Industry

HL Deb 10 December 1980 vol 415 cc728-40

2.58 p.m.

Lord Scanlon rose to call attention to the importance of the country's industrial base and the necessity for an adequate training programme to enable industry to meet the nation's needs in the future; and to move for Papers.

The noble Lord said: My Lords, I beg leave to move the Motion for Papers standing in my name. Successive Governments have emphatically stated that all their policies are directed to the main aim of establishing viable, economic, wealth-producing industries, recognising as they all do that, without such a base, housing, schools, roads, hospitals, rising living standards are just impossible. Of course Governments fundamentally differ on how to bring about this state of affairs, but there is certainly no difference in the end itself.

The last Government sought to revitalise our base by the Social Contract, by their industrial strategy, setting up as they did 40 sector working groups to analyse and, hopefully, to resolve the bottlenecks and problems in industry; and, if I may say so, thank goodness that this Government have not made it impossible for those committees to continue to work. This Government seek to do it by curtailing public expenditure and, they hope, consequently reducing certain forms of taxation and hoping that that will provide the necessary investment in plant and in people.

If we are completely and frankly honest with ourselves, I think we must say that no Government in modern times have succeeded in establishing that viable base. Indeed, it would be true to say that there is today no industrial growth whatsoever, no investment in either plant or people which is capable of creating those circumstances; and all those things are so necessary for our very survival. Even if one disagrees violently with the means to bring these things about, it makes it a little more palatable if the means are pursued with vigour and determination and have an end result such as I have tried to describe.

The situation today is too serious for ideological point scoring. That is why we do not apologise in any way for bringing the issues of both our industrial base and training before your Lordships' House. All industries are facing increased competition and rapid technological change. Some have declined as a result, perhaps, unfortunately, beyond the point where they can be revived. But some sectors of industry must survive, even in this climate, or we shall be left with no wealth-producing base whatsoever. I make no apologies for saying—indeed, I now declare an interest as chairman of the Engineering Training Board—that vital among those key sectors that must survive is the engineering industry, however you describe it, for not only does it have a role to play in producing that wealth, but so many other industries are dependent upon its products, particularly bearing in mind the increasing speed of engineering technology and its development. And I say that this applies as much to offices and banks and insurance as it does to factories themselves.

Your Lordships' House recently debated, and if I have my facts correct generally supported with some qualification, the Finniston Report, emphasising as it did the need to regenerate our manufacturing base and to improve the competitiveness of British industry. It is a matter of regret that on this vital issue of our professional engineers, and production engineers, firms of all sizes and all types, neither the Government, nor indeed the institutions, supported the Finniston Committee on its main recommendation, namely, the establishment of a statutory engineering authority. Nevertheless, it is the duty—I emphasise the duty—of Government to ensure that the supply of people with the skills and knowledge we need is secured. It just cannot be left to chance, because any ground lost now will never be regained.

The state's responsibility to secure these vital needs was first acknowledged in the 1962 White Paper, and if your Lordships hear a tinge of regret in my voice it is because a Conservative Government introduced that White Paper, and not one of my own calling. Nevertheless, this led to the introduction of the 1964 Industrial Training Act. That Act was widely supported by all parties and welcomed as possibly one of the most progressive pieces of legislation that has been placed on the statute hook. It marked the point at which industry began to take training seriously. Before it, with notable exceptions, training received only amateurish and haphazard attention.

The Act led to widespread improvement in training, to better standards, and to the development of a professional training expertise throughout industry. But, perhaps more important than anything, it brought to an end once and for all the policy of piracy operated by certain firms who did no training on those firms that had the conscience to undertake the requisite amount of training. The surest way to ensure a return to such a chaotic state of affairs as existed before 1964 is to abolish the existing training arrangements that we have.

