HL Deb 20 December 1984 vol 458 cc740-6

12.7 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead) rose to move, That the draft order laid before the House on 3rd December be approved. [5th Report from the Joint Committee.]

The noble Lord said: My Lords, I beg to move that this order be now approved. The levy which this order would extend for a further year is expected to raise a total of some £42.5 million to meet the training needs of the construction industry. It is important to ensure that these costs are spread among employers and that all but very small firms contribute to the CITB for grants and training in the industry. For small firms there is an exclusion level which applies to those with an annual total payroll of less than £15,000.

The proposals before your Lordships provide for an occupational levy for the main part of the construction industry. This is a set amount for each occupation and is subject to an overall limit of 1 per cent. of employers' wages bills. These occupational rates vary according to the type of craftsman trained. The board believes that this system reflects the extent to which it has been able to meet the training needs of various categories of workers. The levy rates are set at a level by the board's industrial committees to reflect the specific training costs and needs of each occupation in the industry. I am pleased to be able to say that the occupational rates remain largely unchanged from last year.

Also again proposed is a 2 per cent. levy on labour-only subcontractors. This levy is to be applied to payments made by firms employing labour-only subcontractors who often do not contribute to craft training. This proposal is widely supported in the industry. For their other occupations such firms will pay the fixed occupational levy, subject to the overall 1 per cent. limit.

Noble Lords are aware that the construction board was retained following a general review of training arrangements in 1981 because there was—and remains—widespread support from employer organisations in the industry. The board chairman, Mr. Leslie Kemp, his staff and all board members, employers, trade union representatives and educationists have really done sterling work, particularly in making the youth training scheme such a success in the construction industry. The Government welcome the representation on the board given to the Federation of Master Builders in June last year. This seems a sensible move, since the federation has an important role in contributing to the board's efforts in training.

In previous years there has always been consensus in the industry for the board's training proposals. This was clearly demonstrated a year ago. The present order follows proposals adopted without opposition by the board, and approved by the Manpower Services Commission, who have decided that they are necessary to ensure proper training in the industry. However, the Government have had many representations about the levy. Ministers have consistently stressed that levy matters must be settled within the board, not by the Government. It is vital that employers agree because it is they who pay the levy. The Federation of Master Builders wants to change to a payroll system of levy. Other employer organisations reject this, saying that it was tried before in the 1960s and proved inequitable. I should make clear that all other employer organisations, so I am advised, represented on the board support the proposals.

This order is necessary to being in vital revenue for the board to meet the industry's training need. It will also enable the board to continue to play a significant role in the Government's new training initiative. These proposals are very similar to those put forward and approved by your Lordships a year ago. I beg to move.

Moved, That the draft order laid before the House on 3rd December be approved.—(Lord Belstead.)

Lord Dean of Beswick

My Lords, first of all, may I express my appreciation to the noble Lord, Lord Belstead, for the very sympathetic and detailed way in which he has moved this order today. He will know that when this was debated in another place on Tuesday more than an hour was spent on it. I can assure noble Lords who are present here today that I do not intend to take anything like that much time on it.

If one peruses the Hansard of another place, one sees that all aspects of this order were pretty well covered. The Minister, in moving it, has explained what it is about. It is of course an annual increase. It is a pity that there is some disagreement between the bodies that make the levy. There is no disagreement whatsoever as far as I am aware, and I am sure the Minister will agree. Everybody in the building industry involved in this matter agrees with the scheme itself.

What the Federation of Master Builders has been saying for some time is that, as it represents the smaller builders—the special system—the present system is a little unfair to it as against the other federation which represents the larger builders.

In the debate as reported in the Hansard of another place reference was made both by the Under-Secretary of State and the Opposition spokesman to the working party that has been formed to look into the building industry. It is hoped, although there is no guarantee, that this will be one of the matters that will be looked at in order to iron out any differences of opinion, so that in future there can be a universally accepted form.

I hope that that can be the case because the CITB, since it has been set up, has done a first-class job under Mr. Kemp. In another place I was one of the Members who first asked for a place to be found on the board for the Federation of Master Builders, the smaller organisation, and this has been granted. No doubt the federation will make its presence felt and put its case accordingly.

I do not think there is much more I want to say, other than that I support the acceptance of the order. It is necessary, and I hope that the disagreements which at present manifest themselves can, for the good of all the people involved—those in the building industry, the component sections, and the young people being trained by the CITB—be ironed out so that perhaps next year the Minister can come along with a package totally acceptable to the people involved. I support the order.

