Employment and Training Bill

HL Deb 30 June 1981 vol 422 cc101-41

4.4 p.m.

The Earl of Gowrie

My Lords, I beg to move that this Bill be now read a second time. We shall today be debating the very important subject of industrial training and part of the framework necesary to enable us in this country to meet the special demands of the 1980s and beyond. Therefore, this is a subject of the very greatest importance to the future economic life of our country. It is essential that we get right the necessary future training arrangements for industries and that we do so as quickly as possible. The Bill before the House today is fundamentally an enabling measure which gives the Government power to modify the arrangements for organising training that is done by and for industry and commerce. However, I think that in order to see the Bill in a proper perspective we must take account of the likely trends in employment generally and the past history, in brief, of our training arrangements.

If, like I think most people in your Lordships' House, you belong to a group of people who consider themselves professional or white collar workers, you do not ordinarily want your children to look for jobs as soon as they reach the age of 16. You hope for higher qualifications, in some cases qualifications which are not attainable until the early or even mid-twenties. The burden of my theme is that in the next few years, if you think of yourself as a blue collar worker, you will also need to think increasingly along the same lines, for the job market is changing, irrespective of policy and changing, in our view, irrevocably.

There is a shift, for instance, in the balance of manual and non-manual jobs. There were in 1961—the year, for what it is worth, that I myself first came on the labour market—9.3 million non-manual jobs. Ten years later, in 1971, there were 10.2 million non-manual jobs. There are well over 11 million now, even at the depth of this recession, and by 1985 we would anticipate that non-manual jobs will equal and then subsequently exceed manual jobs. There is a disappearance of unskilled jobs. Over 650,000 such jobs disappeared between 1971 and 1978. We would anticipate that a further million would probably go by 1985—and that is not a very long time ahead.

There is a shift in the balance between manufacturing and service employment. Between 1970 and 1979 manufacturing jobs declined by 1.1 million; over the same period the service sector grew by 1.7 million. There is a steady decline in traditional skilled manual jobs. The numbers of engineering craftsmen declined by 3 per cent. between 1971 and 1978. Those numbers should fall by another 8 per cent. by 1985. There is a steady decline in jobs for those whose skills are narrowly job-specific or related to a particular firm or even related to a particular industry. The numbers of non-transferable craftsmen—for instance, miners or some in the shipbuilding or steel trades—fell by 19 per cent. in the 1970s and are expected to fall faster between now and the mid-1980s.

However, by contrast to that there is a greatly increased demand for those with what are called in our trade jargon "knowledge skills"; the professions, the managers, the engineers, the technicians and the office workers. Their numbers increased in the 'seventies. They will increase further, and in some specific cases—for instance, technicians—very much further again by the mid-1980s.

New markets are being developed which require a much more highly skilled, better-educated and more mobile workforce in which a large number of professional and technician staff are supported by a range of workers who perform a range of tasks and are not again so narrowly craft-specific. The old reliance on training some young people for set periods at the start of their careers and leaving others to pick up limited skills as they go, is rapidly proving inadequate to these great sea changes in the world of work. The apprenticeship system, in particular, relies too heavily on time serving rather than the attainment of qualifications and there is the need, therefore, to remove age restrictions and place far more weight on the attainment of recognised standards of performance. In short, this country's training for skills takes too long and is too rigid. The consequences are unnecessary expense and excessive lead times in training investment. Employers, therefore, are understandably deterred from undertaking sufficient training. That is perhaps why the country suffers from latent skill shortages even in times of high unemployment, like we have at present.

How do we stand on young people's preparation for employment? I think that it is well known that nearly half of those who leave school at the age of 16 get virtually no significant training or education in their first job. Even at school they are often less well prepared than they should be for working life. I am afraid that it is rather painful to think that in France over 80 per cent. of young people leave school for some kind of substantial training or education. In Germany it is over 90 per cent. The German economy, like our own though to a lesser degree, is experiencing difficulties in the field of adult employment and unemployment, but there is very little youth unemployment in Germany. Of course, the other side of the coin is that in Germany there is very little youth employment as we understand the term.

So we wish to move to a position where all young people under the age of 18 have the opportunity either to continue in full-time education or to enter training or a period of planned work experience, combining work-related training with education. Access for jobs for all who can demonstrate agreed standards of competence is the overriding aim of the Manpower Services Commission's A New Training Initiative, which we welcome and indeed back. In short, our plan is to try to provide links between education and training by a more systematic programme of vocational preparation based on our experience of the Youth Opportunities Programme and of the Unified Vocational Preparation Scheme.

What about training opportunities for grown-up people, for adults? The short answer is that there are not enough of these. For too long we have treated training and education as a once-and-for-all experience which you undergo at the start of your working life. Centuries old restrictions of skilled work for apprentice craftsmen have not helped liberalise things in this regard. Such rigidity in systems and attitudes is, in our analysis, no way to face an age of very rapid technological change.

The main improvements needed are those set out in the document that I mentioned called A New Training Initiative, which the MSC recently published. The commission also elaborates other objectives, apart from the one concerning young people which I have mentioned. It wants to open up training for skills, including apprenticeships, to young people of different ages and of different educational attainments, and to enable them to acquire agreed standards of skill. It wants to open up widespread opportunities for adults to acquire, increase or update their skills during the course of their working lives.

The MSC has called for comments by the end of September and for immediate action where this is needed. The Government are urging all those concerned to respond. To make progress towards improving the quality and quantity of training will, of course, demand effort and money, and we must ask squarely the question: Where will the resources come from? Will they come from the employer, will they come from the person undergoing the training, or will they come from the Government?

The answer must be to try to attain a plural system, and that the resources must come from all three. Training necessarily demands an investment of time and money by the employer and he, of course, will reap the benefit from his employees later on. The trainee needs to make an effort not only to learn; it is reasonable to expect a financial contribution, even if this is expressed only in terms of lower earnings, during the time that he or she is investing in training for a better future career. Of course, the Government have a clear interest in intervening at the margin to oil the wheels of the system, to ensure that there are adequate training opportunities for all, and to avoid the bottlenecking shortages of key and necessary skills.

That, then, is the background against which I commend this enabling Bill to the House. We are talking about quite radical change in many areas. Therefore, all the more reason why the change should start now if we are to exploit the opportunities and overcome the difficulties which Britain will face in the 1980s and beyond. In this context the Bill is quite a modest measure, but it is intended to try to get the institutional and organisational framework right. It is, therefore, an essential prerequisite to securing reforms of the kind that I have suggested are needed.

I turn now to the past. We have had a system of industrial training boards in this country since the Industrial Training Act 1964. According to that Act, a board's duty was to provide or to secure the provision of courses and other facilities for training for employees or for potential employees in an industry. Boards were required to impose a levy on employers and were empowered to pay grants to employers who trained satisfactorily, to obtain relevant information from employers, to conduct research and to apply selection tests or tests of competence. After their first year their operating costs were defrayed out of sums raised by levy.

By 1969 there were 27 industrial training boards established as well as the Foundry Industry Training Committee which, in practice, functioned like an independent board, The boards then covered 15 million employees out of a labour force of some 25 million. But already the system was attracting considerable debate and by the time of the previous Conservative Government—by 1971–72—the Department of Employment conducted a review. The findings were published in Training for the Future—a Plan for Discussion, which concluded that training had increased since 1964, but that it was not possible to say how far this was due to the industrial training boards, although some credit was no doubt due to them. On the other hand, it had also become clear that anything approaching a redistribution of training costs—that is to say, spreading the costs of training more fairly among employers, which was a fundamental aim of the 1964 Act—could not be achieved at levy rates which were bearable to industry. The ITB system was criticised, therefore, for excessive bureaucracy and for failing to deal with many of the training needs of the day.

The Employment and Training Act 1973 attempted to tackle these problems, and one of my first jobs as a Minister in your Lordships' House was to introduce it here. It set up the Manpower Services Commission to act as the focus for our national training effort and to co-ordinate the work of the industrial training boards. It also required the ITBs to exempt from levy those establishments whose training arrangements met their own needs adequately. Levy rates were limited to 1 per cent. of an employer's payroll, unless an affirmative resolution of each House was obtained. The operating costs of the boards were transferred from industry to the Exchequer, but, of course, the national training debate continued; it is by no means an unfamiliar issue, and it has to continue as training needs change.

The next major stage was reached in early 1979 under the previous Labour Government, when the MSC set up a working party to review the workings of the 1973 Act. The commission did so in accordance with its policy of regularly reviewing its operations. The present Government welcomed the review which was concerned with future policy as well as with the future of the organisational structure. We recognise the need for a new sense of general direction and for a new framework to meet the particular needs of the 1980s and beyond.

At present we have an extensive system of industrial training boards, with statutory powers, covering about 55 per cent, of the workforce. The review recommended that, broadly, the system should continue. The Government, however, are very much aware that there is continuing debate among employers and others as to whether these arrangements need statutory backing. We feel that in many sectors of industry adequate training arrangements can continue without the straitjacket of a statutory framework. We therefore asked the MSC to conduct a sector-by-sector review of future training arrangements. This Bill enabled the Government to act quickly following the outcome of that review.

May I now turn to the main provisions of the Bill. For the convenience of the House I have arranged for copies to be placed in the Printed Paper Office of an amended version of the 1964 Industrial Training Act, which incorporates the changes which were made in 1973 and which also incorporates those proposed in the current Bill. Later in the week we will also be placing in the Printed Paper Office explanatory notes about the Bill, which I hope will be useful to the House for the later stages.

Clause 1 is an enabling provision, allowing the Government to take decisions about the future of industrial training boards following the present review of training arrangements in industry which the Manpower Services Commission is carrying out. The clause proposes that the Government should have power to establish, abolish or change the scope of an industrial training board, after consultation with the commission, but not only (as at present) in accordance with a recommendation of the commission. Whatever our views about the need for statutory boards in one sector or another it is surely right that the Government, rather than the commission, should in the end have the authority to decide whether to have them and for what industries. The law at present means that if the commission is unable to agree on a recommendation (which is quite possible in view of its composition), or puts forward a recommendation with which the Government do not agree, the Government cannot act. So the Government have less than proper authority, and Parliament has less than its proper ability to influence events.

The Government want to move over to voluntary training arrangements wherever possible. But statutory boards will be kept where they are needed to meet essential objectives. May I have a word about these voluntary arrangements? As a matter of general principle, we believe that voluntary action is better than statutory compulsion. It reflects the fact that real responsibility for company training must rest with companies, whose competitiveness depends on having an efficient and well-trained staff. It accords with the present reality in many industries and for many occupations that it pays employers to train their staff to high standards and to co-operate in finding efficient ways of doing so. But this is not to argue that statutory boards have not made a significant impact on training by companies. In many areas they clearly have. They have made a major contribution too to improving the quality of training. Many firms have been stimulated to plan their training rather better. But we believe that even some of these improvements can now be maintained and extended in many sectors on a voluntary basis. Statutory training boards necessarily spend much more time and effort checking on training that is taking place in any case. Voluntary arrangements are likely to be more cost effective, rather more in tune with industry's needs, more flexible, and less prone to activity for activity's sake.

With these considerations in mind, my right honourable friend the Secretary of State asked the Manpower Services Commission to review future training arrangements in every sector of the economy. We have made it clear that the main test of whether voluntary training arrangements are adequate, and whether statutory boards can be dispensed with, is whether essential training needs will be met. We do not want to be left with inadequate arrangements in key sectors, with the risk of exacerbating skill shortages when demand picks up, or of allowing training standards to slip, or of being unable to secure the essential reforms sought through A New Training Initiative, and which I mentioned at the start of my speech.