When he was Secretary of State for Employment in 1972, the noble Lord, Lord Carr, undertook a review of training arrangements, and he stated at the time: Boards have massive achievements to their credit in changing the attitude of much of industry to training". Some of us thought that such a change had permanently taken place and that the training position for the future was secured. Consultations that ensued, however, revealed that such an assumption was certainly not valid. The 1973 Employment and Training Act which followed modified the original 1964 Act. It transferred the cost of the operation of the boards from industry to public funds. It imposed limits on the boards' powers to raise the training levy. It introduced the important idea that where firms through their own endeavours, through their own initiatives, introduced training to the required standards, they would be exempt from the levy in its totality. In many ways, these were steps forward, and though in some respects the 1973 Act weakened the 1964 Act, under that Act it is still possible today to ensure that industrial investment in the skills and knowledge of people continues.

Exemption from the training levy requires firms to plan their training for the future. The evidence this year is that, in spite of a very brave effort on the part of firms to maintain their recruiting and training programmes, the economic climate is such that there is an alarming drop in the intake of craftsmen and technicians, an alarming drop which, quite frankly, is eating our seed corn if we allow it to continue. It is so serious that, whereas a required intake of 23,000 was estimated, a figure of very nearly 17,000 only was introduced, a shortfall of 6,000. Were it not for the efforts, as a result of money granted through the MSC, by which we had been able to train an additional 2,000, we would be that figure of 6,000 short rather than just—I say just—the 4,000 that we are presently short.

Somehow, some way—and I would emphasise this to noble Lords on the Government Benches—the gulf between what industry can afford to train, based upon its order books, and what it needs to train if we are going to meet the economic upturn as and when it comes, must be bridged from public funds; and it must start now, for it takes four years for these people to come on stream. If the upturn in the economy has not then taken place, let us forget all about being an industrial nation and settle for becoming a banana republic. That is the stark alternative which faces your Lordships' House, and I hope that I am not saying that in exaggerated terms.

I do not want now to go into any detail about the review of the 1973 Act which this Government asked the MSC to undertake. It is sufficient to say to your Lordships that, in the main, that review body, comprised as it was of trade unionists, of representatives of the CBI and of others interested, came down in favour of the existing arrangements. It is true that it made certain qualifications and I wish to refer to those later. But, following that review and following its publication, the Secretary of State for Employment made a statement in the other place which quite frankly causes a little concern. He made it clear that the Government intend to consider the position in each section of industry and to make decisions by next summer. There have been nearly 18 months of investigation by the review body. It has received evidence from all quarters and it has made its recommendations. Yet, today all the training facilities are in such a state of flux that they will not know what their situation is until July next year.

That is bad enough. But the Government have also made it clear that in general, with the exception of certain key sectors, they will rely upon voluntarism in order to achieve training standards. The main drawback of voluntarism is that inevitably there are too few volunteers. History has proved that voluntarism does not work, and moreover, it has worked nowhere in Western Europe. There have been suggestions in the past that somehow, some way, we should go commercial and sell our expertise as regards training boards to industry. I wonder what companies would think if and when—and I hope it will be never—such a suggestion is made in the present economic climate? I must be more than frank and say that the recommendation to return the operating cost to industry is, in the present industrial climate, certainly not practical and, in my view, firms should not be asked—again in the present climate—to undertake that additional task. Certainly I hope that any words that are said in this debate—and certainly these words of mine—may fall on fertile ground and that this course will not be pursued. Of course, in itself, it is ideal. I think that industry may itself desire it. But to suggest that this should be returned by 1982 is putting a most optimistic and unrealistic construction on when the upturn of the economy is likely to take place.

I should also like to refer to the statement of the Secretary of State concerning the spending of £250 million on training services and the working towards the point at which every 16 or 17 year-old who is not in full-time education or employment will receive vocational training. That is an ideal and wonderful suggestion, and it would be churlish of anyone to pour cold water on that suggestion. But, in an atmosphere of all too scarce resources, would it be unfair to say that the Government should examine very, very closely untried and costly training schemes, launched at the expense, possibly, of well-established and modern arrangements developed in industry over the past 15 years? Such schemes may well temporarily reduce the unemployment figures, but I do not know whether they are, or will be, of any lasting benefit to the economic wellbeing of our country.

