INDUSTRIAL TRAINING LEVY (ENGINEERING) ORDER 1978 (Hansard, 4 April 1978)

The noble Lord said
My Lords, we are a somewhat dwindling band to deal with a very important order. This is the first time that an industrial training levy order has been brought before Parliament for approval. It may help your Lordships if I explain in some detail why this is necessary.
The levy is the main instrument by which industrial training boards can encourage companies in their industries to raise the quantity and quality of training. Under the Industrial Training Act 1964, as amended by the Employment and Training Act 1973, an industrial training board can, with the approval of the Manpower Services Commission and the Secretary of State for Employment, raise a levy on companies in its industry up to 1 per cent. of emoluments—that is, of a company's wage bill. Parliamentary approval must be sought, however, for any proposal to raise a levy of above 1 per cent.
The proposal before the House is that for the major part of the engineering industry the levy on employers shou1d remain at 1 per cent., as it has been in previous years. The engineering industry training board is proposing however to raise a levy of 2 per cent. on large employers in the mechanical and electrical engineering construction section. This part of the industry includes those employers involved in building power stations, petroleum refineries, chemical plants and the structures which are necessary to exploit the North Sea. The order before the House sets out in detail the conditions which may have to be met before an employer is liable to the 2 per cent. levy: first, he must be engaged wholly or mainly in engineering construction activities; second, 108 the 2 per cent. levy will only be raised in respect of site employees; that is not those working in a company's head office but those actually working on construction sites; third, the 2 per cent. levy will apply only to large employers whose payroll for site employees exceeds £500,000. Where the above conditions are met an employer will be assessed for levy as follows: no levy on the first £50,000 of his payroll for site employees; 1 per cent. on the next £450,000; and 2 per cent. on the payroll above £500,000. The board estimates that in effect this will mean for a large employer an average levy on the total payroll of about 1.5 per cent.
Why is a higher rate of levy necessary for the engineering construction sector'? Basically the answer is that in the past there has not been sufficient training by employers in this sector, partly because training in the industry is difficult to organise due to the great mobility between sites. The engineering industry training board hopes to be able to use the 2 per cent. levy to raise the standard and level of training in the industry. It will be giving particular attention to maintaining and, if possible, improving the level of apprentice intake into the industry. And the Government's further year of support for special training measures to maintain apprentice intake at a time of recession should help the board in its task. Other priorities for the board in 1978–79 will be management and supervisory training, the training of professional engineers, and training in other important skills like welding, non-destructive testing, site draughtsmen, and instructional skills. Safety is another priority for this industry and I understand that all the training done to the board's standard must include a substantial element of training for safety.
These are all important areas for the future of the engineering construction industry and of those people who work in it. This sector contains a very high proportion of skilled workers: 75 per cent. of the workers on engineering construction sites are skilled. This makes it doubly important for the reputation of the industry abroad as well as at home that they are trained to a high standard, so that their job is done as well and effectively as is possible. Training is important also to ensure that the job is done as safely as possible. Work on 109 engineering construction sites is high risk work, but proper training can help to reduce the risk of accidents to site workers. I am therefore particularly pleased to see the importance which the engineering industry training board attaches to safety training.
My Lords, we must also look ahead for the future supply of trained people in the industry. The Engineering Industry Training Board will, as I have said, be giving priority to first and second year apprentice training in the industry. The Government will also be making funds available in 1978/1979 to encourage companies to maintain apprentice intake at a time of recession. In the last three years, this aid has amounted to about £135 million over industry as a whole; and in 1978/1979 a further £41 million is being made available. I understand also that discussions have been held between the Manpower Services Commission and the Board to see what other support the Commission can give to key training activities in 1978/1979. Areas to receive support are initial off-the-job training for apprentices, adult operator training and training of professional engineers, draughtsmen, managers and supervisors. The Engineering Industry Training Board is not starting from scratch in this sector. The Board and the Manpower Services Commission have already devoted a good deal of attention and resources to the engineering construction industry. The Board has set up a separate committee for the engineering construction sector representing both sides of the industry, and has made available to it £1 million on a loan basis to help it to get things moving. The Manpower Services Commission has also provided £3½ million over three years to the Board to help them begin the job of improving training in this difficult part of their industry. When the Commission provided the money, however, it made it clear that a gap was being filled and that in due course the firms in the industry would be expected to shoulder the main part of training to meet the industry's needs. This is why the Board has now come forward with these levy proposals.
In moving this order, I should like finally to draw attention to the support which the 2 per cent. levy has received from both sides of the industry—from the Engineering Industry Training Board 110 itself, on which unions and employers are represented; from the AUEW, the major union in the industry; and from the Engineering Employers' Federation and the Oil and Chemical Plant Construction Association, both of which have provided evidence of substantial majority support among their members. I very much welcome this support from employers and unions. It is important that both sides of the industry should co-operate to tackle the problems of training in the engineering construction sector. I believe that the support which this proposal has received marks a recognition that training is essential to the long-term good of the industry and of those who work in it. I beg to move.
Moved, That the draft Industrial Training Levy (Engineering) Order 1978, laid before the House on 22nd February, be approved.—(Lord Wallace of Coslany.)