The commission's report is expected in July. We are keeping an open mind about the future of training boards until we have the commission's recommendation. We hope to take and announce decisions as soon as possible after that. This review of the coverage of training arrangements will be the first comprehensive review of its kind, and the existing legal requirements for consultation, which envisage consultation with interested parties on specific proposals for change, are not apt for the purpose of such a wide-ranging review. Clause 1 therefore provides for a more flexible consultation procedure in future, and would allow the decisions resulting from the review to be implemented without unnecessary delay.

I would emphasise that the commission's review has been very thorough. It has sought views from some 2,000 organisations, and its officials have had discussions with many key organisations. Ministers, too, have been receiving views from very many people. All these will be taken into account when we come to take decisions on future training arrangements. The review is not just concerned with whether the statutory boards should continue or not, but is a thorough general appraisal of what training arrangements are needed in each sector of the economy. I hope that the commission will recommend in particular cases not merely whether a board can and should be replaced, but also what kind of voluntary arrangements should be fostered.

Clause 2 of the Bill enables all expenses of an industrial training board, including operating and administrative expenses, to be met from money raised from levy on employers, as was the position before coming into force of the 1973 Employment and Training Act. The clause would also enable boards to use to defray their operating expenses money derived from levies imposed before the enactment of the Bill. The Manpower Services Commission's review body said that in principle industry should support financially the agency established to meet its training requirements. State funding of training board operating costs got in the way of the boards' proper activities by blurring their true line of responsibility, by distracting attention from strategic issues and indeed by robbing them of some of their authority. We agree with the commission on this, believing that if industry is to pay for voluntary training arrangements it should equally pay for any statutory arrangements. The Government's present intention is to reduce Exchequer funding of training boards' operating costs in 1981–82 and to end it completely by 1982–83. This was reflected in the Government Expenditure White Paper last March. Nevertheless, Ministers recognised that some firms may find difficulties in meeting significant extra costs at present. We shall be prepared to look at the question of timing again once we have the commission's report.

I now turn to the question of training boards' policies governing exemption of employers from levy, which is covered by Clause 3 of the Bill. This clause represents a slight but important strengthening of the powers of training boards. On the principle that we shall need statutory training boards only in sectors where companies are unable to meet essential training objectives on a voluntary basis, we have provided that statutory boards should be able to use their duty to give levy exemption in a rather more flexible way, and to encourage companies to train to meet total industry needs, and to raise some non-exemptible levy rather more easily. This is particularly aimed at the kind of situation where there are essential skills which require lengthy and expensive training and which are easily transferred from company to company.

In Outlook on Training, the MSC's review body recommended that training boards should have discretion whether or not to introduce levy exemption. Clause 3 gives boards some greater discretion over their levy exemption policies, but we think it right that this greater discretion should be circumscribed. Accordingly the clause allows a levy of up to 0.2 per cent, of emoluments without exemption certificates conferring any exemption. But a levy of over 0.2 per cent, must be supported either by a consensus of the employers in the industry or an affirmative resolution of both Houses of Parliament. The clause also allows a consensus to apply to two levels in succession, and allows boards to set exemption criteria based not just on the needs of establishments as at present but on the wider overall needs of industry.

The remaining clauses of the Bill are reasonably straightforward and somewhat technical. While I am very happy to deal with them in answer to questions, it might save time at the present if I restricted myself to the primary meat of the Bill, which is the first three clauses. I look forward to the debate on the Bill. Much of the debate, I am sure, will turn on the need to tackle the inadequacies of our training arrangements in this country. We certainly need to take radical action about these problems if we are to get the skilled manpower we need for industrial recovery, and that is what the new training initiative is intended to bring about. The present Bill is not intended to bring about a radical change to the substance of training, and I doubt whether at this stage legislation can in any case do more than set the right framework.

The Bill is a limited enabling measure intended to permit the modification of the existing institutional framework for training in sensible ways. The effect should be to enable us to move to a more plural system of training in which companies, helped by a mixture of voluntary and statutory institutions, as is appropriate to a mixed economy, define and meet their own needs with the Government filling the gaps. The Bill is a significant step towards such a plural system and I recommend it to the House.

Moved, That the Bill be now read 2^a.—(The Earl of Gowrie.)

4.31 p.m.

Lord McCarthy

My Lords, I wish at the outset to thank the noble Earl, Lord Gowrie, for offering us the incorporated version which will be available in the Vote Office and for the Explanatory Notes. I wish also to congratulate him on what is for him, I think, a vintage performance. As I listened to him summarising paragraphs 55 to 62 of A New Training Initiative, followed by paragraphs 21 to 230 of the Outlook on Training, I could see that we were in for a soft sell. And when he finally got on to three of the clauses in the Bill, it was quite clear that here we had a potentially dangerous measure introduced with the voice of sweet reason. But that, of course, is what the noble Earl did with his last Employment Act, which also had nothing to do with employment. Now he is doing it with his present Employment and Training Bill, which also has nothing to do with employment and very little to do with training.

Indeed, I do not know why the present Government have not this afternoon debated an Employment and Iron and Steel Bill, an Employment and Representation of the People Bill and an Employment and Everything Else Bill; all Bills begin with "Employment", but we do nothing about employment. The noble Earl is the master of the disarming growl. He can, roar you as gently as any suckling dove, or, 'roar you…as…'twere any nightingale, and, if he plays the lion, then, say, let him roar again. The noble Earl says this is an enabling Bill. It enables the Government to dismantle the state-supported system of industrial training. He says it is a modest Bill. But it is very difficult, since it is an enabling Bill, to say what it is modest about. He describes it as a quick Bill designed to reassure—one might say, to put industry out of its misery—but since nobody knows what the Secretary of State intends to do with this modest, reassuring, quick, enabling Bill, it is difficult for us to be reassured.

In Committee, we shall of course try again to pin the Government down on specific points; we shall try to argue with what I might call flushing-out, probing amendments. But the House will expect at this stage, on Second Reading, that we on this side should address a number of general questions to the noble Earl, and I wish to address three general questions to him to see whether, when he replies to the debate, he can give me a little more information. My first general question, which is to some extent answered in A New Training Initiative of the MSC—which is not necessarily a consultative document of the Government; it is a consultative document of the MSC, and that is why I must ask the question—is whether he and the Government accept the need for an immediate and significant reversal in the downward trend of training in this country, the downward trend in quantity and, I would say—although on this matter figures are difficult to come by—the downward trend in quality.

Secondly, if the noble Earl accepts that, may I ask whether he thinks it is at all likely, in the midst of a depression, that what was not possible before 1964, in the 15 or so years before that when we relied on voluntary training to solve our problems, will somehow be transformed in the depression years of the 1980s? What reason have we for believing that if voluntarism would not give us sufficient volume and quality in the years before 1964, it will give us them in the years following 1981? If that is not so, then my third question is this: why should we accept this modest little measure at its face value? Why should we not seek to be a little sceptical about how modest it is and ask a few questions about how in fact it fits into the overall framework of the Government's economic policy?

As for my first question, surely the noble Earl must admit that the 1964 Act, which he summarised along the lines of the MSC document Outlook on Training, was a belated attempt to deal with the collapse of voluntarism after 20 years of post-war boom; that it injected a system of levy and grants into the industrial training field which, for the first few years at least, transformed industrial training in this country. Next —he may not agree with this but I should like to put it to him—looking back, is it not the general conclusion that we should come to (in the context of what has happened since) that the 1973 Act was a mistake—I would say a fundamental mistake—in that it weakened the cutting edge of the levy grant system, allowed too many, too easy exemptions which were easily fiddled and which themselves led to a very large part of the bureaucracy and legitimate charges of bureaucracy which are now levelled at part of the ITB system? Would he not agree that it allowed small firms to escape their responsibilities and that, whereas the 1973 Act represented a significant advance in the sense that for the first time we had a potentially powerful instrument in the Manpower Services Commission—a tripartite body at national level which was able to work out national priorities—in all other respects the 1973 Act represented a retrograde movement back into stagnation?

Surely the noble Earl will admit that in the middle 1970s—1976, 1977, 1978, 1979, at whatever date one wishes to take—the situation in relation to training in this country got significantly worse. It has become worse because it has been necessary to supplement more and more of the declining levy income by funds from central Government. It has become worse because a host of new problems developed in the 1970s which the 1973 Act was quite unable to deal with. I refer to the problems of cross-sector occupations which the ITBs found it difficult to solve; problems of local manpower shortages which were there in the 1960s and which we were told would be solved by the 1973 initiative but which that initiative failed to solve; new problems dealing with micro-technology and the need to introduce all kinds of new training schemes, many of which are now listed in A New Training Initiative.

Then, most importance of all, we had the onset of the depression, which made it more than ever illogical and increasingly stupid to expect even the blue chip firms—even firms like ICI, Unilever and large parts of the public and local government sector, which for generations have done far more than their fair share of training in this country—to go on providing training for other people in the context of a recession. And indeed, in large parts of the public sector, I am afraid as a result of the Government's policy it is impossible either for the colleges of further education to provide this initiative or for the National Health Service or local government to attempt in any way adequately to train for their own needs, let alone traditionally to provide great services for industry at public expense.

None of that is to say, and I do not stand here to suggest, that the industrial training boards have not made their contribution, even in the weakened position that they were in after 1971. The noble Lord, Lord Scanlon, who is to take part in the debate, will no doubt speak for the engineering industry training board. I think that anyone with any knowledge of the construction industry and of the size, the complexity and the number of small firms in that industry, and of the work of the construction industry training board, could not doubt that without the training board there would be virtually no training at all in that industry.

But there are many other training boards. There is, for example, the petroleum industry training board, which has concentrated on providing training for people working for small offshore companies. It has established the Montrose Training Centre, and has provided essential back-up services as well as a safety service for training in this vital industry, which it is impossible to believe would, and could, continue without the statutory back-up of the industrial training system.

So one is not suggesting that everything in training is fine. One is not suggesting that there is no need for a new initiative, or for new institutions, especially perhaps new institutions to deal with local labour market shortages and geographic occupational shortages. But the central question is: what are the Government prepared to do to make the initiative possible? I am afraid that as always that comes down to what the Government are prepared to do in terms of resources, in terms of money. I am glad to hear the noble Earl I think, say, "Hear, hear". It comes down to what the Government are prepared to put in. It is in this context, as an earnest of their good expectations, that we look at this Bill. Before the Bill was published the Secretary of State said in another place that lie hoped that there would be a return to the voluntary system. He said subsequently that he hoped that as a result of the Bill industrial training boards would continue in "a few key sectors only"—to use that constantly quoted phrase. Despite constant attempts in another place to get the Government to spell out what "a few key sectors" means, nothing has been forthcoming, and I do not suppose that anything will be forthcoming this afternoon; but if it is I shall be very pleased to receive it.

But if it is in fact the aim of the Bill to drive down industrial training on an industry basis to a few key sectors only, all we can say is that the Bill is very well equipped to do so. Clause 1 of the Bill enables the Government to abolish, or maim, any industrial training board, irrespective of the views of the Manpower Services Commission. Clause 4 totally exempts firms in enterprise zones, even if those firms are in industries in a few key sectors, say, where the Government want to keep alive three or four industrial training boards.

The new, amended Clause 6, in some ways contains the most serious provision—the noble Earl did not get that far. The clause in effect gives employers a veto on even a 1 per cent. levy. So in future it will be employers on the ITBs who will be able to decide whether there is any levy support system at all. Clause 8 makes it easier to wind up industrial training boards because of the new rules which relate to pension funds. It is of course true that part of Clause 6 transfers responsibility for the appointment of the staff of industrial training boards and for the terms and conditions of the staff to the boards themselves, and Clause 2 allows the levy to be used for that purpose.

