told us that it would increase the burden on many taxpayers. But people would do even better to look at the performance of all past Labour Governments, who increased the burden not only on higher-rate taxpayers, but on all taxpayers. In the end, there is only one way in which the extra £20 billion of expenditure to which the Opposition are committed could be funded, and that is by putting an extra burden on every taxpayer.

Mr. Nicholas Brown

On the question of increasing the tax burden on ordinary citizens, can the hon. Gentleman confirm that the Conservative Government, throughout their time in office, have done exactly that?

Mr. Smith

What I can confirm is that over the past 12 years the Conservative Government have managed to reduce the standard rate of tax from 33 to 25 per cent. and, at the same time, achieve substantial growth in public spending. That is a very remarkable achievement. At the next election, people will judge the various promises according to past performance.

Mr. Nicholas Brown

No doubt the hon. Gentleman is aware of the system of indirect taxation, which accounts for part of the tax burden on citizens of average and below-average means. Will he confirm that the Conservative party has increased, rather than decreased, the total tax burden borne by ordinary citizens?

Mr. Smith

What people will want to consider is net take-home pay. During the Conservative Government's period of office, a married man on average earnings and with two children has seen an increase of more than 30 per cent. in his net take-home pay. By contrast, the performance of the last Labour Government over a period of five years resulted in an increase of just 1 per cent. in the net take-home pay of such a person. What people are concerned about is net take-home pay. That is where the Conservative Government have scored, and where Labour Governments will never score. It is in that context that people will set the speech that, apparently, the Leader of the Opposition is to make today. People have not forgotten what life was like 15 years ago under a Labour Government. It was a very unpleasant experience, and not one which people will want to repeat. The present Government have cut tax and have increased spending.

Investment in training is another priority for the Labour party, but anyone reading the Labour party document that was published a couple of weeks ago will find that it is full of priorities. There is an endless list of priorities, together with an endless list of new Government bodies to spend the money that implementing them will require. Every priority will involve additional public expenditure, and there will be a new quango to do the spending. On the question of training, it is entirely wrong to assume that quantity is in itself a virtue. The quality of investment is equally, if not more, important. That is a matter upon which this debate ought to focus.

A better means of securing increased investment in training is to improve the profitability of British industry. Whether we are concerned about fixed investment, about investment in research and development, or about investment in training, the way to achieve increased investment is to increase the profitability of British industry. Over the past 10 years, we have seen a huge increase in industrial profitability and, as a result, a huge increase in retained profits. That is why there has been a better performance in terms of investment in training.

The CBI forecast figures that have just been given by the Financial Secretary are very encouraging. It is remarkable that, in the middle of a recession, so many companies should contemplate increasing their expenditure on training or, at least, not reducing it. Clearly, when profitability improves next year—as it will—there will be an increase in training budgets. Employer-led training is so much better. The key is to ensure that training is of the kind that employers want, the kind that makes trainees employable. The hon. Member for Greenock and Port Glasgow (Dr. Godman) has talked about the training of disabled people. I agree that that should be no less a priority than is the training of able-bodied people. Indeed, it is a very important aspect of the whole matter.

Dr. Godman

I cannot speak about the situation in England and Wales, but I can tell the hon. Gentleman that, in Scotland, the numbers and percentages of people with a mental or physical handicap who underwent employment training in each of the past two years were dismally low. Indeed, that was conceded in a recent answer by the Scottish Office Minister who is responsible for industry.

The Second Deputy Chairman

Interesting as these exchanges are, I must point out that the Committee is dealing with a very specific date, which is mentioned in the amendment. I should like hon. Members to return to that, rather than engage in a general debate on training matters.

Mr. Smith

I have to accept what you say, Miss Boothroyd, although the debate has ranged very widely. I fully accept that we are discussing a specific tax relief, which involves public expenditure, but hon. Members have been putting that item of public expenditure in the context of the resources committed to training, whether by the Government, by way of taxpayers' money, or by the private sector. Of course, every tax relief has a public expenditure cost. I intended to refer to a particular example of the training of disabled people, but I shall abide by your ruling, Miss Boothroyd, and return to the amendment. Let me say simply that this new tax relief to encourage individuals to better themselves and to enable them to choose training is very welcome, and when it comes into force in 1992 it will be very popular.

Dr. Godman

I support the amendment, as I believe that it would improve a modest measure. It is surprising that, in relation to training bodies, the Minister should have been so dismissive. I have always regarded the Act that established those bodies as being one of the finest pieces of legislation passed, under the stewardship of Mr. Robert Carr, by the then Conservative Government. It made training provision for very many people. The legislation was passed many years before you, Miss Boothroyd, became a Member of Parliament, and a few years before I came here.

I do not want to incur your wrath today—or, for that matter, any day—but I have to say that, like the hon. and learned Member for Montgomery (Mr. Carlile), who spoke on behalf of the Liberals, I have reservations arising from the Government's failure to make provision for distance learning. This is particularly regrettable in respect of information technology training, which can be provided by, among various institutions, the Open university.

Distance learning programmes are very important for would-be trainees in many parts of Scotland, particularly the highlands and islands and the Shetlands. I think that I am right in saying that the Open university has in the Shetland islands alone several hundred students who undoubtedly benefit from its unparalleled teaching.

6.30 pm

Can the Minister tell us why Scottish vocational qualifications at the highest level are being excluded? It means that the Scottish higher national diploma is being excluded. I know trainees who are studying for such qualifications. If the amendment were passed, others could benefit.

I am sorry that there is to be a delay in the introduction of a provision which could help many of my constituents. May I remind the Minister that, according to Government statistics, the unemployment rate in the Greenock travel to work area is 13.5 per cent., which is far above the levels of unemployment in constituencies represented by Conservative Members? It is certainly much higher than the national average.

When we talk about the training of young people, may I point out to the Committee that just yesterday Kvaerner-Kincaid of Greenock announced the redundancies of more than 100 employees, most of whom are highly skilled engineers, but who include 12 apprentices? When employers engage apprentices to undergo training, they have a moral obligation to ensure that the apprenticeships are completed. Kvaerner-Kincaid is acting irresponsibly, even immorally, in putting the apprenticeships under threat.