Viscount LONG
My Lords, now that the captains and the generals have departed from the arguments over devolution, I should like to thank the noble Lord for the information which he has given us over this particular industrial training levy order this evening. One thing is quite certain: we are very happy to see, from these Benches, that the employers and the unions are in agreement over this vitally important training scheme levy. There can be no better way of helping those in the engineering construction industry. Many of us on these Benches know the difficulties entailed in the long training that some of these people have to bear and also the difficulties of financing themselves in one way or another.
The noble Lord mentioned the safety rules that must apply throughout the engineering construction industry, and certainly these are of vital importance because of the new technological equipment that is used. Anything that can be done to train these people will be of great importance for the future of the industry.
I should like to ask the noble Lord one question. If he can answer it now I shall be grateful, but if he cannot answer it tonight perhaps he will be able to do so at a later date. My question concerns the figure for those using this scheme—the number of people wishing to take up apprenticeships under this training levy 111 scheme. I think it would be valuable if we could get some idea of how many people are coming forward. It would be important for the industry as a whole to be able to know how many people are interested and wish to learn more by means of this scheme. We on this side of the House are deeply grateful for this order and for the idea behind it. We can only hope that in future more people, whether male or female, will be able to make use of the scheme.

§ Lord ROCHESTER
My Lords, I, too, on behalf of my noble friends, should like to say that we are glad to be part of this cosy little group, and we wish to thank the noble Lord, Lord Wallace of Coslany, for the clear way in which he has explained the terms of the order. We have little to say upon it but, like the noble Viscount, we should like to say how glad we are that the proposals it contains have clearly been the subject of much consultation within the Engineering Industry Training Board and among employers' and trade union representatives, and that the proposals themselves have been approved by the Manpower Services Commission before coming to this House.
We understand why it is that, in the case of engineering construction activities, the levy should be of a relatively high amount, and we endorse the view that is being taken that this should be a help both as regards safety training and, more particularly, as regards training more people for skilled occupations. We hope that it will do something to meet that shortage, particularly of skilled engineering workers, that was identified only last year by, I think, the National Economic Development Office as being a serious potential constraint on the further growth of output.
I, too, have only one question to put to the noble Lord, Lord Wallace; it relates to the exemption of small employers from payment of the levy, as defined in paragraph 5 of this order. Small firms are defined, generally speaking, as being firms whose employees do not exceed 60 in number. In winding-up the debate—and this is a point of which I have been able to give the noble Lord, Lord Wallace, notice—on the Second Reading of the Employment Subsidies Bill in another 112 place recently, the Under-Secretary of State recognised that the exemption of small firms from payment of levy, on account of the difficulties in dealing with them through industrial training boards, presented special problems regarding the provision of adequate training facilities in those small firms. As the noble Lord will recall, he promised to examine that question very carefully. I realise that this is a general point which I am raising, and that it is not confined to the engineering industry. But I wonder whether the noble Lord has anything to say as to any progress that may have been made in looking into that question. Subject only to that, we on these Benches are happy to approve the order.

Lord WALLACE of COSLANY
My Lords, I should like to thank both the noble Viscount, Lord Long, and the noble Lord, Lord Rochester, for their very kind remarks and for the welcome which they have given to this order. I should also like to thank them both for giving me advance notice of their questions. In the case of the noble Viscount, it was somewhat short notice, but I am glad to tell him that we have managed to get the information for which he asked. He asked for a general idea of the number of people using the scheme. The number of apprentices who started training in the engineering industry in 1975–76 was 25,200; in 1976–77 it was 24,500, and in 1977–78 it was approximately 25,000. Although the last figure is, of course, an estimate, it will give him some idea of the number of people using the scheme.
The noble Lord, Lord Rochester, who very kindly gave me notice of his question, which is not strictly related to the levy order, raised the very important point of encouraging training in small firms. I shall not be too long in replying, but there are special problems and I feel that the matter deserves a fairly lengthy answer, although it is not too encouraging. There are special problems in encouraging training in small firms. Most of the industrial training boards have arrangements whereby small firms below a certain size are excluded from paying levy. They take the view that levy exemption systems do not usually suit small firms, which have very individual and intermittent training 113 needs, and that it would not be cost-effective for a number of board staff to be employed on the administration of the levy for a very large number of small firms.
This does not mean that the boards ignore small firms. Most consider that the best help they can give them is through their advisory services, through grants for key training activities and through the organisation of courses of management training. For example, the engineering industry training board makes available to small firms grants for off-the-job craft training, using partly its own funds and also funds from the Manpower Services Commission. It also organises management training courses for managers in small companies, and projects for individual firms where a training adviser goes into the company to advise on management training and development.
The present intention of the Manpower Services Commission is to review the working of the levy arrangements in 1979, when it has gathered sufficient experience of how the arrangements introduced by the Employment and Training Act 1973 are working. One of the matters that it will no doubt want to consider is the effect of the levy system on training in small firms. In the meantime, discussions are taking place between the Manpower Services Commission and individual training boards on the implementation of the Manpower Services Commission's "Training for Skills" programme. These discussions will be concentrating on the future needs and provision of skill training in industry, and this will inevitably cover the present arrangements in both large and small firms. I readily recognise, and am not surprised to find, that this will be a continuing subject for discussion in the not too distant future.
In conclusion, I should like to pay tribute to Hugh Scanlon for the work that he has put in in leading the engineering industry training board. His work and experience have been extremely valuable and have been appreciated greatly by employers, in particular. Let us hope that his services may be available for some time to come. But I do not think that it would be out of place to pay tribute here, as indeed both Government and Opposition did in another place.

§ Lord STRABOLGI
My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.
Moved accordingly and, on Question, Motion agreed to.
[Sitting suspended from 7.46 p.m. until 8.30 p.m.]