§ 3 p.m.
The Earl of GOWRIE
My Lords, with the eyes and ears of the nation upon one today, I beg to move that the draft Industrial Training Levy (Engineering) Order 1979 be approved. This is the second time that an Engineering Industry Training Levy Order has come before the 544 House for approval. Last year the order was introduced in this House by the noble Lord, Lord Wallace of Coslany, and was supported by my noble friend Lord Long, and I am sure we can look for the same bipartisan approach today. I also hope that, as last year, the debate will cover training in the engineering industry generally because the engineering industry is one of the key wealth-creating sectors of the economy. Its training arrangements are therefore of great importance in equipping the industry for future needs and growth.
I should perhaps explain that under the Industrial Training Act 1964, as amended by the 1973 Employment and Training Act, industrial training boards raise and collect levy from establishments within their scope for the purpose of encouraging adequate training. There is exemption for small firms and for other firms who meet the board's training criteria. The boards consist of representatives of employers and unions in the industries concerned, and members representing educational interests.
This particular levy order is before the House because one part of it involves a levy of 2 per cent. on large employers in the mechanical and electrical engineering construction sector. Under the Act an order giving an industrial training board power to raise a levy in excess of 1 per cent. of emoluments must be approved by both Houses. This order is identical to last year's. For the main part of the engineering industry the proposed levy is 1 per cent. of a firm's aggregate wage bill with small firms with less than 60 employees excluded. For the foundry sector the proposed levy is also 1 per cent. with establishments with payrolls of less than £25,000 excluded.
For the engineering construction sector the proposed levy is 2 per cent. on large companies and, unlike the other sectors, there is no provision for exemption except in the case of head office staff. The 2 per cent. levy will apply to all site employees of companies wholly or mainly engaged in engineering construction activities and to other engineering companies in respect of workers wholly or mainly engaged on site on engineering construction activities. That is simply there to stop the levy being avoidable. It will not apply in respect of workers not 545 employed on sites, such as those working in companies' head offices for instance; and for them the levy will be 1 per cent. It will be assessed in stages—no levy on the first £50,000 of an employer's payroll for site employees, 1 per cent. on the next £450,000 and 2 per cent. on the payroll above £500,000. This means that only large employers will pay the 2 per cent. and then on only part of their payroll. The board estimate that the average levy on the total payroll of a large employer will be about 1½ per cent.
These proposals follow a period of extensive consideration and consultation. They have been unanimously approved by the Engineering Industry Training Board and by the Manpower Services Commission. The Oil and Chemical Plant Constructors Association and the Engineering Employers Federation, which represent the majority of employers in the engineering construction sector were consulted by the board about the 2 per cent. levy and showed overwhelming support, with only eight of the 155 firms consulted opposed.
The reason for the 2 per cent. levy is that in the engineering construction sector training is difficult to organise because of the peripatetic and fluctuating nature of the workforce, and because the place of work is of course not normally a permanent one. This has led in the past to a rather poor training effort over the years in this sector—indeed until recently there was no formal apprentice training—which the Engineering Industry Training Board is now seeking to improve through the funds raised by the levy that we are discussing. For example, in the coming year grants to the sector to be made available from the levy funds will be used to finance first year craft and technician training, the training of operatives in important skills such as welding, instructor and training staff training, safety training, and fellowships to improve the standard of site management in the industry. The board's efforts will be assisted by the provision of some £365,000 from the Manpower Services Commission to support training in the engineering construction sector.
The whole House will support the efforts being made by the board to improve training in this key sector whose work impinges on so many parts of our economy; for example, I am thinking of 546 the construction and assembly of power stations, gas works, steel mills and oil refineries—all of which rely on the job being done to high standards, and all of which are crucial to our future prosperity. Moreover, the engineering construction sector is a high-risk industry in which it is essential that there is proper training to maintain standards of safety. It is also a highly skilled industry with an unusually large proportion of skilled workers where the industry should make a significant contribution to its own skill needs. As I have said, this is widely accepted by the industry.
