§ 6.56 p.m.
§ The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie) rose to move, That the draft order laid before the House on 14th April be approved. The noble Earl said: My Lords, the draft Industrial Training Levy (Engineering) Order, 1980 has been placed before you today and I beg to move that it be approved. The levy orders have been debated here in each of the last two years—last year it was presented by myself and in 1978 by the noble Lord, Lord Wallace of Coslany. This, therefore, is the third occasion that an Engineering Industry Training Board Levy Order has been put forward for approval. The whole House is, I know, well aware of the great importance of the engineering industry as one of the key wealth-creating sectors of the economy as our debate on the Finniston Report bore witness.
§ The House will know 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 from levy liability for small firms and for other firms who meet the boards' training criteria. The membership of the boards comprise equal representation of employers and unions in the industries concerned together with members representing educational interests.
§ This particular levy order, as in the last two years, requires parliamentary approval because one part of it involves a levy of 2 per cent. on large employers in respect of site workers 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, or pay roll, must be approved by both Houses. The order is in most respects 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 from levy liability. For the foundry sector, the proposed levy is also 1 per cent., with establishments having payrolls of less than £25,000 per annum excluded.1600
§ For the engineering construction sector the proposed levy is 2 per cent. on large companies in respect of site workers and, unlike the other sectors, there is no provision (except in the case of head office staff) for firms to be exempted in recognition of having met their own training needs. The 2 per cent. levy will therefore apply to all site employees of companies wholly or mainly engaged in engineering construction activities. It will not apply to off-site workers such as head office staff; for them, the levy will be 1 per cent. on employers where more than 30 people are employed. No levy will be payable on the first £50,000 of an employer's payroll for site employees; the next £450,000 will attract levy at I per cent.; and the payroll above £500,000 will be levied at 2 per cent. Consequently, only large employers will pay the 2 per cent. and then on only part of their payroll. The board estimates that the levy will raise some £2.6 million which will then be used to finance the training necessary to the industry.
§ The proposals, which have received detailed consideration and consultation, have been unanimously approved by the Engineering Industry Training Board and by the Manpower Services Commission. The two employer associations, the Oil and Chemical Plant Constructors' Association and the Engineering Employers' Federation, who together represent the majority of employers in the engineering sector were consulted about the 2 per cent. levy. They have reported agreement, but only nine out of the 104 firms consulted opposed. I beg to move.
§ Moved, That the draft order laid before the House on 14th April be approved.—(The Earl of Gowrie.)
§ 7 p.m.
§ Lord BLEASE
My Lords, I wish to express thanks to the noble Earl the Minister for his very comprehensive and lucid explanation of this order. As the Minister has said, the proposals contained in the order have already been given detailed consideration and approval by the Engineering Industry Training Board, the Manpower Services Commission and by relevant employers' associations. The order has also been scrutinised by the Joint Committee on Statutory Instruments. Nevertheless, I think that it is 1601 important that while we have this wide support for the order as the Minister has said, in this House we ought to stress our concern and interest in measures to promote effective training developments in this wealth-creating sector of our economy. I do not need to add—because the Minister has often repeated it—that training requires to be under continuous review as a vital component in the maintenance of efficient and competitive production.
I should like to take this opportunity to join with all those who have publicly paid tribute to the useful work of the Engineering Industry Training Board, and especially to the leadership and drive given to the progressive training developments by the board chairman, the noble Lord, Lord Scanlon. There are two aspects of the Engineering Industry Training Board which I wish to mention briefly. I understand that the Board have established and developed an engineering careers information service. I consider it very important so far as universities and polytechnics are concerned that this particular service should be encouraged and developed in ways that will ensure that at academic level and practical level the polytechnics and universities may provide within their faculties for the needs of the engineering industry in the United Kingdom.
The Engineering Industry Training Board also operates a wide range of advisory services, including an export training and development service. This is another aspect of the board's work which I feel sure could be encouraged to the progressive benefit of our country's needs at this particular time. Finally, may I say to the noble Earl that I hope he will suitably pursue what he considers to be appropriate encouragement to the Engineering Industry Training Board in these two particular aspects. With those few remarks, I am very pleased to give support to the order.
§ 7.4 p.m.
§ Lord ROCHESTER
My Lords, I apologise to the noble Earl for not being present when he began his explanation of this order; but may I join the noble Lord, Lord Blease, in thanking the noble Earl for the clear way in which I heard him explaining the part of the order that I was 1602 in my place to hear. We, too, welcome the provisions of this order, as we did the order which was laid before the House last June. We are particularly pleased to approve the raising of a training levy in the engineering industry. As the noble Earl well knows, this is likely to be used largely for training in skilled occupations in some of which, despite the increasingly high rate of overall unemployment in the country, there is still a shortage of people.