Nothing is worse for a young person of 17, 18 or 19 than to have an apprenticeship disrupted. Where can he go? I say "he" because I am talking about 12 young men who are deeply anxious about their future. What are their prospects if the Norwegian company has its disgraceful way and puts them into the dole queue? I told the chief executive, Mr. Hanna, yesterday that it was a disgraceful state of affairs. If the apprentices are put out of work, it will be nothing short of a scandal.

My constituency and other areas in the west of Scotland are suffering badly because of the lack of systematic training, particularly in electronics and in information technology. That is a matter for regret. If the Government were to accept the amendment, it would make a modest provision much more sensible for many of the people whom I represent north of the border.

Mr. Cryer

I want to comment on the Minister's reasons for rejecting our useful and modest attempt to improve the modest provisions of clause 31. The Minister said that there were administrative difficulties because regulations need to be drafted. I am surprised that the Government are admitting that they are introducing primary legislation without a thought for the regulations which will flow from it. According to the Minister, the Government have not troubled to look through the Bill to see what regulations will be needed.

The Minister said that there would be enormous difficulties about consultation. The Government use consultation when they want to and dismiss it when they do not. The Minister is contemptuous of training boards. When the clothing industry training board was told that there would no longer be a compulsory levy to fund it, there was no consultation. The Government did not ask members of the board what they would do about providing training in an area where we have to be competitive. They simply said, without consultation, that there would be no levy. The Minister chose his arguments to suit himself. There was no question of consultation.

I must reiterate my concern about the machinery of government. We have a slapdash Government who do not know what they are doing from one week to the next. They are so dithering in their attitude that they have not gone through the Bill to check what regulations will be needed to enable tax concessions to be made. It is not a question of whether the Government will get the measure through the Committee. They have a majority of 150 so they know that they will get the legislation through.

The Minister said that regulations will need to be drafted. It would have been prudent for the Minister to ask his officials, when drafting the Bill, to consider what regulations would be needed. Will the regulations be made under the affirmative procedure or will they be less important in the Minister's eyes? Has he made a judgment? Has he decided just to dig out regulations at some time in the future, some to be made by affirmative resolution and some by negative resolution?

These are important questions, because most provisions are created not by primary legislation but by secondary legislation, through powers delegated to Ministers. Therefore, Ministers should regularly assess the regulations that will be necessary. It is not as though the Treasury is unaware of the need to produce regulations. Even when tax concessions concern other Departments, the regulations have to be drawn up with the consent of the Treasury.

The Government have rooms full of people dealing with regulations, yet the Minister tries to tell the House that they cannot draft regulations quickly. It is incredible. I will lay a bet with the Minister that there are five times as many people in Government Departments drafting regulations as there are in the emergency unit dealing with relief for the Bangladesh victims. There may even be 10 times more people involved in drafting regulations, because there are only about a dozen officials grappling with one of the biggest disasters that the planet has seen, in which perhaps as many as 500,000 people have been killed.

The Minister's argument about regulations does not wash; he has used it as an excuse. He could have accepted our amendment, brought forward regulations and introduced the provisions in this financial year. An element of retrospection might have been needed, but I have never been one of those who says that there should be a bar against retrospective legislation under any circumstances.

The Government want to induce people to enter into vocational education. That is necessary. We are not grudgingly accepting the notion, as the Minister tried to suggest. We are urging the Minister to ask his civil servants to get cracking on the regulations so that the legislation may be brought into operation in this financial year. What could be better? The Minister is getting support for a Bill which is mostly pretty awful, but at least the regulations would help people. We are supporting the Government, but the Minister says no, it is administratively impossible, because the Government have never introduced legislation in 24 hours, never introduced regulations, plonked them before Parliament and brought them into effect during the 40 days within which a prayer can be tabled. We know that that is not true. They have used administrative expediency when they wanted to and when there was the political will to do so. There is not the political will to encourage people to undertake vocational training.

Why is it especially urgent for people to undertake training? It is urgent because some manufacturing industries are in difficulty, and people might need an additional inducement to encourage them to undertake training in view of the relatively dismal prospects for some of those manufacturing industries.

Let us take the example of engineering. New car registrations are down by about 20 per cent. The fall in registration in cars manufactured in this country has enormous repercussions. It means that component suppliers such as GKN have shed people and created redundancies because of the downturn caused by the Government's economic policies. The suppliers of steel and tyres and of cloth for the upholstery in cars and other vehicles are all affected by the downturn in demand, which has been created by the Government's blind and foolish ideological adherence to the use of interest rates alone to control the economy. As a result, more people have joined the dole queue. Therefore, there must be some inducements to encourage young people to go into the engineering industry, which is one of our most vital manufacturing industries.

The inducements should be on the premise that there might be an upturn—not under this Government, but after the next election. With a Labour Government and a decent attitude towards the economy, we shall create jobs, not destroy them. People will then have more confidence, but not at the moment. Therefore, inducements to enter an industry that faces difficulties will be a help.

The textile industry is important in Bradford. Fourteen thousand jobs depend directly on that industry. It is not an antique industry—it has invested and modernised—but it faces uncertainty, again because of the downturn in demand. There is much short-time working and a continuing trickle of redundancies. I predict that over the next few months mills will close in Yorkshire and the west riding because of the Government's economic policies and also because the textile industry in particular bore much of the burden of the perfectly legitimate sanctions against Iraq. The Gulf war meant that the market diminished in the middle east, which had been a fairly lucrative market for British textile manufacturers.

People might ask why they should go into the textile industry when it has been contracting for years, and over the past 10 years has lost at least 100,000 jobs in its woollen sector. Why should they go into an industry to learn a craft or a skill only to find that, at the end of the day, they are redundant and that the skill is not required?

The tax concession is needed now to counteract the economic downturn—the recession or slump—which the Government's policies have introduced once again into our economy.