The chairman of the Manpower Services Commission, Sir Richard O'Brien, in a most excellent paper delivered to the National Economic Development Council made, among many points, the following, which I shall quote verbatim. He said: The process of change, particularly of technological change, is speeding up and manpower studies underline how far-reaching the effects will be. By 1985 for the first time in our history there are likely to be more white-collar jobs than manual jobs in Britain. Even if further rises in unemployment are assumed"— and one has to put in the caveat that that is not an unfair assumption— there will be rather more managers, people with professional skills such as engineers, and technologists and technicians at work in 1985. By way of contrast, there will be fewer skilled workers exercising traditional craft skills and there will be a very big drop indeed in the number of less skilled manual jobs". Sir Richard went on to say that there would be over 900,000 fewer unskilled and semi-skilled jobs available in 1985 compared with 1978. He said: The lessons are obvious. Economic recovery will be held up unless people train in the skills in high demand. Firms will have to be far readier to train and far more responsive to changes in the labour market than they have shown themselves to be so far". It is against that background that I ask your Lordships to consider the issue of the continuance of training boards and particularly training boards in the key sectors of our industry.

The resources available must be spread widely and some must be allocated to ensure that effective use is made of the vast training resources that already exist. I should like to say in that connection that it was the unanimous decision of the chairmen of all training boards that somehow, some way, we must cut out the time-exhausting bureaucratic channels through which one has to go before in some instances—particularly where one is dealing with finance—some of the most elementary decisions are held up to the delay and frustration of industry.

One recognises at the outset that where public money is involved the appropriate Secretary of State must be accountable to Parliament and must be able to report to it. But surely it must be possible, once cash limits and once budgets are agreed, to say to those training boards, "Get on with the job and at the end of your financial year we shall hold you accountable within the policy of Government, and if you do not fulfil that commitment we shall get rid of you and get in somebody who does." I believe that that is the way to deal with some of this bureaucratic nonsense which is surely strangling some of the most well-intentioned efforts of people dedicated to training work.

Mr. Chairman—I apologise to your Lordships, I cannot forget my presidential hat; I nearly said "fellow members "! My Lords, something must be said about adult training, for I know that this is the concern of many industrialists, many employers. Technology is developing at such a rate that skilled men on the one side are being declared redundant and need retraining in the new skills.

The media, all too often supported by people who have little knowledge, immediately raise the cry of the restrictive practices of the trade unions. Let me try, in the brief time left, to give some information to your Lordships. The Engineering Industry Training Board embarked upon a new scheme of craft training for new proposals. It said to industry at large, to trade unionists and to academics, "Why should it be that in training for craftsmanship we have a different arrangement from that in any other profession or calling? It does not matter how inadequate the training facilities, how inept the trainers, how unable the recipients of the training may be to assimilate the information; at the end of a given period of time we have no failures. We just say that they are craftsmen or craftspeople. Why should we not embark upon a scheme where status is achieved by the attainment of standards, as in any other calling? And the sooner a boy or girl achieves those standards the sooner will they be recognised in their particular status".

We held over 100 tripartite meetings throughout the length and breadth of Britain: industrialists, trade unionists, academics. I might be forgiven for referring to the last first, for they surround their arguments with philosophical arguments which are the most difficult to answer. I once thought that the best definition of an intellectual was "One educated above his intelligence", and it is not a bad description when one comes to think of some of the difficulties of arguing that education is for life, forgetting that working is the greatest part of any one person's life, if they are fortunate enough to be able to work.

