Industrial Training Levy (Engineering Board) Order 1985 (Hansard, 15 July 1985)

§ The Minister Without Portfolio (Lord Young of Graffham)
My Lords, I beg to move that the draft Industrial Training Levy (Engineering Board) Order 1985 laid before this House on 17th June be approved. The order is before your Lordships today because levies in excess of 1 per cent. require an affirmative resolution of each House under Section 12(6) of the Industrial Training Act 1982. Your Lordships will be aware of the importance of the engineering industry, which remains the largest manufacturing sector in terms of employment. Engineering output rose in 1984 by 4.2 per cent. and the fastest growth was in the electronics sector, emphasising the need for high level skills training in the industry. It is important to ensure that all firms play their part in training and we must ensure above all else that economic growth is not hindered by skill shortages as has sometimes happened in the past.
This levy is expected to raise about £156 million before taking exemption into account and about £20 million after exemption. The levy will cover a period of 12 months to 31st August 1985 and is in two main parts. First, in the mainstream engineering establishments, with a levy of 1 per cent. of payroll in respect of establishments with 1,000 or less employees, 0.06 per cent. of this levy is non-exemptable. In larger establishments, 0.06 per cent. is non-exemptable in respect of the first 1,000 employees and 0.054 per cent. is non-exemptable in respect of the remainder.
The non-exemptable levy will be used to meet the major part of the board's operating costs. Your Lordships will be pleased to learn of the continuing reduction in non-exemptable levy which only two years ago stood at 0.065 per cent. The product of the exemptable levy will be used for training grants and initiatives considered necessary by the board. Establishments where the number of employees does not exceed 40 will be exempt from levy, but may still qualify for certain grants from the board.
We have establishments in the mechanical and electrical engineering construction industry sector, where the levy is in two parts. For off-site employees, no levy is payable by establishments of up to 30 employees; for establishments of more than 30 employees, 1 per cent. of the total wages is payable of which 0.15 per cent. will be non-exemptable. For site employees, no levy will be paid on the first £50,000 of emoluments and for emoluments over £50,000 a nonexemptable levy of 1.12 per cent. will be payable. That is the reason for the necessity for the affirmative resolution which is before us today.
The employer and employee members of the Mechanical and Electrical Construction Industry 574 Sector Committee agree to the levy unanimously and the proposals were subsequently endorsed by the board without dissent. Letters of support have been received from the two employer organisations in the sector. There is thus consensus in the industry for the proposals, as required by the 1982 Industrial Training Act. I therefore recommend the order to your Lordships. It has widespread support and is very necessary to meet industry's future training needs. My Lords, I beg to move.

§ Lord Dean of Beswick
My Lords, in speaking to the Motion, which was so well put and so well detailed by the Minister, I take a point that he mentioned. It is related to the engineering industry, which, as the Minister said, is our biggest single employer of labour. It is a fact that over the last 10 to 15 years the engineering industry has, in total, lost more jobs than mining and steel put together. If the country is really to put its act together on the question of the export potential of manufacturing industries, this is the major industry that has to be able to take the lion's share of that.
Of course, the training under the Engineering Industry Training Board's schemes is rather different from what it was some years ago when I myself was in engineering, both in the locomotive sector and in the turbine manufacturing sector, and when we were dealing with the more traditional forms of engineering. The journeyman or the tradesman on the job very often then took it upon himself, by his own self-appointment, to train some youngsters. But we are now dealing with a very rapid advance in technology with which we have to keep up.
I believe that the measure goes a long way towards what I think is a desirable situation. We can always say that it could have been more and it could have been earlier, but that is not the case and, anyway, we do not live in that type of world. Only today, I was discussing these proposals with a Member of your Lordships' House who was a very distinguished chairman of the Engineering Industry Training Board, my noble friend Lord Scanlon, who probably knows as much about the background and the origins of these schemes as any Member of your Lordships' House. He said that this is the sort of thing for which we have been fighting for years. It has, perhaps, come a little later than it might have done and it is not, perhaps, of the dimension that one would have wanted. Nevertheless, it is a step in the right direction.
It is a fact that, unless we train our youngsters in the new techniques that are coming in, such as new computers, ribbon techniques on machines and so on, we shall lose out to our competitors. My one worry, and I am sure that it is the worry of all your Lordships as well as of the nation as a whole, is that it will be a tragedy of immense proportions if, after the training is complete, it is wasted because there are no worthwhile jobs for these youngsters to move into. Nevertheless, I think it is a move in the right direction. It is an attempt to nurture and encourage our seed corn, and on that basis, I welcome it.