If the rest of the Bill were adequate, if there were no limit, for example, on the 1 per cent. levy, if the Government were spending elsewhere the £50 million that they save, if some of the suggestions put forward by the Review Body of the Manpower Services Commission in its outlook on training were included in the Bill, then one would not want to object to this part of Clause 6. Indeed, the MSC itself, in its outlook on training, reported something of the kind. But in the context of the Bill, taken together with all its other provisions, one is bound to worry about a provision which in effect saves the Government £50 million and forces industry at this time, if it wants to maintain a statutory system, using the levy in any way, to finance its own resources and its own administration.

Even the CBI, which God knows! likes to see the Government cut public expenditure, is afraid of this system. It wants the Government to go back to charging industry for these things at the slowest rate possible. Certainly the TUC is not in favour of the system. The MSC is not in favour of it; and we all know about the 24 chairmen of the 25 training boards, or perhaps it was the 23 chairmen of the 24 training boards, who wrote to the Secretary of State in the following terms: A substantial majority of chairmen expressed surprise and disappointment that the key recommendations of the Review Body"— that is to say, the MSC review body— … will not be fully implemented … Whilst many reputable firms will continue training, many others will make no such effort and [will] resort to the previous practice of 'poaching' their trained requirements from the more responsible firms". That seems to me to be not a prophecy, but a self-evident truth.

So I come to my second question: what reason can the noble Earl give us at this stage for believing that voluntarism will make up this gap? If it did not happen in the boom years, if industry is in the centre of a depression, if most of the larger companies are cutting their training facilities like mad, if, for example, apprenticeship training is 10 per cent. down in the engineering industry this year while Germany, France and other competitor countries are flushing their industrial system with training money, what chance is there that the voluntary system in this country will make up the gap? I suggest that there is no chance—no chance at all.

There are in fact only two ways of explaining the Bill. One is that it is all presentational, in the way that we were told that the Employment Act was presentational. Sometimes the noble Earl, and sometimes the Secretary of State in another place, almost say this: "It is a modest little thing, we shan't really do very much with it". It is like the old Green Paper on trade union law. It is just a delaying tactic. It is one way of putting off the Queen of the Night. But we cannot be too certain about that because she has a way of winning victories.

There is a very good reason why we should move towards the other, the second, explanation for the Bill: that it is in fact a way of reducing the Government's commitment in the industrial training field. A New Training Initiative, published by the MSC, states that it does not anticipate that there would be a need for a substantial increase in spending on training; that is in paragraph 40. It goes on to pose the questions as they stand for employers (in paragraph 34.1) for employees (in paragraph 34.2) and for the education service, that is the local authorities, CFEs and so on, (in paragraph 34.3). However, to me it is highly significant that it does not pose this challenge to the Government. There is nothing in A New Training Initiative which poses to the Government this central question, and therefore one must pose it to them oneself: is there a real commitment to increase the actual volume of training allocation? Do you believe that if voluntarism does not work, the state must stand behind—and fairly quickly stand behind—the training provisions if we are not to have a collapse of industrial training in this country? That is the question that I should like answered.

Alternatively, is it the case that, as I have said, the Bill is part of the general economic policy of the Government? We are entitled to ask that question. We are in a period of rising unemployment. All the signs are that rising unemployment will provide a continuing strain on the public sector borrowing requirement until, and through, the next election. Yet the Government are committed to reducing the PSBR. The Government are committed to tax cuts. We have had cuts in public investment. We have had cuts in the social services. If we have many more cuts in the social services, there will not be a Tory council left in the country. There may be room for cuts in the National Health Service; certainly room is going to be made for cuts in higher education. Is it not reasonable to ask the noble Earl whether the basic aim behind this Bill is that training must take its share of the cuts? A cut in the overall Government training provision would be the most reasonable and the most plausible explanation of this Bill.

4.50 p.m.

Baroness Seear

My Lords, as I listened to the noble Earl's opening remarks, before he started talking about this Bill, I felt a great deal of sympathy with what he had to say, and I began to believe that he, at any rate, was very much on the right lines. It is true that our training of young people, and indeed of older people, lags sadly behind that of our competitors. It is true that in many ways our training methods are grossly out of date; that we need to think anew and to think radically about the kind of training we need, starting with what goes on in schools, carrying through the bridging period between school and work and going into training while people are at work—and, indeed, the retraining which is needed as the rapid change in labour market demands means that new skills must be learned and new knowledge acquired.

The message was coming over from the noble Earl that he believes that this kind of radical alteration in training is needed, and that we must be able to hold our own, and more than hold our own, with what is going on in other countries. But, my Lords, what I find so difficult is to square what the noble Earl said—and I believe he meant it; I am not so sceptical about his integrity in this matter as is the noble Lord, Lord McCarthy; I believe that his beliefs are sincerely held—with this pathetic little Bill.

The essence of the Bill is that training must be pushed back on to the employers on a voluntary basis, and that the statutory backing for training must be cut down, if not totally removed. Like the noble Lord, Lord McCarthy, I find it quite incredible that any Government can believe that industry, which by and large did not pay for training even before 1964—leave out the few leading firms which have always trained—should do so now, in the depths of a recession. In the halcyon days before 1964 the great mass of British industry fell behind, it never recognised that it had any obligation to train. It did not fall behind: it never got into the race. Why, then, should it be assumed that it is going to do it now? If it were that the training boards had been so magnificently successful that they had converted the whole of British industry to a belief in the importance of training, that the mission was fulfilled and the conversion carried out, even then I would not be too certain that they would not fall back over the years if there were no statutory organisation left to prod them.

The noble Earl seems to rely—and here, of course, there are echoes from other aspects of Government policy—on what I must say appears to me the most remarkably naïve argument from the market. I, more than the noble Lord, Lord McCarthy, believe that the market is very powerful in its proper place, and rightly so; but the argument is that the market will lead employers to spend money on training at the present time. If you can believe that, my Lords, you can believe anything.

The noble Earl said that they would spend money in their own interests—a good market argument—because they would reap the reward of better trained employees later on. They will do no such thing: their competitors will reap the rewards of the people that they have so expensively trained—and if they are thinking in market terms, that is what they know full well. The fact is, of course, that in terms of training even the best employers, as the noble Lord, Lord McCarthy, said, are cutting back on training. This is just a fact. They are desperate in their cash-flow situation, and they look around for what they can cut; and all of us who are at all close to what is going on in industry know that the chop soon comes, and has come already, on training, because in the short run, when you are desperate, it is easy to cut training.

As a financial consultant said to me when I was arguing the case for more training, "In the case of a number of the companies that I have been investigating, when they have met the obligations which they cannot not meet, which are absolutely obligatory in law like wages and the bills which are coming in, there is no money left, and if there is no money left they cannot spend it on training." So it is unbelievable that the Government really seriously think that in the present climate the market argument is going to lead employers to carry out training which they did not carry out when they were far better off, before the 1964 Bill.

A further very odd part of the Bill is that the Government are not content with saying that the employers ought to be paying for training inside their own establishments, which is all that was required of them under the 1964 Act. They are even saying that the obligation should be on the employers to pay for all the training needs of the industry in which they happen to be. That is surely an extraordinary added burden to put on industry, which is straining against increasing bankruptcies at the present time. How can the Government justify this additional burden which is being laid upon businesses?

There is another reason why it is lamentable that the Government are contemplating reducing the statutory backing for training and reducing public expenditure on training. It is more and more obvious to those of us who have been studying training at all closely that the best training is that which is done by the employer. This is increasingly important where there are conditions of rapid change, because only the employer, who is examining the markets and who is studying the demand for the new techhology, can know what new training requirements are going to be and can initiate them in time to be able to take advantage of the changes which are going on. Training which is not initiated and carried out by the employers always runs the risk, and too often falls into the trap, of being somewhat out-of-date, because by the time the information has been collected about what the new job needs are going to be, and by the time that has been translated into training programmes, then the scene inside industry has moved on and so the training programme tends to be outdated.

Therefore, we want the employers to take more responsibility, not less, for handling training in the country—yes, that is right, but it is going to be very expensive indeed, and it is a national need. If the Government really meant business in getting the economy going again, if they really meant business in cutting back on unemployment, then this would be the last expenditure of all for them to cut, because we all know that unemployment is going to fall most heavily (not just during the recession, but from now on, indefinitely) on those who are untrained.

The noble Earl himself quoted the difference in percentages as between the people who receive training in this country and the people who receive training in France and Germany. Unless we can narrow that difference, unless there is a real increase in the proportion of people trained here, not only are we going to be in an exteremely unfavourable position competitively, but we are going to face a society in which there will be a high percentage of people, youngsters now leaving school, who may never during the course of their working lives have a regular job. That is the burden of training in this country—to see that that does not happen; and it is not going to be carried unless there is Government money put into it.

Now we come to the abolition (question mark) of the training boards. As has been said, this is only an enabling Bill, and we do not yet know what is going to happen to the training boards. We are to some extent debating this in the dark. I have argued the case for continuing a statutory backing as against the folly of relying on voluntarism at the present time. Why will the Government not recognise that the best programme would be to build on what we have and on what is good in the training boards? I agree that there are many aspects of the training boards which it is possible to criticise. But do not let us get rid of them. Improve them, adapt them, change them! Start with the foundation that was laid in the 1964 Act and develop from there! They have their weaknesses. They are too bureaucratic, but I agree with the noble Lord, Lord McCarthy, when he says, "Whose fault is that?—the 1973 Act".

The noble Earl, Lord Gowrie, remembers the 1973 Act well. It was his first big piece of parliamentary business. I remember challenging him from these Benches to say that this Manpower Services Commission which he set up will be free of entanglements and control by the Civil Service. He looked across the House and said, "I tell the noble Baroness, Lady Seear, again as I have told her repeatedly, that it will not be under Civil Service control". Yet, in the debate earlier this year in another place, the Secretary of State said that the training boards have to refer to the Manpower Services Commission, the MSC has to refer to the Department of Employment; the Department of Employment has to refer to the Civil Service Department—and why, in Heaven's name, the Civil Service Department, passes my comprehension—but that is the sort of "the king told the queen who told the dairymaid" kind of process which goes on.

Of course, it is bureaucratic; but who invented the bureaucracy? Why blame the training boards if the 1973 Act precipitated the levels of bureaucracy of this kind? The Government have Sir Derek Rayner looking into abuses. It would be a good idea to put him down that particular rabbit hole. Bureaucracy? Yes, it is there; but it is created by the 1973 Act, by the refusal to leave the training boards to get on with the job and to saddle them with layer upon layer of intervention. Then it is true that the training boards cover only about 60 per cent. of all persons employed in industry. This is very little. The noble Earl was right to say there will be a big shift in the kinds of employment in future; that the old type of manual occupation is becoming less and less and there was a whole variety of services growing in importance and that knowledge skills (to use the same jargon) are becoming for more people more important than manual skills.

But you can build this kind of training into the training board system. Why not? Some training boards have been very much more successful than others. It is possible that some degree of amalgamation between training boards would be beneficial. Also, it is true—and it was recognised before the 1964 Act that this was likely to be a problem—that the sectoral system, on which the 1964 Act was based, did not allow adequately for cross-sectoral training. The 1973 Act—and I remember the discussions on this matter—were intended to be able to lead to improvement in cross-sectoral training. It did not. This absence is a weakness and is something which badly needs to be put right.