We argued that given a degree of vocational training in schools, given a concentration on maths, we would be able to reduce the training period, or at least the off-the-job training period. Industrialists were equally sceptical. They said, "There is no substitute for experience". They did not like the idea of trusting sophisticated and costly machine tools to the operations of boys at what they considered may be the tender age of 19, forgetting that they have the vote and can be responsible in law for all their actions, and even called to die for their country at that age if necessary. The trade unions have an equally vested opposition in saying that the earlier we get to skilled status, the earlier will those people be on the dole. So from every quarter we met opposition. It is not going to stop us, for the attainment of standards as the means of attaining status is something that inevitably must come, and must inevitably lead to training at any age.

But there is one other point we cannot ignore. A given vacancy—to whom is it offered? The school-leaver, bright eyed and anxious to play a part? Or do you place him on the dole and retrain the man who has come out of work because, due to technology, his job is no longer there? That is a social question you must answer, and which Governments must answer. All I can say is that we at the training board are doing our best to overcome legitimate objections and are pursuing this matter. I must say that we are not prepared to say what our amended arrangements are. We published them before and got rebuffed. This time we are going to make certain they are accepted before we publish them. I think that is a wise course to adopt.

I apologise for keeping your Lordships so long. I am involved and have declared my interest, but I must finish as I began. Everything depends upon our ability to create wealth in the face of very severe international competition and rising technology. Left to themselves, too many companies will be tempted to neglect training, especially in a time of recession. We must therefore continue with these efforts, recognising that these are difficult times, recognising that Government resources are scarce indeed, but that if we neglect this need to train we shall neglect it at our economic peril. My Lords, I beg to move for Papers.

3.26 p.m.

The Earl of Gowrie

My Lords, I very much welcome this debate in the name of the noble Lord, Lord Scanlon, and would like to congratulate him most warmly on the way in which he opened it. Inevitably, deepening recession and unemployment rising from levels which are already unprecedentedly high make it difficult for all of us to catch a glimpse of some kindly light amid the encircling gloom. Inevitably again, whichever Government are in office during a recession must expect fierce criticism that their choice of policies are making an already bad situation worse—and I shall face up to any such criticisms and answer them. But the terms of the noble Lord's Motion, as well as the way in which he moved it, do direct us towards the positive and do so recognise that some of our difficulties stem from poor adaptation to change and inadequate preparation for future needs. The Government endorse that view, and I am most grateful to the noble Lord for giving us this opportunity to agree with him and to show our hand on training matters. I am also very much looking forward to the maiden speech of an ex senior colleague in a previous Conservative Government, the noble Lord, Lord Boardman, later this afternoon.

I want to devote my opening remarks to training, dealing with specific points put to me, including Finniston, when I come briefly to wind up. Before I come to training, let me say a few words about the present industrial recession: its devastating effects on levels of employment, on the wealth-creating basis of the country, and its threat to our social and political stability. Because, of course, the Government recognise what industry is going through and share all the anxieties that have been expressed.

An industrial crisis on this scale is not merely damaging politically, although of course it is damaging. It also makes it harder for Government to help ease the social stress occasioned by an industrial crisis (employment, loss of morale) and harder to help with the necessary structural changes and adaptations that can and should provide the positive challenge of recession. There is another side to the coin. Bad times can provide the spur to make one change outdated or restricted industrial habits, to overhaul things in the sheer interest of survival, and to adapt to new products and processes if only because the old ones have disappeared. But recession also makes it harder for Government to help because recession is horribly expensive: the Government lose in revenue taken in and lose on benefit and subsidies pumped out. The deficits of the major public trading industries, for example, the nationalised industries, are now taking about the equivalent of half the revenues of all the North Sea in each year. That denies needed resources to other industries. It also requires financing, given our other spending commitments.

Because of the difficulties of bringing fiscal policies swiftly enough into line such financing may also be inherently inflationary, as we can witness in the money supply figures. But it is on any count absurd to suggest (and I quite acquit the noble Lord, Lord Scanlon, of any such suggestion) that Governments would choose policies liable to deepen recession or, having made the wrong choice, would continue on such a damaging and expensive path—just to save face, so to speak—if they felt they had any real freedom of manoeuvre, or even if they were merely uncertain that alternative routes would not even lead to greater disasters.

