HL Deb 15 January 1987 vol 483 cc699-704

8.15 p. m.

Lord Lucas of Chilworth rose to move, That the draft order laid before the House on 8th December be approved. [4th Report from the Joint Committee.]

The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper.

This order requires parliamentary approval because one part of it—that covering labour-only subcontracting—involves a levy exceeding 1 per cent. of emolument. I do not think that noble Lords will need any reminding of the importance of the construction industry which last year accounted for about eight per cent. of gross domestic product. Protecting the skill base of the industry therefore is clearly vital. That is why it is essential that this order should be approved. Money is then available to the construction industry training board to enable it to encourage firms to train within the industry.

The levy proposals are structured in the same manner as those approved by both Houses last year and are expected to raise about £50 million.

The levy is made up of three parts. First, there will be an occupational levy on directly-employed construction workers in the main industry. A set amount will be raised for each occupation. This is of course subject to an overall limit of 1 per cent. of employers' wage hills. The rates vary according to the type of cratfsman trained and reflect the training costs of each craft. The rates are in the main the same as last year but increases are proposed in five occupational areas. These affect fewer than 10 per cent. of the total directly employed workforce in the main industry. The increases are judged necessary to enable the board in particular to increase its contribution to the YTS it operates on behalf of the industry.

Secondly, with continuing strong support from the industry, the board proposes to retain the 2 per cent. levy on payments made by firms in the main industry for work done by labour-only subcontractors. This rate has remained unchanged since 1981. It reflects the board's continued judgment that labour-only subcontractors in the main undertake an inadequate level of training, but rely on obtaining skilled manpower trained by other employers.

For the sectors covered by those two measures, companies with payrolls of £15,000 or less will not be required to pay levy, and this will exclude around 37 per cent. of all construction firms coming within the board's scope.

Thirdly, for the smaller brick manufacturing sector, the board proposes a rate of 0.05 per cent. of payroll. This is a reduction on last year's rate. All employers with emoluments of £10,000 per annum or less will not be required to pay levy. This is unchanged from last year.

These proposals have been unanimously approved by the board. Noble Lords will recall that the board comprises representatives of employers and employees through the trade unions—UCATT, TGWU. EETPU—and education. The proposals are supported by the employers' associations in the industry. Noble Lords will wish to know in particular that the proposals are supported by the Federation of Master Builders, which two years ago expressed some concern about the proposed method of calculating levy. At the same time, other employer organisations spoke equally strongly in favour of keeping the current system. As a result the board set up a working party—including the federation—to examine this concern and it has been agreed that the issue needs to be re-examined when the board can evaluate the financial implications of participating in the new two-year YTS. I am pleased that the industry has been able to come at least to an interim agreement on this matter, which we have always said is one essentially for the industry to resolve. I believe that the proposals therefore have the necessary level of consensus support required under the provisions of the 1982 Industrial Training Act.

Perhaps I should add that during the year the board has continued to work hard to develop training in the industry. It is pleasing to note that in April it signed a contract with the Manpower Services Commission for the new two-year YTS. The board currently has some 17,000 young people undergoing training in the scheme and this is making a central and important contribution to training in the industry. In addition, the board is piloting practical skill tests for trainees seeking to qualify as building craftsmen. This represents a major step toward the objective of obtaining a more coherent and relevant structure of vocational qualifications, alongside the provisions that were set out by the Government in the recent White Paper Working Together—Education and Training. The board will be playing a leading role in following up the White Paper's recommendations on vocational qualifications.

I commend the order to your Lordships. The proposals have been agreed by the board. I believe that they are necessary for it to continue its important work to extend and improve training in the construction industry and to play a significant part in the Government's training initiatives. I beg to move.

Moved, That the draft order laid before the House on 8th December be approved. [4th Report from the Joint Committee]—( Lord Lucas of Chilworth.)

Lord Dean of Beswick

My Lords, let me first express my appreciation to the noble Lord, Lord Lucas, for the clear explanations and the objective way in which he moved this industrial training order.

I believe that it is two years since I stood at this Dispatch Box when he moved the earlier orders. I am glad to see that, while there was no area of conflict between the larger building employer associations and the smaller ones, there is some optimism that the area of conflict as to how the levy is to be raised is in the process of being resolved. That is of benefit to everybody. My party supports training initiatives. They are essential. If the building trade industry picks up again it will be essential that adequate training of young people is made available in the crafts which are required. However, I think the Minister will understand that I wish to make one or two points.

This training board has quite a record of success. My view and the view of my party is that it seems a pity that the other training boards were done away with, against the advice of much broadly based political thinking, because we thought that they were also doing a good job. Although we accept the training schemes at present in being in other industries, we think that the retention of those which have been lost would still have been of benefit.

Yesterday during the debate the noble Lord, Lord Ezra, drew attention to the fact that there is a regional imbalance in the necessity for training building operatives. I know that in regions outside the South-East there is available a reservoir of skilled building labour workers who are at present unemployed. As I understand it, there is a shortage in the South-East of these skilled trades. The imbalance cannot be made up because there is no way that building trade workers in the North, in the numbers deemed necessary to make up the shortage, can move South because of the tremendous imbalance in the cost of housing, etc.

I should like to ask the Minister to give some indication that the training board will direct its attention to trying to deal with this regional imbalance, and correct the situation if possible. I know that is asking for an answer to a difficult question, but nevertheless I think the situation has to be corrected if we are to get out of the present troubles. My information is that there is a cash surplus of approximately £60 million at present available to the industry. This might have been better used in broadening the training schemes themselves or finding some way to use this not inconsiderable amount available for the purpose of resolving the regional problem about which I have spoken.