These are all limitations, I accept; but they are not limitations caling for abolition of the training boards. They are limitations which call for reform, and reform in a number of directions. Your Lordships will have been inundated, as I have been, by communications from so many different training boards and employers that it is hard to remember even half the advice that one has been given in connection with this Bill. One proposal which has come in different forms from a number of areas requires a great deal of consideration. It is that there should be far more activity and far more organisation of training boards at really local level, at the grass roots. The training boards have not been particularly good at this. We need a system so that people concerned with the local labour market are organised in a way in which they can help to implement training from the bottom up, at the grass roots level. What I have not seen in all the papers sent to me is a really satisfactory administrative procedure which will make local organisation of this kind really work. Nor have I seen any indication as to how the public funds which, in my view, need to be channelled through to whatever is the institutional instrument for training, can best be funnelled through to the organisation at local level.

These are unanswered problems and these are the problems to which anyone concerned with training and employment should be directing their attention. As one of the papers put it, we need sectoral training, supra-sectoral training, sub-sectoral training and cross-sectoral training; and we need to organise so as to get the most efficient pattern of instituion to meet a variety of needs. You start with the training boards, you adapt them, you add new institutions as required. You do not scrap what has been, in the history of training in this country, still the most successful experiment in training instituions that we have had.

5.7 p.m.

Lord Kilmarnock

My Lords, the noble Earl has been most disarming and persuasive in his introduction of this Bill. As the noble Lord, Lord McCarthy, has said, the word "modest" fell from his lips as did "limited", "enabling measure", et cetera. That is the danger of it. What is the Secretary of State going to do with it? Is he quietly and diplomatically going to put it on the shelf, or is the Treasury breathing down his neck to implement it and save that putative £50 million a year as soon as possible? And if he does eventually save this money, will it simply go into the common kitty, or will he be able to spend some of it constructively, for example, on the new training initiative to which the noble Earl referred? This Bill should be seen against its historical background, to which a slightly different gloss might be given to that chosen by the noble Earl.

It is, or it could be, depending upon the next move, the culmination of a long retreat. For who was it that enacted the Industrial Training Act 1964 and set up the ITBs? Was it a nasty, interventionist, Left-wing Government, nibbling away at our sacred freedom to muddle through? No, my Lords. It was a Conservative Administration. Then, again, in 1973, it was a Conservative Government that brought in the Employment and Training Act. Admittedly, under pressure from employers, the levy-grant system was turned into a levy exemption system; but the ITBs were preserved and it was at this point that the Manpower Services Commission came to life, charged with overall responsibility for the nation's training policy. I do not know who chose the title, "Manpower Services Commission", which I, personally, do not happen to like very much; but there is, undoubtedly, implicit in it a commitment to some form of positive manpower planning.

Now we are told that there is to be a return to voluntarism with the Government intervening only at the margin, to use the noble Earl's words; that is, to leave it up to industry and to let industry get on with the job—a return by degrees to the pre-1964 position which was found unsatisfactory by the party now in power. The Government's own advisers are not in agreement with the main measures contained in the Bill. The MSC writes in paragraph 3.9 of their corporate plan: It is the Government's intention fully to phase out the Exchequer's contribution to the boards' operating cost by 1982–83 … and to apply a cut of £l1.4 million in the year 1981–82. The commission regrets that the Government's present intention is to implement these decisions in full by April 1982 while the economy is in deep recession. Implementing this major change so quickly will create problems of adjustment and may further depress training levels at a time when they should be sustained to prepare for the upturn". In the same paragraph, the commission refers to the sector-by-sector review which it is proposing to carry out at the Government's request and which I think the noble Earl told us was due in July.

Is it sensible to take power for far-reaching changes in advance of this review? In case the MSC should be thought hardly impartial, there is also the view of the Central Policy Review Staff. They are not sparing in their criticism of ITBs on the grounds that they reflect the interests of some unions and management in preserving traditional systems of training rather than longer term needs as a whole". This may be fair in some cases. I do not think anybody in your Lordships' House would hold that all ITBs are perfect and should be preserved for ever. But the Central Policy Review Staff go on to say: while recognising the financial and other constraints on the Government, we believe the Government will need to give a more effective steer to the training system". They say this twice. In paragraph 31 they say: For the reasons mentioned above, we believe that there is now argument for the Government to give the training system a stronger steer". That is to say the Government certainly cannot opt out.

If they are going to remove one tiller—the existing one—by reducing the MSC training services division and emasculating the ITBs, how are they going to steer the training system until they have manufactured another? I think that is the main concern of myself and of my friends on this Bench. There may be a case for re-fashioning the tiller and even engaging a new helmsman. The CPRS go on to say in paragraph 35 that the Government will need some instrument such as ITBs to provide leverage on training that is done by employers". A little down further on the same page they say there needs to be a change of emphasis to a type of body which will both encourage reform of existing schemes and promote innovation in those areas which are neglected at the moment". But there is not even a glimmer of such a new body in the Bill. In his introduction, the noble Earl referred somewhat disparagingly to "statutory straitjackets"—I think those were his words—and then he passed on. The noble Earl may of course very reasonably say that it is not the purpose of the Bill to define the new framework which the Government envisage, and one would accept that. But lack of certainty about the Government's intentions does not make it very easy for some of us to swallow the Bill as it stands.

Of course, it is only fair to say that there are quite a number of consultative documents and discussion papers around. I have two or three of them in my hand: Training for Skills, A Programme for Action. That was published under the last Government and still has a lot of good sense in it. More recent MSC reports still mention it with reverence. It is still the basis of their support for apprenticeships. More recently we have had A New Training Initiative, to which the noble Earl referred which is largely directed, at the needs of 16 to 19 year-olds. We have also had An "Open Tech" Programme, slanted more towards adult training and re-training which is also, of course, of crucial importance. A once-and-for-all ration of training is now completely out of date. I think that everybody recognises that.

Both these documents call for views and opinions of all interested parties by 30th September 1981. That presumably means that the Government have not yet made up their mind which of these schemes to back, or in what proportion, if any, to back them or with what funds. There is also of course the strong possibility that your Lordships' own Select Committee on Unemployment will come forward in the autumn with some constructive proposals in this field.

In the circumstances, I ask myself whether it is really sensible for the Government to bring this Bill forward at this time, when the whole question of training, whether on the job or off the job, whether at school, in a college of further education or on employers' premises is obviously due for a major review. It is my view, and I think that of most of my colleagues, that we should keep what we have got until we have devised something better, which we must undoubtedly do. But before we start scrapping we must, I submit, have a much clearer idea of what we want to build than we have at present. It is on those grounds that I find it difficult to welcome this Bill. It seems to me to be putting the cart before the horse. The whole approach is the wrong way round. Let us first work out what we are going to do about training, what the new framework is going to be, and then might be the time to bring forward a Bill of this nature to introduce the necessary statutory modifications as a basis for the new arrangements which we so desperately need. Though I find it difficult to welcome the Bill, I have no difficulty in welcoming the noble Lord, Lord Tordoff, whom I am sure the whole House is anxious to hear.

5.15 p.m.

Lord Tordoff

My Lords, it is six weeks since I was introduced to your Lordships' House and I cannot remember a time when I have sat so silent for so long. But I felt that it was necessary to get the feel of your Lordships' Chamber and, conscious of the honour and privilege of making a maiden speech in this House, I felt I wanted to save my maiden speech for a subject on which I could make a modest contribution from my own experience.

The first reason why I have chosen this subject on which to speak is because it is central to the Liberal Party's industrial policy and has been for many years. The party is ever grateful to my noble friend Lady Seear for the work that she has put in in producing party policy in the field of industrial training. We are, I think it is generally agreed from all sides of the House a greatly under-skilled country. Again, it is generally agreed that the 1964 Act was a step in the right direction. There is also general agreement that the ITBs have become too bureaucratic and are greatly in need of reform. I do not think that there is much difference between various parts of the House on that. The question is whether this Bill is going to improve that situation. Frankly, I do not at this stage in a maiden speech intend to offer an opinion on that, but I must say I am very taken with the arguments of my noble friend Lady Seear.

What I am sure of is that Parliament and the Government have a great responsibility to ensure that there is an improvement in the training system and situation in our industries in this country, particularly at this time. We hear a good deal about the coming up-turn in the economy. It would be wrong of me to offer an opinion on the Government's attitude to that at this stage. Whenever that up-turn does come—and surely it will some time—there has to be a great deal of reinvestment; and we hear much talk of the money from North Sea oil being used to reinvest in new machinery, new computers, robots and the like.

Sadly, we hear rather less of investment in training. But unless there is a greater investment in skill training in this country—both in technical and management skills—then the opportunities are going to be missed and, however good the machinery, however good the computers, unless the men behind them are skilled enough to use them, then we will miss the benefits of the up-turn. So the Bill must be judged in my opinion on whether it is likely to improve the opportunities of those now working in industry and, more important, whether it is going to improve the chances of those people who are not working at the moment. One of the great sadnesses of the unemployment situation today is that many of those people who are unemployed are greatly under-skilled. As my noble friend said, they are unlikely to get jobs when the up-turn comes unless we can do something about improving their skills.

The second part of what I want to say concerns the ITBs. I recognise from the debate already that this is a highly controversial Bill, in spite of what the noble Earl said in his introduction. I do not particularly want to refer at this stage to the controversial aspects of the Bill, although at later stages perhaps I may be permitted to do so. Nevertheless, at this stage it is proper to declare an interest. I have for the past 30 years been employed in the chemical industry and am still so employed by a company which could be significantly affected by the passage of this Bill. Such knowledge as I bring to this Bill comes from that experience in the chemical industry and a slight knowledge of the Chemical and Allied Industries Training Board—CAPITB as it is colloquially known.

The chemical industry is a relatively young and still very vigorous industry. It has a good export record. Its positive balance of payments were over £2,000 million last year. It also has a fine record of in-house training, both technical and management. ft is not typical of many industries in this country. I am sure that the noble Lord, Lord Scanlon, when he speaks on the engineering industry, will point to considerable differences between my industry and his. I nevertheless believe that because of that good history of skill training it also has a good record of industrial relations. I believe that is something that we should take on board when thinking of training. The better skilled our managers are, the better skilled our workforce is, I believe the better the chances of improved industrial relations in this country.

The chemical industry itself has such comprehensive training facilities that I understand that over the sector covered by CAPITB, something like 84 per cent. of companies are regularly granted exemption from the levy, and in the chemical part of that sector I have heard the level put as high as 96 per cent. So it comes as no surprise to me to find that individual companies, and indeed the chemical industry's trade association itself, are very much in favour of the winding up of the industrial training board. What I do find very surprising, though, is that the companies are going to be expected to pay the winding up costs. In the case of the two largest chemical companies in this country I understand the total cost of that may come to over one million pounds between them. It seems a little hard that, having had, as it were, industrial training boards imposed on them and not having had much benefit from them, they are now expected to pay these large sums of money. I do believe that the Government ought to look at that again.

Let me now come to the voluntary sector. If we are going to go down that road, I believe that we have to take a little more time than has been offered so far. The noble Earl mentioned the consultations that have taken place, but I believe that ideas within industry have not really yet crystallised to the point where that consultation is necessarily complete at the end of the day. I think it would be a mistake to suppose that the consultations which have taken place so far ought to be considered as final in any decisions which might be made as early as later this year. There is a variety of needs within various industries, and even within my own industry the needs of different areas differ quite strongly. There is no single chemical company in this country that manufactures the whole range. We are very much an industry where we take in each other's washing. One man's finished work is another man's feedstock, and the consequence of that is that different areas of the country certainly have different needs. I very much take the point made by my noble friend Lady Seear about getting training down to the local level so far as possible, and therefore I tend to favour the suggestion that voluntary organisations might well be decentralised to the regions, at the very least. It seems to me in that way they stand a better chance of forming continual links with the further education systems and making sure that the skills which are applicable in their particular geographical area are those that are available.

