Training: Company Expenditure (Hansard, 24 July 1985)

§ Lord Rochester
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
No, my Lords. We would welcome support for our campaign to persuade employers that training pays. This year the Government are themselves investing £1.2 billion through the Manpower Services Commission in improving our training performance.

§ Lord Rochester
My Lords, I am disappointed at that reply. Is the noble Lord the Minister aware that in the United States last year companies spent approximately 1 per cent. of turnover on training and that West German companies spent about 2 per cent. on it? Does the Minister not agree that the time has come for Government action rather than mere exhortation? Will the Government consider introducing a national training levy of, say, 1 per cent. of payroll which would be applicable to all companies, with remissions for companies attaining certain specified standards? How, 1197 otherwise, are we to ensure that once again economic recovery is not impeded by skills shortages and our international competitiveness endangered?

§ Lord Lucas of Chilworth
My Lords, I am aware of the figures which the noble Lord, Lord Rochester, gave when opening his supplementary question, but the noble Lord will probably recall that it was only three years ago that Parliament decided to replace 16 out of the 23 industrial training boards with voluntary arrangements. Our present view remains that a national training levy such as the noble Lord suggests is not necessarily the best way to achieve effective employer investment in training.

Lord Morris
My Lords, does my noble friend agree that the expenditure of £1.2 billion of taxpayers' money by Her Majesty's Government can hardly be described as mere exhortation?

§ Lord Lucas of Chilworth
My Lords, I thank my noble friend for his question. It certainly is not exhortation. It remains part of the campaign that we have started to raise the profile of the need for training which is to the benefit of the employer as well as the nation.

§ Baroness Seear
My Lords, even if the noble Lord does not go along with the levy that my noble friend suggested, if things stay as they are, does he agree that employers who undertake good and extremely expensive training are subsidising the large number of other employers who do nothing of the sort?

§ Lord Lucas of Chilworth
My Lords, I recall that the noble Baroness raised exactly that point some years ago when we discussed industrial training boards. What she said may be so to some extent; but British industry spends only £200 per employee on training, whereas our competitors both in Europe and America spend considerably more—three times as much, and sometimes seven times as much—to their benefit.

§ Lord Dean of Beswick
My Lords, without going into detailed figures too much, does the Minister agree that on the question of training and our competitors, we spend less than half of what West Germany spends and proportionately less than our other European competitors also? Can he say how far the recent training initiatives announced by the Government will go to make up the leeway or the deficit? Unless we do that, does he not agree that we are falling far short in providing the seed corn for our future?

§ Lord Lucas of Chilworth
My Lords, I accept the noble Lord's invitation not to go into specific figures. I agree that we spend considerably less than our competitors on training. For 1985–86 the Government have a planned spending programme of £1.2 billion. We expect to be able to help 220,000 people with training and retraining, which is double the number we helped in 1980–81. I think that that will go a good deal of the way towards helping to improve skills in certain industries.

§ Lord Kilmarnock
My Lords, the noble Lord referred to the voluntarist approach which has been the Government's line since the abolition of the industrial training boards, but do not the figures that he has given the House show that that has turned out to be inadequate in practice?

§ Lord Lucas of Chilworth
No, my Lords, they do not show that. We should like to step it up, and we have commissioned a report, Adult Training in Britain. Whichever way one looks at the figures, there is clear evidence that some employers have not taken on board the fact that training pays dividends to the companies.

§ Baroness Carnegy of Lour
My Lords, does my noble friend agree that the proportion spent on training in Germany and the United States is through arrangements by employers who want to keep the Government out of the system and not involve them in the system; and in Germany it works extremely well? Can he confirm that the adult training strategy now under way through the Manpower Services Commission is trying to get the benefit of that system rather than the levy system that was suggested in the original Question?

§ Lord Lucas of Chilworth
My Lords, I am grateful again to my noble friend; she is right. It is invidious to draw comparisons because they are not totally adequate. Our adult training programme offers grants to help employers with the cost of training. Some £14.3 million has been spent and 20,000 people have been helped this year through this scheme alone. There is to be a further expansion, and employers can utilise the services of the MSC to great advantage to themselves and to the nation.

§ Lord Cledwyn of Penrhos
My Lords, can the noble Lord explain why our performance is not as good as that of our major competitors? Will he say whether the Government are to embark on a campaign through the CBI and other agencies to persuade British industry to do better? In the event that the public sector's record on this is exemplary, can he reassure us that when industries are privatised their record will remain as good?

§ Lord Lucas of Chilworth
My Lords, the noble Lord asked me a number of questions. I can best answer him by again saying that we are drawing the attention of employers to the survey,Adult Training in Britain, and repeat that there is clear evidence from researches that training and retraining pay dividends. British industry has, I think, been slow to accept the necessity of retraining, particularly for adults, and some of our competitors have recognised the advantage rather more swiftly than ourselves. In so far as enjoining the CBI and other institutions is concerned, I am quite sure that they are as equally anxious as the Government to improve training. Regarding privatisation, the whole idea of returning public sector business to the private sector is to enable them to take full advantage of all that the private sector can offer outside the restrictions of Government.

§ Viscount Trenchard
My Lords, will my noble friend agree that the reason why our record on training is worse than that of other countries is that we had a period of the best part of two decades prior to 1979 when the atmosphere for private industry was so unfavourable and the profits were so low that research and development and training were both reduced below the level of our competitors abroad? Will he further agree that there is a danger that if the Government do too much in this now that conditions are different British industry will leave it to the Government rather than efficiently increase its training itself?

§ Lord Lucas of Chilworth
My Lords, my noble friend Lord Trenchard is probably quite right. I do not think that I can agree with him that the reasons he puts forward are the only reasons. I am grateful to him for his second supplementary question because I hope that this exchange of question and answer will be widely reported and that British industry will appreciate that the Government are giving considerable support but cannot do the whole job on their own, and that it is in the interests of British industry itself to invest perhaps something in the order of 3, 4 or 5 per cent. of payroll—not the 0.15 per cent. of turnover currently invested—which will return to them a dividend.

§ Lord Davies of Leek
My Lords, is the noble Lord aware that the implication that there is not enough training in industry does not apply to the British pottery industry, where undoubtedly training is some of the best in the world?

§ Lord Lucas of Chilworth
My Lords, I am quite sure that the noble Lord, Lord Davies of Leek, is right. There are some sectors of British industry where training is of a continuing high standard; there are other sectors where it lags behind.

§ Lord Jacques
My Lords, is the noble Lord aware that earlier this year the National Institute of Economic and Social Research published the results of some research on the differences between West German companies and British companies? They took companies of the same size, doing almost the same thing. In the case of Germany the productivity was 63 per cent. higher. Among the reasons which they found for that was a complete lack of training in the British; for example, in the case of foremen. Is the Minister aware that the results showed that not a single foreman in the British companies had a certificate for craft qualifications, whereas in the case of the German companies every one of the foremen had a craft certificate, and some of them had a master craftsman's certificate? There is the point, and the sooner we get down to it the better.

§ Lord Lucas of Chilworth
My Lords, I appreciate the great concern expressed by the rhetorical question of the noble Lord, Lord Jacques, and I take note of all that he said.