6.45 pm

It makes more sense to give tax concessions now to encourage people to go on a training course than to spend the money on the dole queues. Although Ministers are shy about telling us the cost of the dole queues, they cost between £20,000 million and £25,000 million a year in unemployment payments, various other benefits and loss of tax revenue. The Minister can correct me and give an accurate Treasury figure, but it is far better to start this year with the modest tax concession outlined in the amendment to encourage people to go into training rather than for the Government to shrug their shoulders and say, "It is administratively impossible—we can't do it now," while the dole queues grow ever longer.

The Minister mentioned the cost of training in relation to Government expenditure. I should like to probe the figures a little further. He said that the Government were already spending that sort of money, so the amendment was not necessary. If the Government are so concerned about training, I wonder whether the figures that he gave for Government expenditure on training include expenditure on the skill centres. I presume that the tax concession would be available to an individual who decided that he wanted to go on a course at such a centre, but what has happened to the skill centres?

The Minister may not be aware—as he is from the Treasury, he should be—that the centres were a nationwide network run by the Department of Employment to provide training, but what did the Government do? They advertised them for sale, saying that they were making a loss, that they were not effectively run—although the loss was not so big—and that something had to be done about them.

It was strange that the Government sold the centres—in fact, they did not sell them but gave them away—to the people who were already in charge of running them at a loss. I wonder whether that money is incorporated into the Government's figures. The Government gave the new concern not only about £100 million, but the freehold. The new concern—Astra Training Services, in the main—has been busy closing down the centres, sacking people and diminishing training opportunities. It has sacked about 500 people—the Minister can correct me if he has up-to-date figures. It has been one of the biggest rip-offs of the privatisation procedures, and they have all been rip-offs of the taxpayer to some extent.

As the Minister knows, the sale is being investigated by the Public Accounts Committee. I hope that its report will be produced pretty speedily, because we are dealing with a huge gift of money to Astra Training Services and with the three civil servants who got into the Minister's good books, pulled out a plum and said, "What a good boy am I." That is an Elizabethan poem based on the corruption of Government in that era. The amount of money that would be provided by the tax concession is peanuts compared to the amount of money that the Government squandered on Astra Training Services and on giving away the freehold of important training facilities and sites.

I hope that the Minister has a few answers, that he will rise to the occasion and say that the Government have many facilities and lots of skilled draftsmen for regulations, that they will draw up plans and regulations, send round a circular and ensure that the minor tax concession is introduced in this financial year. The Minister has the opportunity to do that and to do a bit for people who want to take advantage of training. We encourage him in that, and I hope that he will accept the amendment. My guess is that he will not, but people who are looking for training will know where the real concern for training lies—not with the Government, but with Labour. We want an early opportunity in government to put our plans into action.

Mr. Peter Hain (Neath)

The Financial Secretary sought to deflect criticism of the Government's measure by saying that it was not all that the Government were doing on training. That is a statement of the obvious. But the proposed £20 million in tax relief on training costs is a drop in the ocean compared with the £245 million that has been cut from employment training and youth training this year. It is a tiny droplet compared with the £1.5 billion cut from public spending on training during the five years from 1987 to 1992.

The Government's proposal does not even begin to address the skills gap in Britain. In particular, it does not address the dilemma and the problems faced by women trainees. Women should be a prime target for any training scheme, especially in view of demographic trends which are causing a shortage of adult men and making it necessary to bring more women into the labour market. Many women do not have the qualifications to take advantage of the jobs that companies need to fill. Others who would like to return to the labour market after a period of caring for dependants but need to top up their skills to take advantage of opportunities are unable to do so. The measure does not even begin to address that problem.

Under the clause, there will be a deduction on the basic rate of tax, so those who pay a higher rate of tax will receive much greater relief. As women represent a small proportion of those in the higher tax bands, almost no women will benefit. In addition, the tax deduction will be available to non-taxpayers only in the form of a reduction in the cost of their training place. Many women who are on low pay cannot afford the massive cost that is often levied for a place on a training scheme.

The main beneficiaries of the proposal will be people who are already in work. They will be mainly professional people. Not many will be women and few will be low-paid workers. That should be considered against the background of the overall impact of the proposal. It is a molehill of a measure compared with the mighty mountain of the skills crisis in industry and across the economy. At present, 60 per cent. of trainees emerge without any qualifications and two thirds of our work force have had no training in the past three years. Many have had no training in their entire working lives.

The Financial Secretary referred to the rosy picture painted by the Confederation of British Industry by drawing selectively on its forecasts. I invite him to come back into the real world. For example, in west Wales, training places have been halved through the measures taken by the Government in the past year. One example is at a successful company called Kenyons in the town of Pontadarwe in the Neath constituency, which has trebled its turnover in the past two years. It builds industrial refrigeration plants and provides building services. It is a skilled engineering company employing 500 people in that part of the world. It is just the sort of company that we should encourage. In the past few months, its youth training places have been cut from 90 to 70, despite the fact that the company had the places and people wished to fill them. The funding was cut by 20 places.

Only after the managing director created merry hell, as he described it, was the company able to win from the local training authority an additional 10 places. Similarly, employment training places in that company were cut from 30 to 18. Again, that opened up a skills gap even though the company had the opportunity and the desire to fill it. All that is in an area where we desperately need engineering skills in order to compete with foreign companies, which are rapidly taking over our markets. I have been approached by business men in Neath who want to provide places for computer training, which is desperately needed in our information technology society. The funding for those places is not available.

Several of my hon. Friends mentioned the lack of training opportunities for people with special needs. Training places for people with special needs have also been cut. All in all, the measure does not address the real world. The £20 million tax relief for training which is being provided one way or another should be compared to the £1.1 billion of tax subsidies for personal pensions last year and the incitement to contract out of the state earnings-related pension scheme in the form of a £6 billion tax subsidy. The £20 million does not even begin to measure up to the needs of our economy.

The £20 million can also be compared to the tax subsidies to encourage people to take more and more shares and invest more in equities; yet in the past 10 years it has been highly profitable for individuals to invest in shares. People have received an annual gross return of 19 per cent. on their investments. Why is money spent in that direction when it should be spent on funding the training that we so desperately need?