Having said that, I must say I have grave reservations about the voluntary system. Even the good companies in these times of economic depression are going to find it difficult, as has been said, to maintain their levels of training; and the bad ones, those which still believe that training is a luxury—foolish they may be but nevertheless there are still plenty of them about, although in my particular industry there are fewer than average—those people are going to fail even more than they are doing at the moment to provide the necessary training for their employees and for the industry.

In the particular area of health and safety, I believe this is absolutely crucial. It may well be said by the Government that health and safety can be looked after by the Health and Safety Executive or by the Factory Inspectorate; but health and safety begin not with machines and not with codes of practice but in the minds of men and women, and it is only if they are trained to recognise the dangers of bad practices and of misuse of machines that we shall really engender an atmosphere in industry where good health and safety practice is a reality. So that is an area which I am absolutely certain cannot be totally left to the voluntary sector.

There are other areas, which I will not go into today, concerning which during the passage of this Bill through another place my right honourable friends put down a number of amendments. These included the criteria that should be applied to voluntary bodies, if they are set up. Sadly, that aspect was not accepted by the Government, but I am sure that my noble friends in this House will be seeking to reintroduce some of those provisions at a later stage of the Bill and I hope they will have a more successful passage through this House than in another place. I trust that the noble Earl who, as I have detected in my short stay in your Lordships' House, gives an ear to everything that is said, will take this on board and if at all possible allow himself to be persuaded that criteria are necessary if voluntary bodies are to be set up.

I apologise for not having come to any firm conclusions in what I have said, but I would not want your Lordships to suppose from that that I do not believe that this is a desperately important Bill, because the truth is that unless we get this training thing right we could well be facing a further decline in industry. The lack of training in this country could be a recipe for the obsolescence of British industry.

5.26 p.m.

Lord Vaizey

My Lords, I should like, on my own behalf and on behalf of the whole House, to congratulate the noble Lord, Lord Tordoff, on his maiden speech, which was, if I may be so bold as to say so, a most exemplary one, since it was brief and to the point and was spoken from a great wealth of experience. We shall look forward immensely to the noble Lord's contributions to debates on this kind of subject and indeed on all the other things on which he is known to be an expert.

The noble Lord, Lord Kilmarnock, referred to the work of your Lordships' Select Committee on Unemployment. I am the fourth member of that committee to speak this afternoon, so I think it will give the rest of your Lordships some idea of where the thoughts of the Select Committee, under the distinguished chairmanship of the noble Baroness, Lady Seear, may be tending to go.

First, I welcome the Bill, and particularly welcome the excellent speech with which my noble friend Lord Gowrie introduced it. He did say that training was of central importance to the future of the country—something which I think is undeniably true. He felt that the general criticism which might be made of the training system, in so far as one exists here, is that it takes too long for young people to be trained and that the system is too rigid. I would add something else: there is not enough of it.

The noble Lord, Lord Tordoff, said there would be universal agreement—and I think there is—that one of the things wrong with this country, and particularly wrong with industry, is that we are a greatly under-skilled people. We are a people of great talent and great human resources, but the facilities are not there for us, and I thought that the figures which were given by my noble friend were alarming. He said that half our 16 year-old school-leavers do not go on to any kind of further education or training worthy of the name, whereas in France it is more than 80 per cent. and in West Germany it is more than 90 per cent. Those are two countries very similar to our own, and I think it is a matter for very strong self-criticism that we should be in this position.

I thought that the attention which my noble friend gave to the problem of youth unemployment was most important and significant. He said—and I am sure that Hansard will quote him more correctly than I am doing—that the Government's view was that all young people should have an opportunity for education, training or for work experience which mixed up both. If that is a statement of Government policy, it is worthy of note and it is one which I think the whole House will welcome.

Clearly there will be a division of opinion about how such a policy would be implemented, but that such a policy needs to be implemented, I would venture to say by the end of the 1980s, cannot be doubted. It needs to be implemented on two grounds: first, particularly for young people because, as the noble Baroness, Lady Seear, pointed out, unemployment among young people is going to be concentrated among the unskilled, with all the social problems that that leads to; and, secondly, because the nation needs more training at all levels and at all ages.

As a matter of fact, youth unemployment may not be the most serious problem. The demographic change, the structure of the population, is such that this year marks the peak in 18-year olds, as we noticed last week in our debate on higher education, which was opened so skilfully from the Benches opposite, and from now on, the 16 to 18 year old age group will be dropping quite sharply. So, I would guess that, just for that sheer demographic reason, the actual number of unemployed young people may diminish. That should not distract our attention from the fact that there is a serious problem there. But the even more serious problem may well be among the more mature people in their 20s and 30s, and I am sure—the evidence is over-whelming—that the problem of unemployment will be concentrated among the unskilled.

I do not know, and I do not suppose anybody else knows, whether or not unemployment is here to stay as a feature of Western economies. It crept up on us very suddently in the late 'sixties and early' seventies and it might steal away just as mysteriously. Perhaps President Mitterand knows how to cure it in France—we shall see. Perhaps it will disappear here, because of the Government's policies—we do not know. But I think it would be prudent to assume that, certainly for what is a reasonably foreseen future, some quite chronic level of unemployment may well be here to stay.

This is not a debate on enemployment, but it is a debate on industrial training, and I am convinced that the future of the British economy—not only of industry, but of the service sector as well—depends upon a greater level of skill, and, moreover, that we do not yet have the institutions to provide those skills. I think that the Manpower Services Commission document, A New Training Initiative, was, indeed, a most important policy document which, taken in conjunction with my noble friend's statement earlier this afternoon, begins to point the way towards which we should be going.

I am personally convinced of what the noble Lord, Lord Tordoff, said in his maiden speech, that the industrial training board structure has proved in many cases too rigid. I think it has provided very important experience and a very important background to what we ought to do next. But let us not pretend that this Bill is the major next step. It is extremely important that whatever Government, of whatever political complexion, is in office for the next three or four years, some kind of hope is given to the nation on this question. We need to have some kind of national emphasis upon this crucial issue for our future.

I make no apology for saying it—this is the third time in a week that I have said it—but I think that the time has come for a re-think of the structures in Whitehall dealing with education and training. At the moment, it is a matter of complete chance whether a young man or woman, on leaving school, falls under the beneficent sway of the Department of Education and Science, under the Manpower Services Commission or under one of the schemes of the Department of Employment, and we know from the figures that my noble friend has given that most of them will slip down the cracks between those and other bodies. I cannot help feeling that the time has come for a powerful initiative. As I say, this is not a party political point; this is something which I feel is very strongly inter-party. A need has now arisen for a powerful initiative from central Government to try to overcome what is an acknowledged national scandal.

Moreover, I am convinced that it is the field in which the European Community should also be taking an initiative. The European Community has been bogged down in the fields and vineyards of Europe for far too long, spending most of its income on agriculture when it ought to be spending its income on training and skilled development of all kinds. We know from the experience of the Federal Republic and France that it can be done by nations not too dissimilar to our own. So in welcoming the Bill, which clears away a lot of structures which have probably outlived their usefulness, and which has given the opportunity for a new initiative, I particularly welcome the terms in which my noble friend introduced it to your Lordships' House this afternoon.

5.35 p.m.

Lord Scanlon

My Lords, may I, from this side of the House, join with the noble Lord, Lord Vaizey, in congratulating the noble Lord, Lord Tordoff, on his maiden speech. May I also say that it was made more remarkable for me, knowing full well the opinions of many important employers in the industry in which he has spent most of his life. May I couple with that appreciation for the contribution by the noble Baroness, Lady Seear, whom we have much to thank for at the Engineering Training Board for support throughout the years. Your Lordships will know that I have to declare an interest as chairman of the Engineering Training Board and, I hope, quite temporarily, chief executive of that body.

Everything that is happening, and everything that has happened since our last debate, is proving—to me, at any rate—the decline in the wealth producing sector of our economy. There is no joy in saying that. It has been said many times, and I hope it can bear being repeated, that without that wealth producing sector any of the aspirations of a compassionate, feeling society—raising living standards, care of the sick and aged, pensions et cetera—will not be sustainable. Therefore, training is not an end in itself; it is a means to an end to bring those things about. Hence the interest of many employers, educationists and trade unionists who give up their time quite voluntarily to serve on bodies in spite of their being called quangos. It is the knowledge that that service can be backed up by some form of authority, by an ability to get into operation the things that they decide, that gives them their confidence and belief in those bodies. So I make no apologies at all for returning to the theme that, in our view, voluntarism will not work. I do not believe it will work in any of our major industries. I can say—I think without fear of contradiction from those who have been involved in the training—that it will not work in the engineering industry.

Let me give your Lordships a few facts at the expense of boring you. Based upon our own expertise within the board, based upon assessments by the University of Warwick, we have estimated that if the future needs of the industry are to be met—and I would remind your Lordships that boys and girls who are training today, whether as professional engineers, technicians or craftspersons, will not come on stream for four years —we need an intake of 20,000. The industry, based upon its order books, has recruited only 12,000, a shortfall of 8,000.

But by far the worst aspect is the growing inclination to dismiss young boys and girls during their first, second or third year of training; so much so that over 2,000 have been thus treated this year, making the shortfall 10,000, or 50 per cent. of the industry's requirement. If that is the position now, what is it going to be next month, when half-a-million schoolchildren leave school and when upwards of 100 applicants for every vacancy in the engineering industry will be commonplace? That is the magnitude of the problem. I give these figures to your Lordships in the belief that they speak for themselves and in the belief that they mean that there is a great need for continuance of the boards in their statutory form.

Let me turn to another aspect. It is an accepted fact that if we are to meet the challenge of new technology we have to get away from the idea that a boy or girl will be trained for only one particular branch of industry. They will need to be trained, retrained, and retrained again. Do we believe we can achieve that object if we abolish the boards as they stand at the moment? Do we believe we can overcome the other factor of getting away from the idea that a person can receive the status of craftsman only if he serves a given period of time, instead of applying the standards which obtain in any other calling or profession? Do we believe that we can achieve these ends without the co-operation of educationalists, employers and trade unions? And where else can we get acceptance of this idea except through the training boards? I repeat that we must get their participation. Although the members give their services voluntarily, they exercise a degree of authority when it comes to making a reality of things which are determined at board level. Above all, can we really expect people to serve if authority is taken away from the boards and if some messpot of voluntarism is substituted in its place? I believe not.

May I turn to the new initiatives. There are, of course, two. There is the open-Tech. I can say on behalf of the board and of most people I have met in the industry that this is welcomed, that it is overdue and that it must be encouraged in every way. For a number of reasons it is difficult at the moment to give a concise and definite opinion on the new training initiative. One can well understand why the authors of the document did not know what the future organisations to implement those statements were going to be. Therefore to some extent it appears to me that the document has been written in a style which accommodates all possibilities. Given that understandable factor, the initiative must be welcomed because it poses a number of questions.

First and foremost is the question of resources. I noted what was said by the noble Earl, Lord Gowrie: that there are three factors. Here I must part company with him. Over 50 years ago I could never understand the sacrifices which my mother told me she had to undergo in order that I could have an apprenticeship, because I received the magnificent wage of 10s. 6d. for working 47 hours a week. I repeat that if people judge entry into the engineering industry by the money that they will receive during training, that industry is the last place where they will go. To talk in terms of those boys or girls or of their parents making a contribution towards their training is almost asking the impossible.

The Earl of Gowrie

My Lords, I agree with every word which the noble Lord has said on this subject, but I said that the trainee might make a contribution in the form of lower wages. The noble Lord, with all his experience, might share my view that perhaps adult rates "clock on" rather early in this economy relative to the economics of our competitors.