There are two reasons why the present Government are not able to do more to ease industry through the present recess though they are already doing a great deal. One is the reason put pithily and well by the previous Prime Minister, Mr. Callaghan, when he said that you cannot spend your way out of recession any more. Indeed, there is some evidence that your spending prolongs the recession. The other reason, which answers the question why you cannot spend your way out of recession any more, lies in the nature of this present recession itself.

The speed and severity of the British industrial crisis is due to the fact that the so far irresistible force of our manufacturing decline—poor managerial decisions, restrictive labour practices, loss of markets, inflation—has met the so far immovable object of the 1970s energy crisis, or perhaps I should say the petro-dollar crisis, because dear energy costs are not the problem so much as the failure of Western economies to adapt to them. Japan and the other competitive capitalist economies in the Far East have adapted to dear energy successfully, so successfully that they are becoming a serious threat to Western manufacturing industry overall, let alone to our domestic industry, which is uncompetitive, even by Western standards. For reasons that I hope will become clear, I believe we shall change in time, and therefore I do not think this threat will materialise in full. But it is there; it is as positively there as the threat of invasion.

Then again, the inflationary and destabilising effects of the huge money surpluses of the oil producing nations create opportunities for success for an economy as sophisticated in financial services as ours. Of course they do, and we have the continued success of our invisible earnings to prove it. But they also make life extremely bleak for investment in manufacturing, even if other things were equal where manufacturing industry's competitiveness is concerned, and, as we know, they are not. If you add to all this the steadily rising material expectations of Western democracies and their electorates (our own not least) as well as a value or ethical system which insists on a large and rising network of social benefits (again, our own not least) you have the recipe for the competitive currency inflations which have bedevilled the Western democracy in the 'seventies.

Without a lively growth in overall world demand, political economies cannot continue to inflate, even if they wished to chance the other hazards and disruptions of currency instability. So what has happened now in the world is that we are all deflating—we are all monetarists now, if you like—and demand is running out of the Western economies like air out of a balloon. British industry, because we are a major trading economy, unprotected, like France or America, by a relative self-sufficiency, suffers especially, and that suffering, already bad, is compounded by the irony that our oil surplus strengthens our currency. That offers better security for the great tide of money which OPEC has unleashed upon the world, a factor aided by the high interest rates, which in my view are engendered less by doctrinaire monetarism than by the high social expectations of this economy and the need, therefore, of Governments to borrow. There is another side to this coin: that same currency strength keeps the cost of imports down. Some union leaders have rebuked the Government for not taking artificial steps, as it were, to force down the rate of exchange further. Even if we were able to do so, is there any deliverable guarantee that the increases in RPI would not immediately feed through into wage claims? And do employers and managers, equally anxious at the high level of sterling, realise how much more than by the exchange rate they lose competitiveness by granting wage claims unmatched by genuine productive increases or profit sharing?

When you contemplate this explosive mixture of internal and external forces, the wonder is not that there are 2 million unemployed but that we do not see twice that number. The wonder is not that British industry is such a terrible case, but that its case is not much worse. The truth is that belatedly, and with much pain, adaptations are being made. British industry is better managed and better manned than we often allow. The trade share is holding up. The price inflation is falling faster than the Government expected and we are confident that the currency inflation will show a similar fall. Wages are adapting fast as people are allowed once again to perceive reality and react to it. There is social stress but no evidence, I believe, of dangerous strain. There will be more agony than muddle perhaps, but we are going to get through.

The real question of this debate, then, is this: having come through, are we going to learn from this experience and have a brighter future, or shall we lapse back again into our old bad habits and become trapped in our immediate and rather inglorious history? The real question for the Government is how can we help, not hinder, the adjustment that should have been made long ago and which we cannot any longer afford to prevent being made. I believe that the two essential elements of the adjustment are helping those worst hit by the transition, particularly the young unemployed, and getting our training arrangements for the future right.