The Financial Secretary complained that the Labour party's policy was one of compulsion. That is not the case. The Government have abandoned their responsibilities for training and their duty to fund and provide the training opportunities so desperately needed in the economy. The Government have washed their hands of those responsibilities. The Labour party says that the Government should fulfil their responsibilities and duties to people who want to train to fill the skills gaps that are appearing everywhere. The Financial Secretary appeared to suggest that he would leave it all to the private sector. But almost universally the private sector is not filling the skills gap. I would ask why the directors of large companies pay themselves 22.7 per cent. increases in their remuneration when they are not providing the funding for training places that we need?

The hon. Member for Beaconsfield (Mr. Smith) childishly suggested that we claimed that we could accomplish overnight the training revolution that is needed in Britain. No one claims that. The Labour party has never maintained that that would be the case, but we are saying that the Government are paying lip service to addressing the skills desert in society. People see, even if Ministers do not, that the Conservative party is a party of quick buck predators devouring our skills base as they asset-strip the economy. Labour is the party of enterprise and industry which is prepared to invest in skills for a strong economy.

Mr. Maude

This short debate has been essentially about the proposal in the Finance Bill to introduce tax relief on vocational training for individuals. The debate has ranged more widely than that, into training in general, and I welcome that.

The hon. Member for Bradford, South (Mr. Cryer) spoke as if the administrative difficulties of putting the scheme into place this year were pure fabrication and a figment of our imagination. He talked as if in the Government there was a sort of regulation factory—if one pressed a button, out would come a set of all-purpose regulations to fit any set of circumstances immediately. However, we are introducing a new scheme which must work. Nothing like it has been done before. The scheme must be relatively as simple as possible for training providers to operate. It must not impose too great a compliance burden on them.

It is important that we should get the regulations right, so that the system works in the best way possible. It would be dead easy to produce very quickly regulations which were wrong. I prefer to make sure that we get things right and that training providers have the time to set their systems in place and operate them. There is no doubt that to apply the system in this way—tax relief at source—places a burden on training providers. That is part of the price for what everyone has accepted to be a worthwhile measure.

As I said at the outset, the reason for deferring the implementation of the scheme until next year is that we are anxious to get it right and do not want to introduce it in a way that would be impossible for training providers. In those circumstances, I am not able to accept the amendment.

7 pm

Several points, including those raised by the hon. Member for Greenock and Port Glasgow (Dr. Godman), related to the ambit of the measure—which vocational qualifications would be within it. That is the subject of a further amendment that we shall debate before long, and I shall deal with it then. However, I shall now deal with the specific point that the hon. Gentleman raised about higher national diplomas. Most higher national diplomas—this applies particularly to England and Wales; I cannot say whether it applies to the same extent to Scotland—would be at level 4 and therefore included within the ambit of the provision. Perhaps we can deal with that matter in a little more detail in the context of a later amendment.

The hon. Gentleman talked about the provision of training for people with disabilities. Training and enterprise councils are obliged to provide suitable training which meets the needs of local employers and local people, which of course includes those with special training needs. Performance-related funding for this year will reward training and enterprise councils for achievement of employment outcomes for people with special training needs, including people with disabilities. It is by no means the case that people with handicaps are at the end of the queue, with no consideration being given to their needs.

Mrs. Golding

Will that include adult low achievers, many of whom in my constituency have lost their places midway through their training programmes?

Mr. Maude

The hon. Lady will understand that that is not something for which I have direct ministerial responsibility. I imagine that it includes people in those circumstances, but it will be for my right hon. and learned Friend the Secretary of State for Employment to provide detailed answers.

The hon. and learned Member for Montgomery (Mr. Carlile) and the hon. Member for Greenock and Port Glasgow referred to distance learning. Distance learning will be included if it leads to a national vocational qualification at levels 1 to 4.

The hon. and learned Member for Montgomery made much of the relatively low financial cost of this measure—almost as though that were something that the Government could automatically increase to make it a bigger and more spendid programme. I am bound to say that it is not a cash-limited programme. The figures in the Red Book—the "Financial Statement and Budget Report"—simply reflect the best estimate of demand for tax relief under the scheme. My hon. Friend the Member for Beaconsfield (Mr. Smith), who is unable to be present because of an obligation elsewhere, believes that the cost could be more because demand would be greater. That may be the case, but it is simply an estimate of what demand is likely to be.

A number of other hon. Members referred slightingly to the cost. The hon. Member for Neath (Mr. Hain) described it as a molehill or a drop in the ocean. I am not sure whether he also said that it was chickenfeed, but someone has described it as chickenfeed. Of course, in the context of the entirety of the Government's training programme and training strategy, it is a relatively modest measure. It is not meant to be the kingpin of the exercise.

As I said, the Government are spending £2.7 billion overall, which is two and a half times as much as was spent on training in 1979. In that context, the measure is relatively modest—I make no apology for that—but it is particularly valuable because it places the emphasis on individuals' choice, encourages them and provides a direct incentive to enhance their skills.

In those circumstances, I am confident that the Committee will warmly support the measure and accept that it is not possible to bring forward its implementation in the way that has been suggested, for reasons which are good and will be understood.

Mr. Nicholas Brown

I welcome you to the Chair, Mr. McWilliam. It is a great pleasure for me not only to see you in the Chair but to hope that it means that you will follow our deliberations Upstairs as well. It would be a great pleasure for me if a fellow Member of Parliament for Tyne and Wear joined me in the early hours of the morning as we considered the Finance Bill.

If you join me and the Financial Secretary for breakfast on Wednesday and Friday mornings during the passage of the Finance Bill, you may find the Financial Secretary a hard man to help and a hard man to please. Yesterday, he complained that I was smiling and nodding as he was speaking, and today he complains that I am grudging and curmudgeonly in my welcome for the clause. There is nothing grudging in our welcome. Most certainly, we are not opposed to it, because it gives some choice to those who are fortunate enough to be able to take advantage of its provisions. Those arguments are not the basis of our reservations.