Lord Scanlon

My Lords, I am grateful to the noble Earl for his intervention. However, these are matters which must be argued out by both sides of industry rather than within the context of this Bill. I can only say—I hope that this is not taken as a threat, because if it is it is purely deliberate—that the trade unions have made it perfectly clear that they have no interest in resolving either the type of training, or the remuneration for training, or the multiplicity of training if they are not part of the general set-up, with authority to deal with training, and I believe that they are fully justified in taking that stand.

May I repeat the appeal which has been made by so many other speakers in this debate. Everything seems to revolve around the desire of the Government to save up to £50 million on the training programme. I tread here on very delicate ground indeed, because I have said that the new initiative is to be welcomed. Is, however, the amount of money which is being spent on the Youth Opportunities Programme, which will keep many a boy or girl off the street, anything to do with the long-term training needs of our country or of the economy? I suggest that it has little to do with that and everything to do with reducing the unemployment figures. If a little of that money could be transferred to the long-term interests of training, I believe that we should get a far better return for our investment. I make that appeal not to decry the initiative taken in respect of the Youth Opportunities Programme but to try to inject some order of priority when it comes to disbursing money.

May I now turn to the Bill. Of course we have to hedge our bets, because we do not know our fate. I do not want to say too much in case we are not placed in the voluntary situation. However, whatever Government are in power and whatever the fate of any board may be, the omnipotence given to the Secretary of State either to accept or to ignore the advice that is given by the Manpower Services Commission is, in my view, neither good constitutionally, nor good law, nor good industrial practice. If people are going to give advice, surely they want to know that their advice will be taken notice of and will be backed up by constitutional authority.

That is my first criticism. My second criticism concerns the levy. I do not know what compelled the Government to write into the Bill authority for employers to determine the levy. That is virtually what they can do. It is not necessary. Over the 17 years that the Engineering Industry Training Board has been in existence we have never had a vote. We have always got by by consensus. If I may put it in more blatant terms, the employers have always got their way ultimately. Why upset the atmosphere and why upset a body that by consensus—not by party politics, not by industrial differences, but because of its interest in training—has been able to bring about the desired result? More dangerous than destroying the atmosphere is the very thing that has been referred to by my noble friend Lord McCarthy. Even where boards are given statutory backing, it is possible to strangle those training boards by lack of funds, through the employers' ability to vote them insufficient funds for their operation. I hope that this aspect will be looked into.

I want to conclude with a point that was also made by my noble friend Lord McCarthy, in respect of the saving of £50 million. In terms of the future needs of this country it is almost unbelievable that we shall take steps to destroy all that has been built up over all these years in order to effect such a saving. I can only hope that even at this late stage the Government will have second thoughts and will recognise the unique value of the co-operation between educationists, employers and trade unionists which subsists within the existing training boards.

5.52 p.m.

Lord Mottistone

My Lords, it is a pleasure and indeed an honour to follow the noble Lord, Lord Scanlon, in his position as president and chief executive of the Engineering Industry Training Board. One could not obtain a better knowledge of how things work than from such a source as he. I should also like to congratulate the noble Lord, Lord Tordoff, for what was, as other noble Lords have said, a brilliant maiden speech and also for such a fluent maiden speech. When most of us start on this great track we sometimes lose our fluency, but not so the noble Lord, Lord Tordoff. I hope that he will address us on many occasions, even if we do not agree with all that he has to say; I am looking forward to a more controversial approach.

I am sorry to have to say to my noble friend Lord Gowrie that I was not here when he introduced the 1973 Act because at that time I was the director of the Distributive Industry Training Board and I applied the Addison Rules to myself because I so objected to the Bill and it so deeply affected my income because of the way in which it was formed. I thought that it was a quite disgraceful piece of legislation, which was passed under all sorts of pressures. I can sympathise with the Government, whom I supported in principle, of course, who were under tremendous pressure from their own Back-Benchers in the Commons. The Act really came at a most unfortunate moment—just as the training boards were getting off the ground, were getting clear of initial suspicion, and were starting to achieve something, they were pushed under the Manpower Services Commission, Department of Employment and Civil Service Department for a whole lot of things, because, poor things, they were centrally funded and the Treasury would not allow them out on their own any more.

I imagine that the noble Lord, Lord Scanlon, will in part agree with me when I say that the result of all this is that an enormous amount of effort among the top people in the training boards made since 1974 or 1975, when the Act was brought into force, has had to be devoted to bothering with the Manpower Services Commission—not only on the money and policy side but also on the training side. I believe it would have been very much better had the Act been so phrased that the Manpower Services Commission—which has a very important job to do in the general area of manpower planning and the unemployed and has done it very well—had been able to leave the training boards to get on with the job of coping with people who are in employment.

We now find ourselves with the need to do something different again, because clearly the present arrangements have not worked. Even the Manpower Services Commission itself, in its comments last summer, admitted that one of the things that has not worked is the relationship between the Commission and the training boards. I really believe that something is due and to that extent I think it is right for the Government to introduce an enabling Bill which will allow certain adjustments to be made. On the other hand I do not believe that the flexibility which the Government have given themselves is the kind of flexibility that I personally should like to see them have.

At this point I must declare an interest because I work for a trade association, the Cake and Biscuit Alliance, and therefore some of the views which I shall express will be somewhat different from those which have been expressed by noble Lords opposite on both the Labour and Liberal Benches, I see this matter as being of great concern to industry, who would have been happy to continue the original 1964 Act with all the flexibility it contained. It is moderately unhappy with the present Act, but certainly does not want what it believes will come out of the proposed Act, if all the enabling powers are put into effect.

I have five points of concern. I am concerned about subsection 2(1), which clears the way for industry to bear expenses. I am concerned at the implication that industry will bear winding-up costs. I am concerned about the extraordinary new procedure for partial exemption, which is allied to what we have just been talking about, and on rather a different basis I am concerned at the widening to "persons employed in the industry". From my own practical experience of the training board with which I worked, I have always thought that except in a very few specialised cases (and I suspect this might apply to part of the engineering industry) the idea of industry-wide training was in many cases just "pie in the sky".

It is not like that, because different types of activity and skill are different not only within different relatively small sections of industry but also among different companies within the same industry. However good people's qualifications are, one has to retrain them to suit one's own application for the sort of work ones own company is doing. This is so in a whole range of industries, although I agree that there are some highly technical engineering activities where this does not apply. En general terms, if the change in the phrase had been less complete, I should have been much happier.

Finally, I am concerned at the implication that all industries must produce a collective voluntary training organisation if they do not have a training board. At least, that is what the implication seems to be to me. If I am reading more into the Bill than in fact is the Government's intention, then perhaps my noble friend will tell me so when he comes to reply at the end of this debate. I suggest that a collective training organisation, if one does not have a training hoard, is suitable for some industries but not necessarily for all industries.

In some industries rationalisation has taken place over the past 30 years, and the industry in which I work is a very good example of that. Rationalisation has left the industry with a situation in which about half the membership of its trade association, out of a total of 40 companies, are either very large companies in their own right or are medium-sized companies in terms of producing biscuits or cakes but are subsidiaries of very big companies. Of the remaining 20 companies, some two-thirds are below the cut-off applicable to the Food, Drink and Tobacco Training Board, so they have not been subjected to training board encouragement at all—much to my personal regret, and it is something that I have tried to put right. That leaves very few firms that perhaps could do with more centralised encouragement: not more than, say, ten in a whole industry which is in fact producing more biscuits and cakes now than it was in 1947, when there were ten times as many companies in the industry.

There are industries like that, and the big companies or the subsidiaries of big companies are, in their own very good sense, bound to continue the training practices that they had going before the training boards were set up, let alone that they have refined and improved since they have had the guidance of the training board to help them more. They are very well aware of the need, not only to develop their own, but wherever necessary to join up with other firms, both in our industry and in another, who initiate the particular type of training course that they find necessary.

This has happened. In fact the last time it happened was against the wishes of the training board, and it produced very good results. So there are industries which probably do not get any substantial gain, will not be kept doing any more training by being forced to be part of a training board or even to set up their own little local arrangement based on their own trade association. It may be that there are not many of us, although I rather think there are more than perhaps your Lordships would think. What is silly, is to put us, when we do not need it, in some sort of bureaucratic situation which costs money. If, after a period of time—and I recommended it in a speech in your Lordships' House back in 1969 or 1970—arrangements were made for some sort of inspection to take place, say at five-year intervals, because things do not change very fast either in a good way or a bad way, which could look at industries which have not got anything or at industries that have never had anything, there might be a good reason for having that sort of arrangement. The inspectors could report to the Secretary of State and say, "This industry has slipped back since the days when it had its training board; you had better do something about it". I think there is room for that sort of approach, but the key point is that the good training companies in the training board system have never paid a penny in the way of net levy. They have always got back at least as much, and very often more, in grant than they have paid in levy. Those are the good trainers, which usually include the biggest companies.

The cost of running training boards before the Government took it on under the 1973 Act was in fact carried by the bad trainers of medium size. The small companies never paid for it because they did not provide collectively enough; it was the bad medium-sized trainers. It always puzzled me that this was not rumbled. Of course I was not going to tell them because that is how they kept us going. That was one of the reasons, of course, why the Government felt they had to do what they did the last time; the only pity was that they did the wrong thing. A change was necessary, but not that one.

The point is that it is going to be very unfair if companies that have never paid a penny are going to be called upon to do so. What is more, those particular companies are aware of their good training, and they are spending a lot of their own money on their own internal training now. They have been prepared to do that because they have known very well that it has helped them to produce a standard which has enabled them not to have to pay a levy.

I have exchanged letters with my honourable friend Mr. Peter Morrison on this subject during the last couple of months and he has not reassured me on this point at all. He has said that the Government will think very carefully about this, they will do this and they will do that; but when one reads the Bill one finds that it is all about making it easy for industry to have to pay. I think it is jolly unfair and it will bounce in the Government's face, because if you want to have something that is new and for which there is no justification, nobody will readily accept it.

Fortunately, I am to be followed in the debate by the noble Lord, Lord Allen of Fallowfield, who may be taking a stand on this point. I should have thought that some training boards, of which my own late distributive training board is a good example, could very well continue under the original 1964 rules, under which they were totally self-financing from their levy grant system, because probably in that industry there are still an enormous number of firms who have more to learn.

As I explained earlier, the one that I am now concerned with, the Cake and Biscuit Alliance, is the complete reverse. They are very small, tight, well-organised big companies, but the distributive industries are totally different, with hundreds of thousands of very small companies, and very few big ones. I should have thought they could still usefully go on under the old rules, but I am somewhat worried again about Clause 2(1), which I grumbled about in another direction, over the question of substituting "encouraging adequate training" for the words "raising money towards meeting its expenses". One of the key factors of the 1964 Act was that the training boards were to encourage adequate training. That was what they were there for. So I hope that amendment does not mean that part of the flexibility in this enabling Bill is not that they could, if they wanted to, put a board back in a 1964 situation, with all that went with it under the 1964 rules. I should be delighted if we could, and perhaps my noble friend could tell me whether that is an option that is open to the Government.

I will not speak for much longer, but I feel that I ought to remind the Government of my suggestion of last winter during the spendid debate initiated by the noble Lord, Lord Scanlon, which is that the training boards have a value to the Government and the country almost irrespective of the training function. It is a wondeful area in which employers and trade union officials and educationists meet together on a subject which is, on the whole, non-controversial and which everybody agrees about. I believe that this in itself is a wonderful thing to have. I do not believe that NEDO, which is in a different framework altogether, meets that point, and I think it is terribly important from the Government's point of view that they should retain that approach.