I accept in the broadest sense the introduction of the two-year training period, and it is a good thing. Nevertheless, there are people with the future interests of the building industry at heart who think that while it is a very good scheme, it falls a little short of producing the in-depth craftsmen required. I make the point on the basis that for a long time I, in both local and national government, have been interested in local authority building; houses, schools, etc. It is incumbent on the Government, or on the training boards through the Government's initiatives, to try, if they possibly can, at the first available time to increase the two-year training period to three years. Therefore, at the end of that three-year period we shall he getting a better finished product that could move straight into the labour market and produce highly finished goods. It is a fact of life in the building industry, as in most other artisan industries, that while the training schemes such as the ones we are now discussing are absolutely desirable and welcome, they are not a complete substitute for on-site training. I, and I know that other Members of your Lordships' House, learnt our trades by working alongside skilled men most of the time.

With those few general remarks, we welcome the spirit in which the Minister moved the order and the objective and frank way in which he explained it. So far as we are concerned, there are areas which need to be kept under review where we may improve things and prevent any slippage.

Baroness Seear

My Lords, I apologise to the Minister for not being in my seat when he began to speak on these measures. As the sole occupant of these Benches at this time I should like to welcome this order and say how glad we are that it is going through and that the building industry is putting this money into training. We particularly welcome the reference to the money being put into the two-year YTS. It cannot be said too often that the future of the trained manpower in this country depends on the success of the second year of YTS. The first year is a foundation year but it is in the second year that trainees will learn the techniques and specific skills required to begin to be effective in the building industry. Therefore, we greatly welcome the Government's commitment to the second year of YTS.

I am sure the Minister will agree with me on the following point, even though he may not see any way of dealing with the matter. All the evidence is that employers in this country are still far from being aware of the full requirements for a proper trained labour force. The adult training strategy put forward by the MSC is not getting the response that many of us hoped it would. The excuse put forward is that a great deal of the effort and money is going into YTS. But that is no alternative to putting resources also into adult training, especially when we have such a large number of people in our adult labour force who have never had any training. We all know now that with modern training methods older people can be trained if the resources are there.

There is abundant evidence, of which I know the Minister is well aware, that employers in other countries—our successful competitors—are putting a much higher proportion of their profits into the training of adult people. Until we do the same it does very, little good for us to congratulate ourselves on the development of YTS, important though that is, when our competitors are going ahead at a very much greater rate. It is not my work to be unduly critical, but employers in this country have simply not woken up to the importance for their own and our future survival of putting more of their money into training.

8.30 p.m.

Lord Lucas of Chilworth

My Lords, I am most grateful to the noble Lord, Lord Dean of Beswick, and to the noble Baroness, Lady Seear, for their contributions to our quite short debate tonight. I feel, as does the noble Baroness, that training is important, and it is sufficiently important for me to spend, if your Lordships will permit, a few minutes taking up some of the points which have been made.

I know that the noble Lord, Lord Dean of Beswick, does not expect me to rehearse the discussions which we had in 1982 when we wound up 16 of the training boards. Let us deal with matters as they are today. That takes me quite naturally to respond to the comments made by the noble Baroness. I could not find anything in what she had to say this evening with which I could disagree.

The Government have always felt that, with some exceptions, the responsibility for training rests with employers. It is certainly true that employers cannot rely entirely on the YTS, however good that is. There is undoubtedly—and we have proof in industry—a correlation between training, whether of young or older people, the acquisition of new skills and profit. It is from profit that wealth is created. We need the wealth to sustain those other parts of the economy that require money. I agree with, and am grateful to, the noble Baroness for underlining, as I do, the importance of employers recognising not only their general responsibility but their responsibility to their particular industries to train and sustain training.

It is interesting that in the construction industry, from a 1980–81 high of 21,874 apprentices, we dropped in 1984–85 to 14,000 only. In 1985–86 we now have some 16,000. I think this is very encouraging. About 13,000 of the young people on the Construction Industry Training Board's 1985–86 YTS have completed training and about 90 per cent. of those young people have been placed in employment.

The noble Lord, Lord Dean of Beswick, commented briefly on the reports of certain skill shortages. There is evidence that in some parts of the country some firms are finding it hard to recruit certain kinds of building craftsmen, in particular bricklayers and carpenters. My honourable friends the Minister for Housing and the Parliamentary Under-Secretary for Employment discussed this subject with senior figures from the industry on Tuesday. One of the apparent reasons for the shortages is that there is a spread of labour-only sub-contracting, and this has narrowed the general training base of the industry. However, the board has set up a working party to examine how training can be protected, given the prevalence of this labour-only sub-contracting. We hope that the working party will suggest practical ways in which this can be done. This includes the point that the noble Lord made regarding on-site training. All of us will look forward to seeing the outcome of that working party's deliberations.

The noble Lord mentioned the fact—I think this is quite important—that a considerable amount of surplus was shown in the training board's balance sheet. He mentioned £60 million. I do not have the report in front of me, but I do not quarrel with that.

Lord Dean of Beswick

My Lords, I may be slightly wrong, but it is something like that.

Lord Lucas of Chilworth

My Lords, in approving the board's proposals the Manpower Services Commission expressed concern at the level of the board's reserves. Indeed, the Government shared this concern. The board has given assurances that it will take steps to bring its income and expenditure more closely into line in future.

My honourable friend the Parliamentary Under-Secretary of State for Employment has been having discussions with the chairman of the Construction Industry Training Board expressly on the subject of how these reserves can be better used to provide the skills that many in the industry say they are having difficulties in recruiting.

Those are the points that have been raised—they certainly are important—and those are the answers. I am glad that noble Lords will agree to the order, which I commend to them.

On Question, Motion agreed to.