§ Lord Rochester
My Lords, from these Benches I should like to join in thanking the noble Lord, Lord Young, for the clear way in which he has introduced this order. Perhaps I may say at once that we too are happy to accept it, our only doubt being whether a levy based normally on only 1 per cent. of payroll is adequate to meet training needs in engineering.
I recognise that this is not the occasion for a further general debate on industrial training, following the debate we had three months ago on the report of your Lordships' Select Committee on Science and Technology on education and training for new technologies, but I cannot allow this opportunity to pass without reminding the Minister that in their report the Select Committee stressed that in this country the link between training and commercial profitability is not recognised sufficiently to encourage widespread investment in training. The committee called for an effective national training policy together with a clearer indication of where responsibility for the funding of training should lie. More to the point—this is highly relevant to the order now before us—they recommended the introduction of a national training levy, with remissions for those carrying out training of the required standard, not simply in the engineering sector but in all areas of industry and of commerce.
The noble Lord, Lord Young, does not need to be reminded that there are many parts of industry in which there are no longer training boards, and where in my view training is inadequate in both quantity and quality. I remain firmly of the opinion that we need to return to some form of overall statutory framework for training in order to ensure that as the economy picks up and unemployment at last falls (as, irrespective of our party allegiance, we must all hope soon happens) skill shortages will not again hold us back and local training needs fail to be filled.
In replying to the debate on the report of which I have spoken, the noble Lord, Lord Young, undertook to consider this matter carefully. I must now ask him what further action the Government propose to take by means of tax remissions to firms, statutory sanctions or in any other way, to ensure that our training standards, not only for young people—I pay tribute to what the Government are already doing in this field under the youth training scheme—but also for adults, enable us to remain internationally competitive.

§ Lord Young of Graffham
My Lords, I am grateful for the great degree of unanimity expressed this evening and for the welcome to this order given by the noble Lords, Lord Dean of Beswick and Lord Rochester. It is indeed a matter of congratulation that everyone, not only in industry but in your Lordships' House, should be in favour of this small extension in the amount of training that takes place in engineering. But engineering is a fast changing field and the establishment of a vital skills agency alongside the engineering industry training board shows that at long last the engineering sector is beginning to take training seriously and is beginning to adopt a professional approach to this most vital of areas—vital if we are to create the future as we should all like to see it.
576 I am very glad that the noble Lord, Lord Rochester, reminded me about the earlier debate. It is a responsibility of my right honourable friend the Secretary of State for Employment, but nevertheless it is worth reminding the House that since that debate took place the very foundation of training in this country, the two-year youth training scheme, has come in—again, unanimously welcomed by the CBI, the TUC, by those in education and by local authorities. I hope that in the future that will be seen to be a watershed in the way in which we look at the training of young people. Only yesterday the chairman of the Manpower Services Commission announced that the new adult training strategy was now beginning to have effect as it comes in up and down the land. But more than anything else I believe there is a growing awareness that training is something in which we must all indulge and look at with great seriousness. I, for one, am not too sure that industrial training boards are the right answer; but the right answer we have to find. That matter is with my right honourable friend, and I hope very much that we shall hear from him before very long. In those circumstances, I beg to move.