I notice that, in defending the Government's case, the Financial Secretary came up with his version of events under the previous Labour Government. That is becoming commonplace. The Conservative party is not willing to have the events under the previous Labour Government taught as history in schools, but nevertheless it turns up time after time as fiction in our debates.

As my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) rightly pointed out, circumstances were quite different under the previous Labour Government. We had training boards, apprenticeships, a manufacturing base and a balance of payments in equilibrium—things that we do not see nowadays. I was saddened to hear what my hon. Friend had to say about the very last of Britain's marine engineering industry. I followed the slow retreat of that industry from Wearside to Tyneside and then up to my hon. Friend's constituency. It is very sad to hear of the plight of young apprentices.

Dr. Godman

It is not just a matter of job losses in such a highly skilled sector. The decision announced yesterday could lead to the end of the building in the United Kingdom of slow-speed marine diesel engines—in other words, no building of diesel engines for merchant ships in the whole of the United Kingdom.

Mr. Brown

I am grateful to my hon. Friend. I am aware of the extent of the tragedy to which he refers, which is why I made a special point of mentioning it.

My hon. Friend the Member for Bradford, South (Mr. Cryer) picked up the Minister on his main excuse for not accepting the help that we offer him—that it is difficult to make regulations. Are regulations required? Clause 31(2) states: The payment shall be deducted from or set-off against the income of the individual for the year of assessment in which it is made; but relief under this subsection shall be given only on a claim made for the purpose, except where subsections (3) to (5) below apply. Clause 31(4) states: An individual who is entitled to such relief in respect of a payment may deduct and retain out of it an amount equal to income tax on it at the basic rate for the year of assessment in which it is made. Surely the clause does not require further regulations. It would, of course, be desirable from the taxpayers' point of view if a MIRAS-type arrangement were in place, but that is not necessary. Under the clause, it would be possible to make a start this year. The argument about the technical difficulties and about the need for regulations is so much bunkum. In any case, what does the Minister expect the initial take-up to be?

My hon. Friend the Member for Neath (Mr. Hain) made a very good point about the difficulties of those who would not have a charge to tax, many of whom would be women, but who might nevertheless want to take advantage of the relief. I find it difficult to accept that many citizens would be in that position—that many people would not have a charge offsetable against tax but nevertheless would have enough money to sustain the financial burden of undertaking such a course.

Having said that, however, and having done my very best to help the Minister, the real issue that divides us is not the clause, or even the Minister's unwillingness to accept our modest amendment, which has been tabled with entirely helpful intentions; our real quarrel with the Government is their failure to establish the properly funded training programme that is so necessary for the country. It is for those reasons that I seek to put our amendment to the vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 172, Noes 223.

Division No. 138]	[7.11 pm
AYES
Abbott, Ms Diane	Hardy, Peter
Adams, Mrs Irene (Paisley, N.)	Hinchliffe, David
Allen, Graham	Hoey, Ms Kate (Vauxhall)
Archer, Rt Hon Peter	Hogg, N. (C'nauld & Kilsyth)
Ashdown, Rt Hon Paddy	Home Robertson, John
Banks, Tony (Newham NW)	Hood, Jimmy
Barnes, Harry (Derbyshire NE)	Howarth, George (Knowsley N)
Barron, Kevin	Howell, Rt Hon D. (S'heath)
Battle, John	Howells, Dr. Kim (Pontypridd)
Beckett, Margaret	Hoyle, Doug
Beggs, Roy	Hughes, John (Coventry NE)
Beith, A. J.	Hughes, Robert (Aberdeen N)
Bell, Stuart	Hughes, Roy (Newport E)
Bellotti, David	Hughes, Simon (Southwark)
Benn, Rt Hon Tony	Illsley, Eric
Bermingham, Gerald	Ingram, Adam
Blair, Tony	Janner, Greville
Bradley, Keith	Kennedy, Charles
Bray, Dr Jeremy	Kirkwood, Archy
Brown, Gordon (D'mline E)	Leadbitter, Ted
Brown, Nicholas (Newcastle E)	Leighton, Ron
Brown, Ron (Edinburgh Leith)	Lestor, Joan (Eccles)
Bruce, Malcolm (Gordon)	Lewis, Terry
Buckley, George J.	Livingstone, Ken
Caborn, Richard	Livsey, Richard
Callaghan, Jim	Lofthouse, Geoffrey
Campbell, Menzies (Fife NE)	Loyden, Eddie
Campbell, Ron (Blyth Valley)	McAllion, John
Campbell-Savours, D. N.	McAvoy, Thomas
Canavan, Dennis	McCartney, Ian
Carlile, Alex (Mont'g)	Macdonald, Calum A.
Carr, Michael	McFall, John
Clarke, Tom (Monklands W)	McKay, Allen (Barnsley West)
Clelland, David	McKelvey, William
Clwyd, Mrs Ann	McLeish, Henry
Cohen, Harry	Maclennan, Robert
Corbett, Robin	McMaster, Gordon
Corbyn, Jeremy	McNamara, Kevin
Crowther, Stan	Madden, Max
Cryer, Bob	Mahon, Mrs Alice
Cunliffe, Lawrence	Marshall, David (Shettleston)
Davies, Rt Hon Denzil (Llanelli)	Marshall, Jim (Leicester S)
Davis, Terry (B 'ham Hodge H 'l)	Martin, Michael J. (Springburn)
Dixon, Don	Meacher, Michael
Dobson, Frank	Michie, Bill (Sheffield Heeley)
Doran, Frank	Michie, Mrs Ray (Arg'l & Bute)
Duffy, A. E. P.	Morris, Rt Hon A. (W'shawe)
Dunnachie, Jimmy	Mullin, Chris
Dunwoody, Hon Mrs Gwyneth	Nellist, Dave
Eastham, Ken	O'Brien, William
Evans, John (St Helens N)	O'Hara, Edward
Ewing, Harry (Falkirk E)	Orme, Rt Hon Stanley
Fatchett, Derek	Parry, Robert
Faulds, Andrew	Patchett, Terry
Fearn, Ronald	Pendry, Tom
Field, Frank (Birkenhead)	Pike, Peter L.
Fisher, Mark	Powell, Ray (Ogmore)
Flannery, Martin	Primarolo, Dawn
Flynn, Paul	Randall, Stuart
Foot, Rt Hon Michael	Redmond, Martin
Foster, Derek	Reid, Dr John
Foulkes, George	Richardson, Jo
Fraser, John	Robertson, George
Fyfe, Maria	Robinson, Geoffrey
Galloway, George	Rogers, Allan
Garrett, John (Norwich South)	Ross, Ernie (Dundee W)
Godman, Dr Norman A.	Ross, William (Londonderry E)
Golding, Mrs Llin	Rowlands, Ted
Gordon, Mildred	Ruddock, Joan
Gould, Bryan	Salmond, Alex
Graham, Thomas	Sedgemore, Brian
Grant, Bernie (Tottenham)	Sheerman, Barry
Griffiths, Nigel (Edinburgh S)	Sheldon, Rt Hon Robert
Hain, Peter	Shore, Rt Hon Peter