The special programmes run by my department and the Manpower Services Commission must begin with the special problems faced by young people without jobs. We must give priority to young people, because recession affects recruitment and people fresh from school more than most. We have a special duty to ensure that in these difficult times their prospects are not permanently damaged and their morale not permanently impaired. Accordingly, we are massively expanding the Youth Opportunities Programme, which provides work experience and basic training for young people. In the next financial year, we shall finance 440,000 opportunities in the programme; that is 180,000 more than in this year. We have already increased the size of the programme this year, and this scale of increase implies a very substantial extra effort from all concerned.

Getting the money for these programmes, which we have succeeded in doing, is only half the battle. The evolution of YOP into a comprehensive national service containing a better proportion of basic training schemes puts considerable strains on employers, local authorities, the educational and careers services, voluntary organisations and on unions properly anxious to safeguard the real employment position of their members. It therefore calls for real national effort and push on this issue because it is a collaborative programme. At its heart are its sponsors. We need many more employers, particularly large organisations, to come forward with offers of help. I therefore warmly welcome the CBI's announcement that it is setting up a new unit under my noble friend Lord Carr of Hadley to increase the number of places which it offers and to develop and improve the training content of what is provided.

Besides increasing the number of places provided on the YOP and improving the training content, we are also improving the two undertakings given to young people. We aim to offer any school-leaver unable to find work a place on a suitable scheme by Christmas, and not, as now, by the next Easter; and we shall also try to offer a place within three months to anyone under 18 who has been unemployed for three months rather than the six months as at present. The emphasis will increasingly be placed on good quality training for work, and two-thirds of the places will provide work experience on employers' premises. We are trying to work towards the point—the noble Lord, Lord Scanlon, acknowledged this and I thank him for doing so—where every 16 and 17 year-old not in education or a job will be assured of some vocational preparation and training lasting up to his or her 18th birthday. These are extremely ambitious targets but they represent, if we can get it together, a new deal for the young unemployed. The package is of course very expensive. It will help those in need a great deal, and in doing so will make less painful the effects of the transition that we are riding so uncomfortably. The package will do those things, but it will not, and cannot, create permanent jobs. Only economic upturn, and lowered inflation, can do that. That is why, if we are to ride the transition successfully, we must look above and beyond the package for the young to our needs in a longer perspective, and look to training.

Earlier in my speech I made some remarks about the effects of the national and international recession. I think that it is fairly well universally agreed that—even if the general position were much better, even if we were not now in recession—great changes in industry and the labour market are taking place anyway and that those with the fleetest footwork carry the prizes away. We can already see the trends emerging—and the noble Lord mentioned some of them. Unskilled jobs are disappearing; over 650,000 such jobs disappeared between 1971 and 1978, and a further million will probably go by 1985. There will be a decline in jobs for those whose skills are narrowly job-, firm- or industry-specific. The numbers of non-transferable craftsmen (such as miners and some workers in the steel and shipbuilding trades) fell by nearly 25 per cent. between 1971 and 1978. Traditional skilled manual jobs are steadily declining. For instance, as the noble Lord knows, the number of engineering craftsmen declined by 3 per cent. between 1971 and 1978.

On the other hand, at the same time the demand for other types of skills and abilities is increasing. In some areas, despite present circumstances, there is an actual shortage in the supply of people with computer-related skills. There will be an increase in demand for people whose skills can be used across a range of tasks or industries; and that really is what electronics is now all about. So flexibility and adaptability will be at a premium.

To make the most of the opportunities we need the right kind of industrial training arrangements. I have already mentioned our productivity record. One part of our failure to be competitive is a lack of training of the right quality and quantity. As the noble Lord very fairly acknowledged, this is not a new problem. Over the years different Governments—and industry—have on many occasions considered ways of improving matters.