Lord Rochester

My Lords, I should like to join in thanking the noble Lord, Lord Belstead, for the clear way in which he has introduced the order. He has done so against a background of the announcement last Tuesday by the Secretary of State for the Environment of substantial cuts in capital expenditure by local authorities. These are a further heavy blow to the construction industry, and I fear may well lead to more unemployment in the industry. That is not a reason for opposing this order, for its objective is to finance training that we on these Benches strongly support, but against such a background I think it is reasonable to ask the question: what is training in the construction industry leading to?

As to the order itself, the main point of contention, as has been said, is whether the levy should be on a per capita basis, as proposed by the Construction Industry Training Board, or should be changed to a payroll system, as advocated by the Federation of Master Builders, which, generally speaking, represents small firms. I recognise of course, as the Minister has said, that very small firms employing only a handful of people are altogether exempt from the order, but there are others coming within its scope which are affected adversely in the sense that if payments were levied on a payroll basis, as I believe is the case with all other remaining training boards, this would result in savings to most members of the Federation of Master Builders while adding to the costs of many large firms in the Building Employers Confederation. In that situation at first sight one's sympathies lie with the smaller firms, which I suspect have less say than others in determining what is ultimately decided.

It nevertheless seems to me, as it does to the noble Lord, Lord Belstead, and indeed to the noble Lord, Lord Dean, that these matters should if possible be sorted out within the board itself. I understand that a working party has been established which will be in a position to examine, among other things, the way in which the levy should be raised. Better that way, my Lords, than that politicians such as ourselves who are outside the industry should seek to do the job for them. So, like the noble Lord, Lord Dean of Beswick, I very much hope that this will be done in time for agreed arrangements to be implemented when next year's order comes before us.

I should like, if your Lordships will allow me, to take this opportunity to raise briefly a more general matter concerning the quality and funding of industrial training. When the Employment and Training Bill was passing through this House in 1981 I moved on behalf of my noble friends an amendment the purpose of which was to ensure that all sectors of industry should introduce training arrangements which would apply to statutory training boards where, as in the case of the construction industry, those remained, and operate also in other sectors where boards were abolished. The idea was that those arrangements would have to conform to certain criteria framed to encourage an approach to training of an organic, problem-solving kind which would focus on objectives and achievements. They were also to recognise that training needs were related to local labour markets and would apply across sectors rather than identifiable only on the basis of individual industries.

It is still my hope that the Manpower Services Commission and the Government will initiate something along these lines. Indeed, in my view there is a strong case for instituting what would amount to a national training levy which would apply throughout industry and be remissible to firms providing training which was adequate in quantity and conformed to criteria of the kind I have suggested. Frankly, I do not see how, otherwise, training can be provided which will give this country people having the technological skill required to match competitors in countries such as the United States of America, Japan and West Germany.

It would be unreasonable to expect the Minister, in replying to the discussion on this particular order, to respond in any detail to the wider point I have taken the liberty of raising, but I hope he will acknowledge that it is one which merits careful consideration and that he will therefore agree to bring it to the notice of his right honourable friend the Secretary of State for Employment. Subject to those few qualifying remarks, we are content that this order should be approved.

Lord Stallard

My Lords, it is not my intention to delay the House for very long. I will first declare an interest. I was involved in training all my working life; first as an apprentice, then as a craftsman training apprentices, and finally as a technical training officer responsible for training technicians and craftsmen. I am still a member of the Institute of Training and Development, so I have maintained an interest in the whole training field for a large number of years.

My sole interest in this particular order and the background to it is that which has been mentioned by all three noble Lords who have spoken already. It is the disagreement which appears to exist within the industry itself about the future method of financing training. My concern is that this should not affect the number of people being trained or the quality of training. But—as the noble Lord, Lord Rochester, has rightly said—while we accept and welcome the fact that smaller firms are exempt, there are thousands of firms, representing thousands of employees, in the area between the large firms and the very small firms. It appears that it is in that area that the disagreement exists.

It would seem that because such firms feel they are being unfairly treated by the per capita arrangements as they now exist, there is a reluctance on the part of some of those employers to employ as many craftsmen as they might otherwise do. This is because the more craftsmen they employ, the bigger the proportion of levy they will have to pay in relation to some of the larger firms. In fact, I understand that some smaller firms pay more in levy than they receive in grant. This is not exactly the same situation as exists for the huge firms.