I should like to take advantage of this brief debate to ask a few general questions relating to the work of the Engineering Industry Training Board in skilled training. I apologise for not having given notice of these questions, but the noble Earl will find them of such a general kind that he will not have much difficulty in answering them. When the Minister introduced a similar order last year, he spoke of a discussion document entitled, Review of Craft Apprenticeships in Engineering. In that document there were proposed fundamental and, in my view, much needed changes in the apprenticeship system: for example, moving away from the serving of a set period of time (which, in my experience, is too long), to the achievement of certain standards of performance based on job requirements. My understanding is that that welcome initiative met with a somewhat disappointing response. I wonder where the matter now rests and whether the noble Earl can give us any indication of the likelihood of any progress being made in that field.
Secondly, there are a large number of firms—including, no doubt, some in the engineering field—which have found that in furthering the national interest (if I may put it that way) in training more apprentices than they are likely to need later as craftsmen they are substantially and increasingly out of pocket. It is very expensive indeed to train even one apprentice. With the pressure on costs to which the industry is subject, my information is that the position has now been reached where some of these firms may feel obliged before long to review the whole question of whether they can continue such training on the present scale. I wonder whether the Minister has anything for our comfort.
In the debate on industrial training last December (in which I am afraid I was unable to take part) the noble Earl spoke 1603 of a review of the whole system of training of this kind. That would take account of the need for arrangements in this field to be closely related to the skilled needs of industry and to be cost-effective. He said at that time that the Manpower Services Commission were aiming to make recommendations some time this summer so that the Government could reach decisions with them on future training arrangements, including the whole industrial training board system.
In passing, this review is especially timely in relation to certain misgivings which a number of firms have recently expressed relating to industrial training boards, basically concerning whether the firms are getting what they conceive to be value for money. The alternative is to do rather more on their own. We on these Benches would be glad to know whether there is any more precise indication now regarding when the Government's decisions in this field are likely to be made known. With those few remarks, and apologising again for having rather sprung them on the Minister—and, for that reason, I will understand if he is not able to give me full answers now—I too have pleasure in welcoming this order.
The EARL of GOWRIE
My Lords, I am grateful for the general welcome which both the noble Lord, Lord Blease, and the noble Lord, Lord Rochester, have given to this order. I certainly make no apology for commending the order, but it is not inconsistent with my commending it for me to feel that all is not generally well with the system of industrial training in this country; and that is why we are reviewing it very seriously. It is no secret that, if we were able to, we would like to see a general debate on the subject, possibly with a view to a Bill being introduced in the next Session. But of course that is not directly for me; other people are involved.
I am very pleased to follow the noble Lord, Lord Blease, in acknowledging the way the ITB has given a lead here under the able leadership of the noble Lord, Lord Scanlon. It has, of course, taken full account of the changing industrial and economic needs of the country in preparing its plans and assessing priorities. I should like to pay tribute to the work it 1604 has done over the years to ensure a satisfactory amount of training in the key transferable skills of craft technician and professional engineer levels. But, I am sure that, were he here, the noble Lord, Lord Scanlon, would agree with me that there is still a lot to do.
The noble Lord, Lord Rochester, asked me about the reform of engineering craft training. In March 1978 the Board published a discussion paper, which I think the noble Lord has in mind, on the results of a review of the craft apprenticeship system. It contained proposals for raising the standards of skills and achieving flexibility in their use, recognition of craft status on the achievement of standards rather than time serving, the development of courses in schools to shorten the period of off-the-job apprentice training and a financial mechanism for making up the intake of apprentices to the level required to meet industry's needs.
Widespread consultations were held but I think it is no secret that because some of the proposals proved to be very controversial the Board has subsequently been concentrating on the industrial aspects of the proposals as they affect employers and craft unions. What has emerged so far is, I am able to tell the noble Lord, Lord Rochester, that exemption requirements are to be tightened to encourage more employers to train to module standard; and the length of the introductory stage of first-year training is to be more flexible so that young people who have taken appropriate technical courses at school can make an earlier start on the next stage of training. That, I think, is a satisfactory beginning, but I am sorry to say that there has been no agreement so far on the radical part of this paper's proposals, with which I must say I agree—that is to say, the recognition of craft status upon the achievement of standards rather than time serving. We have quite a way to go there.
On the two other general issues raised by the noble Lord, Lord Rochester, I think he wished for a short comment from me on the review of the Employment and Training Act. I have given some indication that the matter is in progress and that I might be able to bring something before your Lordships' House. I am hopeful of doing so in the next Session.
1605 Generally, we are, of course, aware of some of the criticisms that can be levelled against arrangements for industrial training. For instance, there is an increasing need to address cross-sector problems more earnestly and to consider local labour market difficulties in a more coherent way. That is why the Manpower Services Commission is engaged on its fundamental review of the 1973 Act. I cannot predict the outcome of the review but I have made my own interest and concern clear to the House and I hope I shall have a bit more to say on it within the reasonably near future. In the meantime, to return to the order, I beg to move that it be agreed to.
§ Lord LYELL
My Lords, I beg to move that the House do now adjourn during pleasure until eight o'clock.
§ [The Sitting was suspended from 7.15 p.m. to 8.0 p.m.]