The 1964 Industrial Training Act was the outcome of such consideration. It was under that Act that industry training boards were first established as a means of encouraging and assisting the training efforts of industry itself. Boards were required to raise a levy on firms within their industry and empowered to make grants to firms to help them with training. Under the 1973 Employment and Training Act boards were required to exempt from payment of the levy, except where there was in the industry a consensus that there should not be exemption, establishments which trained adequately to meet their own needs. The 1973 Act also set up the Manpower Services Commission to run the public employment and training services. As well as supporting the work of ITBs and providing funds to meet their operating costs and for training grants, the MSC became responsible for the public provision of training for adults who are not in employment. So for a moment or two I should like to speak about this kind of training.

This provision is today known as the Training Opportunities Scheme, or TOPS for short. Government training is not of course new. It was I think first provided in the 'forties. It aims at training, or retraining, adults, thus enabling them to be better equipped to find and keep suitable work. Today such training is provided in the skill centres and colleges of further education, as well as in employers' establishments. This year some 67,500 adults are expected to complete training courses under the scheme. In addition, the MSC provides training services to employers on a sub-contracted or fee-charging basis. At least one good effect of the recession is that we are now far less short of skilled instructors than we were. Then there is what might be called the "educational" aspect of training: the technical, professional or other vocationally-oriented courses that people pursue in colleges on a full-time or part-time basis all over the the country.

But despite those developments, we lag behind other countries in our training attitudes, and there is clearly a need for fresh thinking. All the efforts of past years have not prevented skill shortages holding us back when the economy got moving; and, my Lords, this recession will end, if only in the sense that as stocks run down demand, whether soundly based or temporary, inevitably goes up again. The prospect of technological development makes it vitally important for us to maintain, extend and improve training for that time.

The need to do that has been emphasised by both the CBI and the TUC. As we now all know, the noble Lord is personally aware of the need to ensure that we have the right sense of direction and framework for industrial training. I should like to pay my tribute to his involvement, courage and work with the Engineering Industry Training Board. All is not lost when Conservative Adminstrations heap praises on the noble Lord, even if there is an element, appropriate enough in this House, of praise for the new application of the gamekeeper's previous poaching skills. I am sure that the noble Lord will agree with me that it is right for the Government to be actively considering future training policy. Putting Government money into training is not the whole answer. But we shall of course continue to spend about £250 million on TOPS and training for skills.

I have mentioned the programmes for young people. I should add that we intend also to continue and develop the programme of unified vocational preparation for young people in jobs where the jobs they are in have no structured training. I believe that there can be no serious disagreement that it is high time that we undertook other equally fundamental reforms.

Since the noble Lord mentioned it, I wish briefly to say a few words about the apprenticeship system. This system, the traditional route by which young people acquire skills and craft status, must be modernised, as the noble Lord said. Not only is the system outdated, but the way in which it operates is in many cases so restrictive that it threatens our future ability to be able to meet the changing skill demands. The rules governing apprenticeships are agreed by both sides of industry, but let me quickly go through some aspects of what happens when the system operates at its worst.

In some skilled trades opportunities for employment are generally open only to those who have completed a full apprenticeship. Most of these people are obliged to start their training at age 16. While the rules of most apprenticeship schemes make exceptional provision for those over 17 to start skill training, in practice this is rarely possible. In my view one should not be on the shelf at the age of 17 or 18. The effect is to restrict options for individuals and indeed for industry; and the individual's choice of work is determined at an unreasonably early stage.

Opposition to the training of adults is shortsighted—and I am so glad that the noble Lord recognised this. Sometimes adults are allowed to train only if they have had previous experience in the trade concerned, and even where TOPS or other adult trainees are accepted, there are often restrictive conditions attached to their employment, which prevents effective use being made of their abilities. For example, they may be acceptable only where there are no "time served" men available.

I should like to quote a concrete example. Leyland Vehicles decided to build its Titan bus at its plant in Lowestoft. That meant expanding the workforce by a further 300. But in that part of the country there is a shortage of skilled coach-body builders. Leyland planned to recruit unskilled workers and train them to the necessary standard. But the craftsmen at the plant demanded either a substantial cash sum to train the new workers, or considerable differences in their respective wages. No agreement was reached, despite management assurances that the craftsmen's skills would be protected, and the net result was that the Titan bus was not built at Lowestoft.