So I should like to see the Government bearing the cost of the boards—just the boards, not the staff—and that the levy and grant staff should be wound up, except in the cases that I have just mentioned, where the boards have a job more to do—and maybe that applies equally to the noble Lord, Lord Scanlon's board. In the case of selected boards, we should keep the board going, have the liaison between the different branches of industry, wind up the levy and grant and put the training advisory staff on a self-supporting basis in three years' time. I consider that that should be possible, and if they cannot do it, then it would be found that the ones which could not keep going would naturally, and by their own selection rather than from direction at the centre, join up with others with whom they might be able to make a go of it. I think there is a great deal to be said for that approach.

I will not continue on that point because if my noble friend's advisers like to look at the relevant Hansard about 16th December they will see it in greater detail. But it would be helpful to know whether the Bill is flexible enough to allow that sort of solution to arise. If the rather different solutions that I think the Government are contemplating are still able to be achieved within this Bill, then I think it is splendidly flexible and that is a good thing. But if they cannot be, perhaps it would be wise for your Lordships to amend it so that it can. There may be other variations, which I am sure the noble Baroness, Lady Seear, can think of, where we could make it more flexible. Let us have all the options to get the best result, but for Heaven's sake! do not make the employers who have never paid, start paying now.

6.10 p.m.

Lord Allen of Fallowfield

My Lords, my intervention in this debate will be very brief simply because many of the things I would want to say have already been said by those who have preceded me. May I say at the outset that I welcome this debate despite the fact that it arises from a Bill which in my view fails to recognise the full implication to this nation of what the noble Earl, Lord Gowrie, described as the change in the job market. Certainly the Bill before us makes no real tribute to that change; indeed in my view it is a retrograde step that the Government are placing before the House in this Bill.

I welcome the debate, too, because it is about people, it is about the creation of wealth, and more than that, it is about the future of this nation as a trading nation. There can be nothing more important at this particular hour. I have to confess to some surprise, some apprehension and indeed some disappointment that the Government have seen fit to bring this Bill to your Lordships' House at this time. We have heard criticism of the industrial training boards. It has been said that they are too rigid; it has also been said in this House that they are too bureaucratic. There may be some semblance of truth in the two indictments, but I ask this House to compare the indictments that are being brought against the ITBs and the situation pre-ITBs, when the standards of training in this country were, with notable exceptions, very bad indeed, and, as many have said and found out in practice, totally inadequate. So, before we start criticising too greatly the ITB structure, the statutory structure in this country, I think we ought to keep carefully in mind what it superseded and what it has done in the period since its inception.

To present a Bill of this kind to this House at a time when the nation is confronted with sizeable economic difficulties is not, in my considered opinion, the right time to give the Employment Secretary unilateral powers to abolish statutory ITBs, and this, as others have said, despite possible recommendations to the contrary from the Manpower Services Commission. I believe that this Bill is untimely and unnecessary. Nor can it be right at a time when, by comparison with our competitors, particularly our competitors in Europe, in industry, trade and commerce, Britain's workforce is to a large extent even today under-trained.

Instead of breaking up the statutory framework, it seems to me that the Government should be seeking to improve and extend it. I think it astonishing that, at a time when the nation is facing a quickening pace of industrial and technological changes, and when maximum effort, quite rightly, is called for for greater efficiency, improved skills and cost-effective business and industry, the architects and defenders of this Bill are sanguine in their belief that we can hope to achieve and maintain these objectives by replacing statutory direction in training with a voluntarist, or please-your-self-how-much-if-any training scheme to be done by employers in business and industry. I do not share the optimism of those who believe that, as expressed in this Bill.

May I for a moment, in support of my view, ask this House to stop and look back for a few moments and examine what happened in one particular case during the life of a previous Conservative administration in respect to the Commission on Industrial Relations? The commission, facing a daunting task to try to restore a better and more peaceful relationship between employers and employed, did so under the umbrella of a statutory framework. After a period of time I think the record proved, albeit slowly, that some effective work was being performed. The Government then, as indeed I believe the Government are now doing, listened to the siren voices of those who wanted to change. Instead of the statutory framework, there was introduced into this country a voluntary approach to try to deal with the problems of both sides of industry. I believe the replacement of the statutory framework in the CIR by the then Conservative Administration proved a disaster, as I believe it will prove a disaster if this Bill goes forward as an Act in its present form.

Any attempt to return the large part of training in industry and services to voluntary arrangements will be a retrogressive step. History has shown that to leave industrial training to voluntary arrangements has, as many noble Lords have said in this House today, failed the workforce, the employers and the nation in the past. Of course I accept that there have been notable exceptions, and I believe that this Bill will penalise those notable exceptions. I believe that we shall see a return to the advertisements in trade magazines of one kind or another—advertisements by employers who have done no training seeking trained personnel, if this Bill goes through in the manner in which it is presented to us at the present time.

I believe that certain clauses within the Bill are what I would describe as short on definition of what constitutes an effective training organisation for each section of industry covered by that board which is capable of fulfilling the requisite criteria. But against that it is very long in its determination, despite all the experience carefully built up since 1964, to destroy a statutory obligation on employers to train their work force. In this nation, at a time when overall training compares unfavourably with some of our main competitors, it is not a question of whether we can afford to train our employees but of whether we can afford not to train and remain competitive.

My criticism of this Bill is conditioned to a large extent by an active participation in the industry to which the noble Lord, Lord Mottistone, referred, in which he played a very instrumental part; I refer to the distribution industry. Lord Scanlon speaks knowledgeably of his experience in the engineering industry and as chairman and chief executive of the Engineering Training Board. I must say that nothing I have seen over a large number of years in the distributive industry, again with notable exceptions which can be counted on one hand, leads me to believe that a voluntarist approach to training in the future will improve the distributive scene overall and make it much more efficient than it is at the present time. Those who are familiar with the problems of distribution will know that it is Britain's second largest industry, sometimes often forgotten, which sets out its stall to recruit annually approximately 20 per cent. of the nation's school-leavers.

The participant within a variety of trades, and those who have a close association with the trade, will also know that it is a sizeable assignment—I am sure that the noble Lord, Lord Mottistone, will agree with me about this—to discharge a satisfactory training arrangement for school-leavers in their first job. Experience has shown that this can best be done by a training board with statutory powers. Indeed, before the advent of the training board, in the industry to which I am referring—again with those exceptions to which I have referred and which can be counted on one hand—there was little if any training done whatever.

So I do not look with any great degree of satisfaction to a voluntarist approach to training in the industry about which I am talking. I hold that view as someone who welcomed the Industrial Training Act 1964 and who played an active role as a member of the Central Training Council, which, as provided for in Section 11 of that Act, had the duty of advising the Minister on the exercise of his function under the Act. There was no such provision then, as indeed we are asked to accept now, that if one called on the Manpower Services Commission for advice one could reject its advice although one had asked for it.

Additionally, of course, by virtue of my then employment, I was privileged to see set up an industrial training board for the industry of which I am speaking: I believe that it was the first one outside London. Therefore, I personally cannot overlook the importance of the ITB statutory framework to the future of that industry. Given the background that I have referred to, there is no voluntary system that I can envisage that will maintain and improve the standards already established by the Distributive Industry Training Board. To abolish or, indeed, to change the scope of the statutory board and replace it with a voluntary system will, in my view, do irreparable damage to the image of distribution and, yes, to the image of a large part of industry and commerce at a time when know-how and finance should continue to be employed in those industries as they are at present.

Therefore, like others who have spoken in the debate, I make my appeal to the Government to think again and to look back on past experience of moving away from a statutory framework to a voluntary framework and all that that has entailed for this nation. It merely means that we shall continue to talk about the problems that we set out to deal with many, many years ago.

6.24 p.m.

Lord Granville of Eye

My Lords, it is always very interesting to follow the noble Lord, Lord Allen of Fallowfield, because he certainly knows the problem and understands the subject. I found myself very much in agreement with the backward-looking view which he was taking of the matter and the way in which he related it to our real needs and what is in the Bill at present. I was also interested in the maiden speech of the noble Lord, Lord Tordoff, who has spent many years in the chemical industry and who certainly understands the problems. As he said in his speech, I have no doubt that he will have many contributions to make when we reach the Committee stage. I agreed very much with the speech of the noble Lord, Lord Vaizey, who is not here at present, when he, like other noble Lords, indicated that this Bill is all right as far as it goes, but that something else is needed if we are to grapple with the tremendous problems which we still have to face if we are to get out of this period of recession and unemployment.

I should like to pay my tribute to the noble Earl the Minister because I think that he applies himself to the problems and comes to your Lordships' House and gives us very interesting speeches. I was also interested in a statement which the noble Lord, Lord Scanlon, made, I think to the press, a few days ago and again in his speech today, that by 1984 we shall be short of 6,000 apprentices a year and that in 1960 we turned out 27,000 apprentices a year in the industries of this country—large industries, small industries, entrepreneurial industries and so on. This year the number is 12,000.

Whatever we may feel about this debate, we cannot face the future industrial problems, as the noble Baroness, Lady Seear, said in her speech, unless something is done about the situation. I had the advantage of schooling in an industrial organisation in Cheltenham which the noble Lord knows very well. We could not afford apprentices, but we managed it. We made do; we found the money somewhere and we maintained the organisation. In fact, we almost turned our course into a technical university. People were not compelled to stay with us after they had finished their indenture—it might be four, five or seven years—they could go where they wished, but many stayed and many came back.

What happened?—with the outbreak of war we were able to establish shadow factories and to build up the technical war potential in the aircraft industry without which, before the Battle of Britain, we should have been in very serious trouble. After the war we were able to harness this technical force, this organisation, to a great policy for export and it is one of the biggest exporting companies today.

We talk about 3 million unemployed and reference has been made in the debate to the "gap". When the silicon chip and the big changes in large-scale and medium-sized industries take place, shall we have enough trained people, trained young men and technicians to be able to take up the cudgels and deal with the situation?

I agree with the noble Lord, Lord Vaizey. I think that the Government need more than this Bill—they need an imaginative forward policy if we are to deal with the unemployment problem in recession. We need a dozen Cranfields and all the technology which they gave to the aircraft world, and we need Farnboroughs. Why not turn Chatham and Portsmouth into great training centres? Why not invest in them? That would be an enormous national asset which would come to this country's assistance when we begin our export drives and our trade revival. There are the undeveloped countries—the great continent of Africa. There are markets there. We should have an export drive and bring their technicians over here, train them and so on. That is the way ahead.

As regards defence, we recently had statements on the Trident and the change in the Government's defence policy. I remember the late Lord Beaverbrook and Lord Hives, who was the creator of Rolls-Royce, Sir George Dowty and Sir Roy Fedden, who created Bristol Aircraft, telling us before the war that Germany had trained and conscripted for machine tools a cadre of young people, while with us it was touch and go. If we have to take a risk, and we want to deal with this problem of defence, our real war potential is our technicians and our trained skilled people who are able to meet quickly the surprises which the enemy will produce, of which we know nothing today. If Vickers and Hawkers had not taken great risks in building up their engineering personnel and the employees in all their factories, we would not have had the Spitfires or the Hurricanes. Therefore, on defence alone, the Government need to tackle this problem with something afresh.

Certainly if we are to survive this recession—as many noble Lords have said in the debate—and if we are to escape having 3 million or 4 million unemployed with the advent of the silicon chip revolution, the Government need—as Lord Allen said, we certainly need this from companies—to take a risk. As the noble Lord, Lord Scanlon, said in his speech, we should not be parsimonious. Therefore, although this Bill is of some help, I very much hope that the Government will take note of the debate and give us something in the future.

6.32 p.m.