Short, Clare	Walley, Joan
Skinner, Dennis	Warden, Gareth (Gower)
Smith, C. (Isl'ton & F'bury)	Wareing, Robert N.
Snape, Peter	Welsh, Michael (Doncaster N)
Soley, Clive	Williams, Rt Hon Alan
Spearing, Nigel	Winnick, David
Steel, Rt Hon Sir David	Wise, Mrs Audrey
Steinberg, Gerry	Worthington, Tony
Stott, Roger	Wray, Jimmy
Straw, Jack	Young, David (Bolton SE)
Taylor, Mrs Ann (Dewsbury)
Turner, Dennis	Tellers for the Ayes:
Vaz, Keith	Mr. Frank Haynes and Mr. Jack Thompson.
Wallace, James

NOES
Adley, Robert	Durant, Sir Anthony
Aitken, Jonathan	Dykes, Hugh
Alison, Rt Hon Michael	Eggar, Tim
Amess, David	Evennett, David
Amos, Alan	Fallon, Michael
Arbuthnot, James	Favell, Tony
Arnold, Jacques (Gravesham)	Field, Barry (Isle of Wight)
Arnold, Sir Thomas	Finsberg, Sir Geoffrey
Ashby, David	Fishburn, John Dudley
Aspinwall, Jack	Forman, Nigel
Atkinson, David	Fowler, Rt Hon Sir Norman
Baker, Nicholas (Dorset N)	Franks, Cecil
Beaumont-Dark, Anthony	Fry, Peter
Bendall, Vivian	Gale, Roger
Bennett, Nicholas (Pembroke)	Gardiner, Sir George
Benyon, W.	Gilmour, Rt Hon Sir Ian
Bevan, David Gilroy	Glyn, Dr Sir Alan
Biffen, Rt Hon John	Goodhart, Sir Philip
Blackburn, Dr John G.	Goodlad, Alastair
Body, Sir Richard	Grant, Sir Anthony (CambsSW)
Bonsor, Sir Nicholas	Greenway, Harry (Eating N)
Boscawen, Hon Robert	Gregory, Conal
Boswell, Tim	Griffiths, Peter (Portsmouth N)
Bottomley, Peter	Ground, Patrick
Bottomley, Mrs Virginia	Grylls, Michael
Bowden, A. (Brighton K'pto'n)	Hague, William
Bowden, Gerald (Dulwich)	Hamilton, Hon Archie (Epsom)
Bowis, John	Hamilton, Neil (Tatton)
Boyson, Rt Hon Dr Sir Rhodes	Hampson, Dr Keith
Brandon-Bravo, Martin	Hannam, John
Brazier, Julian	Hargreaves, A. (B'ham H'll Gr')
Brown, Michael (Brigg & Cl't's)	Hargreaves, Ken (Hyndburn)
Buck, Sir Antony	Haselhurst, Alan
Budgen, Nicholas	Hayes, Jerry
Burns, Simon	Hayhoe, Rt Hon Sir Barney
Burt, Alistair	Heathcoat-Amory, David
Butler, Chris	Hicks, Mrs Maureen (Wolv' NE)
Carlisle, John, (Luton N)	Higgins, Rt Hon Terence L.
Carrington, Matthew	Hind, Kenneth
Carttiss, Michael	Howarth, G. (Cannock & B'wd)
Cash, William	Hughes, Robert G. (Harrow W)
Chalker, Rt Hon Mrs Lynda	Hunt, Rt Hon David
Channon, Rt Hon Paul	Hunt, Sir John (Ravensbourne)
Chapman, Sydney	Hunter, Andrew
Chope, Christopher	Hurd, Rt Hon Douglas
Churchill, Mr	Irvine, Michael
Clark, Rt Hon Sir William	Jack, Michael
Colvin, Michael	Janman, Tim
Coombs, Anthony (Wyre F'rest)	Jessel, Toby
Coombs, Simon (Swindon)	Jones, Robert B (Herts W)
Cormack, Patrick	Key, Robert
Couchman, James	King, Roger (B'ham N'thfield)
Cran, James	Knapman, Roger
Critchley, Julian	Knight, Greg (Derby North)
Currie, Mrs Edwina	Knight, Dame Jill (Edgbaston)
Curry, David	Knowles, Michael
Davies, Q. (Stamf'd & Spald'g)	Leigh, Edward (Gainsbor'gh)
Davis, David (Boothferry)	Lennox-Boyd, Hon Mark
Day, Stephen	Lester, Jim (Broxtowe)
Dickens, Geoffrey	Lightbown, David
Dicks, Terry	Lloyd, Peter (Fareham)
Douglas-Hamilton, Lord James	Lord, Michael
Dover, Den	Luce, Rt Hon Sir Richard
Dunn, Bob	Lyell, Rt Hon Sir Nicholas