There are of course many examples—an increasing number, I am very glad to say—of much more flexible approaches to these matters. But it seems to me that restrictions of the kind that I have outlined are quite inappropriate in many circumstances today. We cannot expect industry to seize opportunities effectively if firms must work in this straitjacket when seeking skilled labour.

The noble Lord mentioned technology. Changing technology means that it is ridiculous to expect the skills learnt between the ages of 16 and 20 to last a working lifetime of 40 years; and reliance on the MSC's TOPS is not the answer. Industry itself must look at the way that its own work forces can be given the opportunities to acquire the skills that firms require. If industry is to have the skilled manpower that it needs, when it needs it, reliance on the apprenticeship system, which takes up to four years, will be insufficient. But until the system is overhauled skilled training for adults will be necessary, and to this end we are very interested in the concept of the "Open tech" to build on the work of the Open University as rapid advances in technology—in computing and microelectronics, viewdata systems and the like—now make this possible.

As the noble Lord mentioned, it is our intention to extend reliance as far as possible on voluntary training arrangements, for which the industry itself would be responsible. Statutory training boards would be kept for a few key sectors where they are likely to be essential to securing wider training objectives. I appreciate the noble Lord's point about the strain which this presents for industry at the present time, but I would also remind the noble Lord that, of course, industry has a large vested interest in our reducing our own expenditure, our own borrowing and, therefore, interest rates. But I give him the assurance that while our present intention is to reduce Exchequer funding of ITB operating costs in one way or another in 1981–82, and have them cease in 1982–83, we will be prepared to consider the timing in the light of the forthcoming MSC review on training, of which the noble Lord made mention.

In sum, my Lords, there is no doubt about the urgency of our task. We are experiencing a sharp rise in unemployment. This is the unhappy but inevitable result of making a major economic transition which we have delayed beyond its time and which we are now having to undertake in very difficult weather. In some sectors we are still delaying, clinging to antique industries and working practices, many of which are rooted in the earliest days of the Industrial Revolution, or earlier. This might be understandable if the old industrial order was still a lever we could rely on to deliver prosperity. But although there will of course still be an immense contribution from heavy industry—particularly in energy-related activities and transport—traditional methods and applications cannot be relied upon to deliver prosperity and full employment any more.

I have said that Britain is passing through a transition from one kind of industrial society to another. This transition is not the result of policy, whether Labour or Conservative. It has been going on for two decades at least, and the criticism to level at Governments, surely, of either party again, is that they have connived at our national tendency to slow down or restrict inevitable change. I say "inevitable" not because I believe in some determinist view of history but because we are a trading economy and cannot isolate ourselves from changes taking place elsewhere. How successfully we make the transition depends primarily on the ability and willingness of people to make it possible by accepting and, indeed, welcoming it.

I say "welcoming" because we sometimes talk as if our old industrial society were desirable in itself, or as if we should fight for its retention. It seems to me extraordinary to be so attached to it. High employment it may have provided, although that only in fits and starts and cycles of depression and boom. But think of its cost. Low wages; low productivity; confrontation and the mentality of "two sides of industry "; a separation of the sexes at work and all the social and cultural implications that that implies; environmental pollution; and the contrast between heavy industrial landscapes and the quality of life rather unfairly offered to those whose work allows them to live outside the old industrial centres. I do not think any Conservative worth his salt should be too Utopian or take too rosy a view of human life. But I do think that the new high technology, high added value and high-wage industries are in human terms surely better, even if they do not, individually, employ so many people under one roof or in one town. Whatever our differences with those on the Benches opposite, none of us believes that Governments can simply or painlessly create a new industrial order. But what we can and must do is lessen the painful effects of transition on people as individuals, and prepare an industry practically and usefully for the future.