As this levy order covers the mainstream engineering and foundry sectors of the industry, as well as the engineering construction sector, I should like to conclude with some more general remarks about engineering training. If we are to achieve faster growth on which rising living standards and more jobs depend we must improve our industrial performance and competitive position, not least in key wealth-creating industries such as engineering. This is a central objective of the Government's policies and industrial training closely related to current and prospective needs for skills can play an important part in that process.
That is why we will continue to give substantial help to the EITB in its efforts to improve training at craft, technician and professional levels and to secure the entry to the industry of enough young people of the right calibre. The board is pursuing a number of approaches to achieve these objectives. It is operating the Engineering Careers Information Service to publicise to young people the careers available in the engineering industry. It is operating a wide range of advisory services like the export and consultancy service to help firms with the development of their export business. It is providing financial support for group training schemes which bring together small firms to share training facilities. It is operating a number of scholarship and grant schemes, including scholarships to encourage girls to train for posts in industry. These are, in the nature of things, mainly technician posts at present; but as the Minister responsible for female employment questions, I am extremely anxious to encourage the situation where more girls can take up formal engineering training. We attach particular importance 547 to this because it will play a major part in the Manpower Services Commission's programme for training additional computer software personnel and in meeting the needs of the new micro-electronics-based technologies. These will in part be the subject of our debate in this House next Wednesday. We also attach particular importance to the board's work to improve apprentice training in the engineering industry.
It is playing an important part under the Manpower Services Commission's new Training for Skills programme which is designed to improve the assessment of the needs of industry for skilled workers and the quality and quantity of industrial training. Over the past year the board has on its own initiative issued the important discussion document, Review of Craft Apprenticeships in Engineering. If your Lordships wish, I shall see a copy is made available in the Library. The document proposes some fundamental changes in the apprenticeship system to make it more flexible in responding to the needs of the engineering industry for skilled workers and in preparing young people for work in an industry which will be changing very speedily in the future with the pace of technological change. I understand that some of the board's detailed proposals have proved to be controversial. They will obviously need further discussion, but I am sure that the objectives and principles of the proposals are rights: for instance, to move away from timeserving to achievement of standards at a speed suited to the individual's ability and aptitude; greater flexibility on age of entry to apprenticeships and better links between school and work. It seems to me that moves in these directions will be essential both to meet the challenges of the future for the industry, and also to provide more flexible training arrangements for young people and other workers in the industry. I therefore welcome the initiative the board has taken and hope progress will be made in consultation with all concerned in the industry and educational world. In commending this order to the House I am also glad to have the opportunity to pay tribute to the work of the members of the Engineering Industry Training Board, not least to its chairman, the noble Lord, Lord Scanlon, who I do not think is in his place, and to 548 all its staff and to be able to express the importance which we in the Government attach to the work of the board. I beg to move.
Moved, That the draft order laid before the House on 28th March, be approved.—(The Earl of Gowrie.)
§ 3.10 p.m.
Lord WALLACE of COSLANY
My Lords, may I first thank the noble Earl for his very clear and useful explanation of this order. On this side, we welcome the order which virtually repeats the provisions of the order which I had the duty of placing before the House last year. The noble Earl also went on to give us very important views on the training for the new technical skills. I welcome these remarks and would say that we also welcome the continued co-operation of managements and trade unions in this field: it is vital to Britain's future of training for skills.
A word of praise, I feel, is also due to the Manpower Services Commission for the work it has done and is doing in encouraging and creating training opportunities. Long may that work continue. The shortage of skilled workers continues to be a major problem in Britain. One company, Fords, has consistently to advertise on television for skilled workers, offering attractive side benefits. This may meet their problem, but in turn it creates problems for other companies who lose skilled tradesmen as a result.
The Manpower Services Commission's Training for Skills, a programme for action, and its training opportunity scheme, had the full support of the Labour Government. Can the noble Earl give a categorical assurance that the present Government will give support without restriction to these programmes? Managements and unions can and do play their part, but they must receive full Government backing to succeed in this very vital field.
Industrial training, whether in engineering or other industries, cannot be wholly effective unless it is adequately backed by the educational system in schools, colleges of further education and evening institutes. Day release is backed by many far-sighted employers, including 549 nationalised industries. Especially in view of the debate taking place in another Chamber, can the House be assured of expansion and not cuts in these fields, which themselves are vital to industrial training?