McCrindle, Sir Robert	Roberts, Sir Wyn (Conwy)
MacKay, Andrew (E Berkshire)	Roe, Mrs Marion
Maclean, David	Rossi, Sir Hugh
McLoughlin, Patrick	Rost, Peter
McNair-Wilson, Sir Michael	Rowe, Andrew
McNair-Wilson, Sir Patrick	Rumbold, Rt Hon Mrs Angela
Madel, David	Sackville, Hon Tom
Mans, Keith	Sainsbury, Hon Tim
Maples, John	Shaw, David (Dover)
Marshall, John (Hendon S)	Shaw, Sir Giles (Pudsey)
Martin, David (Portsmouth S)	Shelton, Sir William
Mates, Michael	Shephard, Mrs G. (Norfolk SW)
Maude, Hon Francis	Shepherd, Colin (Hereford)
Maxwell-Hyslop, Robin	Shepherd, Richard (Aldridge)
Meyer, Sir Anthony	Shersby, Michael
Miller, Sir Hal	Skeet, Sir Trevor
Mills, Iain	Smith, Sir Dudley (Warwick)
Mitchell, Andrew (Gedling)	Speed, Keith
Mitchell, Sir David	Speller, Tony
Moate, Roger	Spicer, Sir Jim (Dorset W)
Montgomery, Sir Fergus	Spicer, Michael (S Worcs)
Morris, M (N'hampton S)	Squire, Robin
Morrison, Sir Charles	Steen, Anthony
Morrison, Rt Hon Sir Peter	Stevens, Lewis
Moss, Malcolm	Stokes, Sir John
Mudd, David	Tapsell, Sir Peter
Neale, Sir Gerrard	Taylor, Ian (Esher)
Needham, Richard	Tebbit, Rt Hon Norman
Nelson, Anthony	Thompson, D. (Calder Valley)
Neubert, Sir Michael	Thompson, Patrick (Norwich N)
Newton, Rt Hon Tony	Thornton, Malcolm
Nicholls, Patrick	Townend, John (Bridlington)
Nicholson, David (Taunton)	Tredinnick, David
Norris, Steve	Viggers, Peter
Onslow, Rt Hon Cranley	Walden, George
Oppenheim, Phillip	Waller, Gary
Patnick, Irvine	Wardle, Charles (Bexhill)
Pattie, Rt Hon Sir Geoffrey	Watts, John
Pawsey, James	Wells, Bowen
Porter, Barry (Wirral S)	Widdecombe, Ann
Porter, David (Waveney)	Wiggin, Jerry
Powell, William (Corby)	Wilkinson, John
Price, Sir David	Winterton, Mrs Ann
Raison, Rt Hon Sir Timothy	Winterton, Nicholas
Redwood, John	Younger, Rt Hon George
Rhodes James, Robert
Riddick, Graham	Tellers for the Noes:
Ridley, Rt Hon Nicholas	Mr. John M. Taylor and Mr. Timothy Wood.
Ridsdale, Sir Julian

Question accordingly negatived.

Mr. Nicholas Brown

I beg to move amendment No. 16, in page 21, line 27, at end insert '; provided that subsection (1)(d) above shall not apply so as to deny relief under this section for the excess (if any) of the payment over the amount of public financial assistance which the individual either has received or is entitled to receive at the time the payment is made'. The amendment and amendments Nos. 15 and 17, which we shall debate later, explore matters of detail in clause 31, the principles of which we have already debated. Will it be possible to make some concession to those who wish to take advantage of this relief and who receive some assistance from public funds? The circumstances that I specifically envisage are those in which some assistance from public funds is provided but the assistance is not up to the value of the tax relief. I do not propose that tax relief should be granted on that proportion of expenditure that is assisted from public funds. However, I should be interested to hear the Financial Secretary's view about providing tax relief on the balance because, given the nature and size of some awards, such a situation could arise, and it seems against the spirit of the legislation to disadvantage someone in that position.

Mr. Maude

The amendment would allow trainees in receipt of direct assistance also to get relief for any part of the cost for a qualifying course which was not covered by that assistance. The main financial help for people undertaking vocational training is provided by their employers who, typically, meet the whole cost so that the trainee has nothing to find. Generally speaking, there is no tax penalty for such support, provided it is totally related to the current job, as it normally would be.

Many other trainees can benefit from a variety of Government programmes carefully designed and targeted at specific groups. Young people benefit from youth training and training vouchers and those who have been unemployed for a long time benefit from employment training. The new relief provided by the clause contrasts with both state and employer funded training in being aimed at those people who embark on vocational training on their own initiative and at their own expense. Such people would include mothers who wanted to return to the job market after having families or someone in work who wanted to retrain for a different career.

Acceptance of the amendment would mean that those who receive public support for undertaking qualifying courses, but only such courses, would get a double amount of help. The clause simply aims to ensure that everyone who embarks on a course for a national vocational qualification can get some help. We shall look carefully at the schemes of public financial support to be included in the Treasury regulations, by virtue of which relief would not be available. When we frame those regulations, I shall take careful account of views that have been expressed. Essentially, the matter can be dealt with in the context of the regulations to be issued on the clause, and I invite the hon. Gentleman to withdraw his amendment.

Mr. Nicholas Brown

I am grateful to the Minister. It is not our intention, through the amendment, to give people twice the help that they would otherwise receive, and I do not think that the amendment is framed in that way. It is our intention to allow someone who has had some help from elsewhere to claim tax relief on the remainder of his expenditure. I am grateful to the Financial Secretary for taking that issue on board and agreeing to look at it when the regulations are being drafted. That was a helpful assurance and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Nicholas Brown

I beg to move amendment No. 15, in page 22, line 12, after 'entitled', insert '; provided however that no tax shall be required to be so accounted for to the Board by the person to whom the payment was made if that person can show (i) that he took all reasonable steps to satisfy himself that the individual in question was entitled to relief under this section and (ii) that at the date the payment in question was made he had complied with any obligation imposed on him by any regulations made under section (32) below'. This is an exploratory amendment designed to discover whether the Financial Secretary, when he drafts the regulations, will safeguard the position of colleges that have acted in good faith, but which could find themselves laid open to a charge if they have been duped by a student who has not acted in good faith.

