HL Deb 22 December 1982 vol 437 cc1083-5

Lord Glenarthur rose to move, That the draft order laid before the House on 2nd December 1982 be approved.

The noble Lord said: My Lords, this levy order requires parliamentary approval because part of it involves a levy of 2 per cent. on payments made by employers in the construction industry for labour-only sub-contracting. In many respects the order is similar to that of last year. For most of the construction industry there is an occupational levy. This is a set amount for each occupation employed, but is subject to an overall limit of 1 per cent. of the wage bill.

All firms pay the levy except for the very small ones—that is, those with a wage bill of less than £15,000. For the labour-only sub-contractors' payments, the proposed levy is 2 per cent. Last year it was also set at this level, but it was then subject to an overall restriction of the whole levy to 1 per cent. The difference is that this year, for the first time, the 2 per cent. levy is not in any way restricted. This 2 per cent. levy will be applied to the payments made by firms who employ labour-only sub-contractors. For their other employed staff a firm will pay the usual occupational levy, but this element alone will be restricted to 1 per cent. of the pay bill.

Perhaps I should explain that the Construction Industry Training Board has no exemption from levy in respect of an individual firm's training performance, although this is possible under the 1982 Act. With the support of the industry it has chosen to levy all firms except those of small size, and this has been its policy for a number of years. The board estimates that the levy will raise about £38.6 million which will be used to finance training necessary to the industry.

The proposals outlined in the order have received detailed consideration and consultation. They have been unanimously approved by the Construction Industry Training Board and the Manpower Services Commission. Furthermore, the principal employers' associations in the construction industry have indicated their agreement with the 2 per cent. levy.

There may be those who are in some doubt about the necessity for a 2 per cent. levy. The reason is that very little training is done by labour-only subcontractors. There are, of course, inherent difficulties in organising training for a mobile and somewhat fluctuating workforce which, for the most part, is engaged in work at temporary sites, and the board is anxious to correct this previously unsatisfactory situation. As I have said, the proposals contained in the order have the agreement of the board, employers and the trades unions. I therefore commend the order to your Lordships. I beg to move.

Moved, That the draft Industrial Training Levy (Construction Board) Order laid before the House on 2nd December 1982 be approved.—(Lord Glenarthur.)

Lord McCarthy

My Lords, I support the Motion that this order should be agreed. Indeed, there is very little I want to say about it. I have only two points to make. First, as I have said, we argue that such a levy is essential if there is to be any training in what is undoubtedly a key industry. If the Government ever wake up and generate some work for the construction industry we shall immediately run into the shortage of craftsmen that we have run into in previous times when there has been an upsurge of work in construction. Therefore, there must be training, and that training will not be done on a voluntary basis by the industry. Consequently, we are very glad to see that the industry has retained its training board and is now proposing to raise a levy worth £38.6 million a year.

My second point concerns the balance between a 1 per cent. levy for people who are on employment contracts and a 2 per cent. levy for labour only subcontracting. I note what the noble Lord said and I gave him some notice that I would be asking him a question about this. I note that he has given us quite a bit of information on why there is the 2 per cent. It is the balance between 1 per cent. and 2 per cent. that I am not quite able to follow. The noble Lord appeared to be saying at one stage that there were expected to be particular benefits to the labour-only sub-contractors. I suppose, as he says, that is because they do not do any training. If that is the case. I do not know whether we are convinced that a 2 per cent. levy will in fact force them to do the right amount of training. I do not know why 2 per cent. is considered the necessary figure to force them to do this training or to have the money available to give them when they do that training.

The noble Lord did not suggest, although he may be doing so, that perhaps the increase of 2 per cent. against 1 per cent. is because we expect a certain amount of evasion of the levy. I thought he was saying at some stage that, because it was very difficult for sub-contractors to do training—or perhaps one might say that because it was very difficult to see whether sub-contractors do training or not—maybe those who can be persuaded to do training have to do a lot of training to make up for those who do not do training. Is it really evasion that brings about the increased levy for sub-contracting? Is the increase in the levy for sub-contracting, as against the levy for non-subcontracting, to be taken as some indication—as I think we on this side of the House would say—that there is something rather unsatisfactory about the whole notion of sub-contracting in the construction industry?

12.31 p.m.

Lord Kilmarnock

My Lords, I must apologise to the noble Lord, Lord Glenarthur, that I came into the House when he had already risen to his feet and had started his speech. I wished to ask him about the limit of the levy to businesses employing more than a certain number of employees—I think the noble Lord mentioned a wage bill of £15,000. Perhaps the noble Lord can confirm that? Is this to be done on the basis of a wage bill or on the basis of the number of employees?

I should like to raise one other point, although I realise it is not strictly connected with the construction industry. However, I do not think it was debated during the debate on the report of your Lordships' Select Committee on Unemployment in which it was pointed out that in the Employment and Training Act 1981 the Government reduced the number of ITBs from 24 to seven. Your Lordships' Committee made a strong recommendation in paragraphs 11.62 and 11.63 urging that the MSC be asked to produce a study of the feasibility of an across the board remissible training levy. It was suggested in the report that the product of the 1 per cent. pay roll tax across the board—that is to say, public and private sectors—would produce something in the region of £1.37 billion for training. In paragraph 11.63 the report urged the MSC to adopt the principles set out in paragraph 11.62. As this is the last opportunity this year to speak on matters of this type, I should like to ask the noble Lord whether he will give the House an assurance that the attention of the MSC will be drawn to paragraphs 11.62 and 11.63, and that they should be encouraged to produce a feasibility report on a scheme of this nature.

Lord Glenarthur

My Lords, I am grateful to the noble Lord, Lord McCarthy, and to the noble Lord, Lord Kilmarnock, for their welcome to this order. As regards the imbalance—if that is the right word—between 2 per cent. and 1 per cent., to which the noble Lord, Lord McCarthy referred, I point out that 2 per cent. is the figure recommended as desirable by all sides of the industry for the coming year. Last year the figure was 1.5 per cent. subject to the overall limit of a 1 per cent. levy on the pay roll.

Labour-only sub-contracting is, by itself, not undesirable, but it is widely recognised that little training is done by labour-only sub-contractors. The purpose of the 2 per cent. levy is to try to ensure that labour-only sub-contractors make their contributions to the training needs of the industry and do not avoid it—if that is the right word—and thereby end up in a position where they can pay people more and so pinch people from elsewhere in the industry. I hope that that answers the noble Lord's point.

The noble Lord, Lord Kilmarnock, raised a question on the limit of £15,000. Smaller firms will not be subject to the levy. If the figure is £15,000 or below, they do not have to be levied. As regards his later question about the Manpower Services Commission, I am afraid that I am not able to give him an answer to that now, but perhaps I may talk to him afterwards or even write to him.

On Question, Motion agreed to.