There is quite a strong feeling in the industry about this matter, and we should not under-estimate it or gloss it over simply because we have been presented with an order which the Minister says enjoys a consensus of agreement. That is not quite true. I believe we ought to take more seriously the possible disruption which may exist within the industry.

We ought to take on board also the fact that the Federation of Master Builders were not involved in a previous working party, and there is no indication that they will be involved in any future working party. There was also a working party set up under a Mr. Smith. That working party did report, and it appeared to favour a return to the payroll levy.

As I understand it, that report was supported by a number of organisations within the industry, including the trade unions. The views of the Smith working party do not appear to have been adequately represented in the discussions which took place prior to the drafting of this order.

The noble Lord the Minister states—and we all agree—that this matter ought to be settled within the industry itself; that would be the best place to settle this kind of discrepancy. But I would ask the Minister whether he will himself consider initiating some kind of conference which would involve all the parties concerned before this situation comes off the rails. In my view, he could initiate a meeting or conference to include all the appropriate parties and organisations who are at odds in respect of the payroll versus per capita arrangement, to see whether the views of organisations such as the Federation of Master Builders, who have a very strong point of view, can be more evenly and fairly represented in the document which comes before the House before the next levy is agreed.

12.25 p.m.

Lord Belstead

My Lords, I am grateful to the noble Lord, Lord Dean of Beswick, for the reception he gave to this order. I am grateful also to the noble Lords, Lord Rochester and Lord Stallard, who put their fingers on the really important points.

First, the noble Lord, Lord Dean, made the point at the start of this debate—and it was one which the noble Lord, Lord Stallard, ended by making—that it would be very desirable if, when this order again comes before your Lordships in a year's time, the method of paying the levy could be on an agreed basis. All noble Lords who have spoken made that point. The Government certainly agree with that point of view. When this order was taken in another place, my right honourable friend the Minister of State for Employment said he would do everything he and his department could do to help the working party. I hope that underlines the answer being given to the question asked of me by the noble Lord, Lord Stallard. We must hope that there will he not only discussions but also agreement in a year's time.

Before I leave that point, I believe it would be fair to say that the board, as it has been constituted, has never agreed there ought to be a change in the method of paying the levy, as it has been constituted. The other point I believe it is right to make is this: I listened with care to what was said by the noble Lord, Lord Stallard, about the position in which some smaller firms perceive to find themselves under the payment of these levies. But one must bear in mind that firms excluded from levy payment—which are those firms having a payroll of below £15,000—receive £3 million in grants, that more than 40 per cent. of companies within scope to the board are excluded from paying the levy because of their small size, and that firms with a payroll of between £15,000 and £30,000 receive 96 per cent. of the levy back in grants (the highest of any single payroll group). It can thus be reasonably said that a great deal is being done for very small firms. Nonetheless, I have no doubt that this point will be discussed in some detail by the working party.

The noble Lord, Lord Rochester, put the general point—and I am grateful to him for giving me notice of it—that it would be desirable to have a system which would lead in the end to some kind of national training levy. I will certainly draw the attention of my right honourable friend to this interesting suggestion, which the Government have indeed considered among other options.

We instituted a major reorganisation of training between 1981 and 1983. I believe it is important that the voluntary bodies set up in place of the statutory boards which were abolished should have time to establish training arrangements suited to their industries. I am advised that there are already encouraging signs of progress. I am simply saying that another upheaval of the system at this stage would not he wise. Generally, our aim must be to reduce the tax burdens on industry and not increase them if enterprise and initiative are to flourish. In line with that aim, the Government only recently removed the national insurance surcharge. Nonetheless, I will certainly draw the attention of my right honourable friend to the noble Lord's remarks.

The noble Lord, Lord Rochester, prefaced his remarks with a brief reference to the Government announcement made earlier this week. He made the point that, in his view, that announcement would have an effect on the building industry. I would simply make the point that the Construction Industry Training Board has achieved the most incredible results so far as the placing of young people on the youth training scheme is concerned; it has recorded 90 per cent. placement at the end of youth training scheme courses. I would simply express the hope that that success will continue.

I hope that I have answered all the points noble Lords have made. I beg to move.

On Question, Motion agreed to.