The Earl of Gowrie

My Lords, I certainly agree with the remark made by the noble Lord, Lord Granville of Eye, who has just spoken, that the Government need more than this Bill. I would remind the House that I tried to make it clear in my opening speech that the Bill is simply a step—the creation of a framework—in what is a much larger total policy about training, and that it would, indeed, be disappointing if the Government were relying on this particular Bill to bring us forward into all aspects of training in the next decade. That is not the intention at all, and if noble Lords would be kind enough to check up in Hansard tomorrow on what I said, I think they will see that I made that clear. My noble friend Lord Vaizey spotted that and reminded the House of the welcome that I had given to the Manpower Services Commission's document, A New Training Initiative, as well as the earnest of intentions that comes from the very considerable resources that the Government put into training.

Again, in some of the anxieties about voluntarism—to which I shall come in just a moment—I think that there was a tacit more than an overt assumption by most speakers that the Government were seeking to escape from the provision of resources for training. At the moment the Government are providing upwards of £300 million a year for training of one kind or another through the MSC, and although we could all argue about what is the most cost-effective provision or whether the money is being spent in every case in the right way—and I am not altogether satisfied with every decision that has been made—I think that the earnest of putting one's money where one's mouth is is something that cannot be denied to the Government.

I, too, was very impressed by the maiden speech of the noble Lord, Lord Tordoff. He obviously spoke with real experience and it is more than conventional politeness if I may say that I look forward to his contributions in this House, particularly to his contributions during the Committee stage of the present Bill. On the other hand the expertise with which the noble Lord spoke about training suggests that he may give me a certain amount of trouble at that stage, and therefore in that respect I do not look forward to his contributions so much.

The noble Lord was one of many noble Lords who took the line that when the recession bottoms out, when the recovery comes, we must be in good shape in training terms to take advantage of it. We are all crystal ball gazing in respect of the future at any time and I claim no special authority or wisdom as a crystal ball gazer. What I do know is that even if recovery or the end of recession in the Western democracies generally comes at a much faster pace than appears to be the indication, the sun will not come out of the clouds and shine on all sectors of this economy generally; and that even if we went back to the old average rate of growth in this country of 3 per cent. a year—which we used to contrast most unfavourably with the 5 per cent. to 7 per cent. enjoyed by the European Community countries, let alone with the 15 per cent. enjoyed by the Far Eastern countries—which now looks like riches beyond the dreams of avarice, that 3 per cent. would not guarantee an easy passage out of recession to all sectors.

I think that the mistake—if I may put it that way—which is being made by many speakers who are anxious about the voluntary principle is twofold. It is not that the Government are relying simply on market forces; it is that market forces are already doing a good job in a large number of industries which, while they are recessed, as everybody is, by the recession, are fundamentally not in any real trouble and are liable to enjoy an even better time when general levels of demand have improved.

Therefore, the point that I should like to make to almost all speakers who have expressed doubts about voluntarism—and the noble Lord, Lord McCarthy, speaking for the official Opposition, started off here—is really twofold. The first point is that we shall not get rid of statutory training boards in those key sectors where we believe that essential training objectives will not be met without them. The other is that in the many years of their existence the training boards have secured significant changes which can now be expected to be permanent in many industries, particularly the successful industries. Statutory levy and grant are no longer essential incentives for companies to train in all industries. Most of them do very well without it. I think that this view is supported by the levels of exemption from levy in many industries where companies covering 80 per cent. or 90 per cent. of employees are given exemption from levy because they are, in fact, doing satisfactory training. In other words, I am not talking of some new dawn; I am talking of the position now, even at the end of the 1970s and the beginning of the 1980s when life has been difficult in all sectors of the economy.

If you look at the back of the Manpower Services Commission's Review of the Employment and Training Act, the document called Outlook on Training (and it has been referred to many times) you will see—and please attach no significance to my choice of the particular boards as it does not bode in any sinister way for their future—that 96 per cent. of employers in the air industry are exempt from levy; 90 per cent. are exempt in the chemical and allied products in industry; 75 per cent. in the distributive industry, 83 per cent. in the engineering industry, 83 per cent. in hotel and catering, 90 per cent. in iron and steel, 72 per cent. in knitting, lace and net, and so the list can go on. That does not mean an instant justification for the winding-up of those boards, but it indicates that they are doing things all right, because they get exemption from levy on account of their size and because they are taking their own needs perfectly seriously.

Lord McCarthy

My Lords, would the noble Earl allow me? Would it not be true to say that an alternative suggestion is that of course it is far too easy to get exemption, and that is one of the things that is wrong with the 1973 Act, and indeed that despite the fact that all these people have got exemption we still do not have nearly enough training?

The Earl of Gowrie

My Lords, what I am saying is, and my opening speech suggested, that certainly all is not well in the field of training, but that we need plural solutions for training. I am not convinced—and it seems to me that these figures on exemption bear out the point—that industry is not capable in very many cases of responding without levy to its training needs. What the Bill is fundamentally doing is allowing the Secretary of State, who is, after all, in the last degree responsible for the money and responsible to Parliament, to exercise a judgment after consultation with the Manpower Services Commission, and after the end of the Commission's review, to wind up boards if need be.

Baroness Seear

My Lords, I do not want to hold up the noble Earl, but he is assuming that the standard would go on if the boards were not there to prod them. After all, exemption is conditional on the continuation of the standard, and the boards are there to see that the standard is maintained. If you remove the boards you remove the prod, and the noble Earl has not told us why he thinks that without the possibility of the disappearance of the exemption the same work would go on.

The Earl of Gowrie

My Lords, that is exactly why I said that two points had to be considered; not only the point I have just made, which I only produced in evidence as an indicator that many industries do look after their training needs, but the point that we are not going to get rid of statutory training boards where these seem to be necessary; and indeed powers exist to form, or reform, boards if need be. I just want to disabuse people generally of the notion that the earnest of the Government's dedication to a particular problem or project must be found in their commitment—resource, or other kind of commitment—to a particular organisation designed to service those needs, because, as I said in my opening speech and as many other speakers have echoed this afternoon, the needs change rapidly. That is the context in which we have to look at this Bill.

I noted with great care the speech of the noble Lord, Lord Allen of Fallowfield, with all his experience, but I think he does me rather wrong in suggesting that in some way I did not place this Bill in a framework of other training needs and of a changing labour market, because that is in fact exactly what I did. I have also tried to make the point that the Government have made an enormous resource commitment in this field. I cannot see that there is any possibility of much reduction of resources in the field of training. But let us not fool ourselves; the provision of resources by Government has to be paid for somewhere—Governments do not of their own have the money—and industry also has other requirements of Government, and not least lower interest rates and lower taxes. We have to try to balance these things. But, as I have said, so far one can judge the Government by what they actually have spent, and that is very considerable.

The noble Lord, Lord McCarthy, asked whether it was likely that voluntary arrangements in this recession would do better than voluntary arrangements before 1964. This point was also echoed by the noble Baroness. The situation has surely changed since 1964. Boards have improved provision of training by companies by getting them to plan better and by raising the quality and efficiency of training. I pay a strong tribute, as perhaps I should have done in my opening speech, to the work that boards have done. Sometimes when a Minister pays tribute to something it is thought that that is automatically in valediction. It is not in this case, and I am glad that the noble Lord, Lord Scanlon, looks somewhat reassured.

As to the quantity of training, the noble Lord, Lord McCarthy, recognises that ITBs have not themselves solved all shortages. Government money is still required to fill gaps, and that is why again one has to look at this in the context of total Government expenditure, including the MSC expenditure in this area. I am quoting, the figures from memory, but I think we have so far put in £25 million to try to cope with what I agree with the noble Lord, Lord Scanlon, is a severe crisis in the apprenticeship field, although of course I think he would acknowledge that part, though not all, of that crisis is in industries which have considerable structural problems regardless of policy or regardless of recession.

The noble Lord, Lord Scanlon, asked me how we could be sure of getting reforms to apprenticeships without ITBs. May I also pay tribute to his courage not only this afternoon but in his work consistently over the last few years in going against a central union opinion, or practice, on the issue of standards. I know that he has done heroic work in getting new attitudes to thrive. I hope that he continues successful in this regard. I cannot accept, however, that the reform of the apprenticeship system can only be secured through ITBs. The main instrument of reform is still collective agreements between employers and unions, and therefore is inately voluntary almost by definition.

The noble Lord, Lord Scanlon, said that YOP had nothing to do with training, and could not some of the YOP money, which he indicated was primarily to take people off the unemployment register, be switched to training boards or to other training provisions. The present Government, like the previous Government, join with the MSC in wanting to see a greater training element in YOP. We do not see in the foreseeable future that there will be any huge improvement in the job opportunities for young people immediately after they come out of school. The nature of work is changing and therefore we are looking towards a second term, so to speak, of vocational education which young people can take on while enjoying the status of adults and getting out of the classroom, as most of them want to. Although I am not satisfied with the degree of training provision that exists in YOP, which within my department I administer, we certainly have tried to improve it, and that is what the MSC are doing all the time.

My noble friend Lord Mottistone must rest assured that this time I shall try to steer a Bill through your Lordships' House which does not decimate his income. I did not realise that my maiden effort in 1973 had had such a devastating effect. My noble friend asked me a somewhat technical question about the 1973 Act, about which, if I may, I shall write to him. He asked me whether the Government were requiring a collective training organisation in all cases. The Government will not necessarily insist on collective training organisations in all cases. Where the bulk of training is in the hands of a few big firms it might well make sense to leave matters in their capable hands. So arrangements will vary from case to case and we are not going down the road of a single blueprint in what is, as I risk wearying the House by repeating, essentially a very plural field. But we stick to our essential objectives of avoiding skill shortages in any recovery and securing adequate quality of training, including agreed standards and meeting the needs of new technologies.

The noble Lord, Lord Allen, asked me about the Central Training Council. Of course, there was no express provision to the effect that the advice of the CTC need not be followed; there did not need to be, as there was nothing—as there now is in the case of another body, the MSC—which says the Minister cannot act except in accordance with MSC advice. The noble Lord, Lord Scanlon, also took up that point in relation to the MSC, no Government have ever felt themselves bound by the advice of any given organisation. In the last resort, they are responsible to Parliament.

I did not mention this earlier, but I am most grateful for the tribute which the noble Lord, Lord Scanlon, paid to the concept of the Open Tech, which is a concept particularly dear to the heart of my right honourable friend the Secretary of State, who has given it a great deal of his time and consideration, and he will welcome the noble Lord's words, which I will certainly draw to his attention.

There are of course always some difficulties for a Minister in bringing forward a measure in Parliament which contains a certain amount of uncertainty and rather wide-ranging powers for the Secretary of State, but I do not think this is one more step down the sinister road of an all-powerful executive, though that is an accusation I have sometimes brought against Ministers when they have sought enabling powers. It is, more, that we are trying to work out a very flexible and plural system for what are very rapidly changing needs. But, regardless of the speed at which needs change, and regardless of the kinds or mix of structures we end up with, it is, I think, certain that we in this country will have to move towards something nearer the continental system whereby young people do not go on the job market quite so early, where they do not obtain adult rates of pay quite so early and where a worker in the new industries is just as professional in terms of having received some higher vocational education as his colleagues in the white collar professions have been throughout this century. I hope, therefore, that the House will at least give the Government the benefit of the doubt in their intentions to try to get a flexible structure, because we share the House's concern for the importance of the issue.

Lord Mottistone

My Lords, before my noble friend sits down and to put the record straight, may I reassure him that my salary was not decimated as a result of the 1973 Act? It was affected, which was the reason why I felt I had to apply the Addison Rules to myself. I should not like the record to give the impression that I was in penury because of my noble friend's Act.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.