In dealing with the limited but welcome provisions of this order, we are touching on a problem of which the noble Earl gave a fair indication and the solution of which is vital to the industrial future of Britain and the prosperity of its people. I therefore trust that the House will look forward to and take full part in a full-scale debate in the not-too-distant future on the need to expand our skilled workforce and to meet the challenge of new technologies. My Lords, we welcome this order.
§ Lord ROCHESTER
My Lords, we on these Benches would like to join in thanking the noble Earl, Lord Gowrie, for the clear way in which he has explained to us the terms of this order. We have noted that it has been the subject of wide consultation within the Engineering Industry Training Board, on which sit representatives of both engineering employers and engineering unions. We have noted also that it has received the approval of the Manpower Services Commission, and I should like to endorse the praise which has already been given to the chairman and members of the Engineering Industry Training Board in this connection, and also to the Manpower Services Commission.
We are especially glad to approve the raising of a training levy in this particular industry because, as has already been indicated, it will be used largely for the training of people for skilled occupations. We hope that it will eventually prove of considerable help in meeting that shortage of skilled engineering workers, which is acting as a continuing constraint on the growth of output in manufacturing industry generally.
§ Lord LEE of NEWTON
My Lords, I was pleased that the noble Earl paid a tribute to my noble friend Lord Scanlon, who has done a first-class job of work in this respect. We have come a long way from the days not so long ago when the whole training in engineering was done by a few big firms and the rest pinched the products. The scheme we are now dis- 550 cussing has had a big influence in widening the scope of training for younger people. Indeed, as my noble friend Lord Wallace said, I have known a time, no matter how depressed the economy is, when there is not an overall shortage of skilled engineers. I see that the noble Lord, Lord Gridley, is present: he will remember, as I do, that even when Northumberland and those areas were very depressed there was an overall shortage of skilled people in the shipyards. Indeed, if we could have obtained the requisite number of skilled people, they themselves would have resulted in the employment of unskilled people. This is a problem which radiates very widely in this respect.
I should like to ask the noble Earl whether the Government are considering why it is that, despite the fact that we are doing a reasonably good job now in the training of engineering students, we continue to have an overall shortage. Is it not the case that, having trained them, a huge number find no attraction in remaining within the industry? I should have thought it would be appropriate that, when Governments are analysing why we are not getting the maximum benefit from our training, they should bend their energies to discovering the causes of so many of these highly-trained young men then going into all sorts of other jobs which are certainly not as advantageous or as vital to the nation as engineering. I therefore commend the idea to the noble Earl that he should take the study a little further. Let us try to find why it is not attractive enough to keep the chaps, once we have trained them, doing the kind of thing for which they are so well qualified.
§ Baroness GAITSKELL
My Lords, may I just add one sentence to this? There is one man, the noble Lord, Lord Baker, who was one of the first distinguished men to draw attention to the great shortage of engineers in this country and all that we have suffered from this shortage.
§ 3.18 p.m.
The Earl of GOWRIE
My Lords, I am grateful for the reception which the order has received. The noble Lord, Lord Wallace of Coslany, asked for categorical assurances. I do not think the Chancellor has yet got up in another place and so I am certainly in no position 551 to give categorical assurances about any Budgetary questions whatsoever. I think, however, that the tone of my remarks, which were very carefully considered in the light of the situation, are such as to demonstrate the concern which we feel about the importance of having highly-skilled workers in the key wealth-generating sectors. I would say, however, that it is in my opinion a myth that worthy programmes can only progress by the constant injection of fresh cash. A shortage of cash is not, in this particular area, the main problem.
I would welcome the remarks made by the noble Lord, Lord Rochester, from the Liberal Benches and I have a word to say to the noble Lord, Lord Lee of Newton. He asked why it was that, despite a programme of intensive training of this kind, people leave. I really wish the noble Lord, Lord Lee, could come and make this remark at Conservative Party meetings up and down the country, because this is exactly our theme. It is increasingly not worth it in the present economy for people to remain in skilled areas of employment. They often do better in unskilled areas of employment. It is my earnest hope that the Chancellor is about to do something about that in another place. I would end by commending the order again to your Lordships and thanking the House for the general reception it has received.
On Question, Motion agreed to.