It seems unfair that an obligation to the Exchequer could fall on a college in those circumstances and the amendment will cover that point. The amendment sets out some conditions. It is not sufficient for a college to say that it has acted in good faith; it must be able to demonstrate it. If the Financial Secretary says that the point will be dealt with in the regulations, I shall be satisfied.

7.30 pm

Mr. Maude

I assure the hon. Gentleman that the concern expressed in the amendment, though understandable, is unnecessary. The regulations seek to protect training providers from having to repay any relief at source granted to a person who did not qualify for relief if the training provider took reasonable steps to satisfy himself that the relief was legitimate.

The regulations will be aimed primarily at trainees who, after beginning a course, have their fees repaid to them. Equally, it is the case that the subsidy should be repaid to the Exchequer, and I do not think that the hon. Gentleman would quarrel with that.

There would be no requirement on the person granting the relief at source to undertake any arduous checking of claimants, and we would not expect those providing training to compensate the Revenue for false claims made by trainees. I hope that that covers the hon. Gentleman's point.

Mr. Nicholas Brown

The Financial Secretary's remarks entirely satisfy me. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Nicholas Brown

I beg to move amendment No. 17 in page 22, leave out lines 36 and 37.

It is nice to learn from the Financial Secretary that the regulations are a little further advanced than my hon. Friend the Member for Bradford, South (Mr. Cryer) might have thought when he contributed to an earlier debate.

Amendment No. 17 explores two slightly different matters. The first is the failure of the Government's scheme to offer tax relief at the highest levels offered by the two vocational training councils. I have received a letter—I expect that other hon. Members will have received similar correspondence—from the Chartered Association of Certified Accountants asking why clause 31 does not make relief available for all levels of training, including that leading to professional qualifications. The association is not the only group to have raised this point. The Financial Secretary mentioned it earlier and I refer to it in a neutral way because it needs to be clarified. The amendment is a probing one to seek such clarification.

My second point is one of detail and I am sure that the Financial Secretary will be able to satisfy me on it. It has been suggested to me that tax relief at the lower level might be clawed back or denied if a student went on to the higher levels of vocational training which do not attract tax relief. I suspect that it is not the Government's intention to claw back or deny such relief, but I hope that the Financial Secretary will set the matter straight.

Dr. Godman

Earlier the Financial Secretary gave some details of the English qualifications that the clause covered. Will he assure me that he will seek to determine the likely effect on the equivalent Scottish qualifications by approaching his ministerial colleagues at the Scottish Office in the usual way? I do not want to see Scottish students or trainees disadvantaged in any way vis-à-vis their English counterparts. I should be grateful if the Financial Secretary, perhaps at a later date, could give me that assurance.

Mr. Tim Smith

The hon. Member for Newcastle upon Tyne, East (Mr. Brown) asked about professional qualifications and I too received a letter from the Chartered Association of Certified Accountants. I do not know what the situation is now, but when I qualified as an accountant many employers paid for training. However, my employer did not, and I had to pay for my training out of my taxed income. I am not asking for retrospective legislation to cover my case 21 years ago, but there is a case for extending tax relief to students who have to pay fees out of their taxed income.

Mr. Maude

I am grateful for the way that the points have been raised. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) is right to say that the matter has aroused some interest and I am glad to have the opportunity to deal with it.

The hon. Member for Greenock and Port Glasgow (Dr. Godman) was concerned that the Scottish qualifications included in the scheme should be on all-fours with the English and Welsh ones. I cannot imagine that that will not be the case, but I will ensure that my right hon. Friend the Secretary of State for Scotland is aware of the hon. Gentleman's point. If necessary, we shall clarify the matter.

The hon. Member for Newcastle upon Tyne, East asked about the possible clawback if a trainee moved from level one to level five. I can assure him that that would not happen.

Let me explain why we have chosen to include simply qualifications from level one to level four. National vocational qualifications and Scottish vocation qualifications will cover a wide range of vocational skills across most industrial groups, based on employer-defined standards of competence and performance. That will mean that the schemes are flexible and that the qualifications will be properly targeted. That will guarantee the success of the qualifications.

The structure of both schemes is to have qualifications that extend to jobs at all levels within particular industries. Level one covers most manual work and similar skills for each kind of job and level four broadly applies to supervisory middle management and technical skills. Levels two and three will obviously fill the gap between the two in a progressive way. The range of vocational training that the relief will support is quite wide. We hope that by April 1992 about 70 per cent. of the relevant qualifications will be in place and that the accreditation task up to level four will be substantially complete by the end of 1992.

Level five will in due course cover the very highest levels of vocational training. They will extend to senior managerial skills and to professional and degree level qualifications. We carefully considered including the new level five within training relief, but decided not to do so for a number of reasons.

First, there is little criticism of our performance in vocational training at that level. British professional skills are internationally recognised as being of the highest quality. Secondly—and I say this with some diffidence in view of the personal experiences of my hon. Friend the Member for Beaconsfield (Mr. Smith)—those who embark on training at that level can readily reap the personal financial reward for their investment in human capital. Therefore, they have less of a claim on the support of taxpayers. However, that may not apply to those who abandon their professional calling to enter the more doubtfully rewarding profession of politics.

The third, purely practical, reason is that there are no level five qualifications currently in existence. The National Council for Vocational Qualifications and Scotvec are still discussing with professional and other bodies how best such qualifications might best be brought into the scheme. By restricting relief to levels one to four, we are concentrating resources on practical and supervisory skills, which is where the main criticisms of our current performance are directed, and where help and encouragement are needed.

Mr. Nicholas Brown

I am grateful for the Financial Secretary's assurance that tax relief given at the lower level of training will endure if a student advances to a higher level, and for the hon. Gentleman's reply to my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman).

On the more vexed question of exclusions at the highest level, in the light of the Financial Secretary's explanation, I believe that the Bill should proceed as drafted. If it is found that the hon. Gentleman's explanation has not stood the test of time, we can return to the issue in a future Finance Bill. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31 ordered to stand part of the Bill.