HL Deb 05 March 1990 vol 516 cc1013-8

5.41 p.m.

The Earl of Strathmore and Kinghorne rose to move, That the draft order laid before the House on 6th February be approved [9th Report from the Joint Committee].

The noble Earl said: My Lords, I understand that it will be for the convenience of the House if the two orders are taken together. I therefore move that the first order be approved and I shall speak at the same time to the Industrial Training Levy (Engineering Board) Order 1990.

The debate today takes place because any industrial training levy order which involves a levy exceeding 1 per cent. of an employer's payroll must receive parliamentary approval under the Industrial Training Act 1982.

In the case of the Engineering Board, one part of the levy proposals—that covering site employees in the engineering construction sector—establishes a levy rate of 1.5 per cent. Similarly, the Construction Board proposals covering labour only subcontractors establish a levy rate of 2 per cent.

Your Lordships will not need reminding that both of these sectors are vital to the country's economy. The engineering industry employs nearly 2 million people in 21,600 firms. Its activities are wide ranging, including mechanical engineering, electrical and electronic engineering, vehicle and aircraft manufacture and engineering construction.

The construction industry is almost as large and employs around 1.8 million people, covering activities such as building, civil engineering, electrical contracting, heating and ventilating and plumbing. The engineering levy proposals are in two parts, the first applying to engineering manufacture, which comprises the vast majority of the industry and the second to the engineering construction industry, which employs approximately 40,000 workers.

I shall briefly outline the proposals in both sectors. For engineering manufacturing establishments the board proposes a total levy of 1 per cent. of an employer's payroll: 0.07 per cent. of that levy will be non-exemptible. These rates are the same as last year. The bulk of the levy is therefore exemptible; that is, employers who train satisfactorily will be given credit for this and will not be required to pay the maximum levy to the board. In addition, firms employing 40 workers or less will be excluded totally from paying levy. Almost 70 per cent. of firms will be excluded from levy because of their size.

In the engineering construction sector, for off-site employees, establishments with up to 30 employees will be excluded from the levy. This would mean that again almost 70 per cent. of establishments will not pay levy. Establishments with more than 30 employees will be levied at 1 per cent. of payroll. The non-exemptible element of this levy will be 0.15 per cent. These rates are also the same as those approved last year.

For site employees the levy has been increased by 0.38 per cent. to 1.5 per cent. of payroll in response to growing skill shortages in this part of the sector. No levy is payable on the first £50,000 of payroll which will exclude about 14 per cent. of establishments. The raising of a non-exemptible levy in excess of 0.2 per cent. in the non-site sector means that under the Industrial Training Act the board must demonstrate that there is consensus in the industry for the proposals.

Employer organisations representing 60 per cent. of leviable establishments and about 86 per cent. of the workforce have confirmed their agreement to the proposals, thus satisfying the conditions of the Act. The Engineering Industry Training Board anticipates that the levy proposals I have described will raise some £22 million. The levy will apply to those firms who fall within the scope of the board between the date the order comes into force and 31st August

I now turn to the construction levy proposals which are in the same form and at the same rates as approved by the House last year. The board estimates that the levy will raise £66 4 million and is proposed in three parts.

First there will be a per capita levy on directly employed construction workers in the main industry. The rates vary according to the type of person being trained and reflect the training costs for each occupation. The rates are subject to an overall limit of 1 per cent. of payroll.

Secondly, the board proposes to retain the 2 per cent. levy on payments made to labour only subcontractors. This rate has not changed since 1981 and reflects the board's judgment that sub contractors undertake too little training, relying instead on obtaining skilled manpower trained by other employers.

Companies covered by these two parts of the levy with payrolls of £15,000 or less are excluded from the payment of levy. Approximately 29 per cent. of firms are excluded by this provision. Thirdly, there is the levy for the brick manufacturing industry. The board proposes a rate of 0.05 per cent. of payroll with firms having a payroll of £100,000 or less being excluded.

As with engineering, the construction board is also required to demonstate that there is consensus within the industry for the proposals because the levy exceeds 0.2 per cent. of payroll without an exemption scheme. Support has been gained from employers' organisations representing 60 per cent. of employers liable to pay the levy and from 82 per cent. of employers who pay more than half of the total levy.

Turning to the future, in line with recommendations in the White Paper Employment for the 1990s, the EITB has put forward proposals for an independent training organisation representing engineering manufacture and the retention of statutory arrangements for engineering construction. These proposals were approved in November 1989.

Currently the board is working on the development of a plan and timetable for the management of this transition and it is anticipated that an independent engineering training authority covering engineering manufacturing will be fully operational by July 1991. This means that the levy proposed for collection in 1990–91 will be the last to be raised by the engineering manufacturing sector.

For engineering construction it is anticipated that its levy and grant arrangements will secure an adequate supply of skilled workers by rewarding those employers who train. It is expected that the exemption arrangements for this sector's off-site establishments will be replaced by a voluntary code of practice. In the construction industry the Government accept that because of the particular employment patterns—a highly mobile workforce and heavy reliance on labour only subcontracting—statutory arrangements will need to continue, with a thorough review in 1992.

In the meantime a number of sectors in the construction ITB, principally electrical contracting, plumbing, heating and ventilating, are developing independent arrangements. The proposals before the House tonight have received unanimous approval from the respective boards and will assist in sustaining their worthwhile activities within their industries. I commend the orders to the House.

Moved, That the draft order laid before the House on 6th February be approved [9th Report from the Joint Committee]—(The Earl of Stathmore and Kinghorne.)

Baroness Turner of Camden

My Lords, this side of the House does not oppose these two orders, and I would like to thank the Minister for the clarity with which he has presented them. However, as he said, these are very important industries and I wish to take a little time to make a few points about them.

I am glad that the Construction Industry Training Board, which has a very good record in an extremely difficult industry, is to be allowed to continue for at least three years. However, I believe it is unfortunate that a three-year term has been imposed. It is bound to lead to a sense of insecurity among committed and trained staff who do not know what the eventual outcome will be. Needless to say, training in the construction industry is of the utmost importance. Whatever precautions are taken, and however highly trained are the people working in it, the industry is an inherently dangerous one. I regret to note that the latest figures appear to indicate that it is becoming more rather than less dangerous. It has more accidents, some of them fatal, than any other industry. Clearly, training may help to minimise these risks.

Moreover, it is an industry in which there are many small operators. In view of this I wonder whether it is altogether wise to exempt from the system the very small firms. I understand that about 29 per cent. of firms come into this category. They quite obviously benefit from training paid for by the larger firms. But representatives of the larger firms will invariably say that it is in the smaller firms, the cowboys in the industry, that safety standards are at their lowest. I wonder whether the arrangements for labour only subcontractors cope with this situation adquately.

The staff of the Construction Industry Training Board still do not know what the Government have in mind in relation to the restructuring of the board now taking place and how it will affect them. I wonder whether the Minister is yet in a position to let us know the score in that regard. At least the Government have recognised that this industry, with its many small firms and highly mobile workforce, needs to have a board and an organisation such as that provided by the CITB. A sense of stability is vital, but that seems to be lacking at the moment because of the policies that the Government have been following in the training arena.

With regard to the Engineering Industry Training Board, the Minister will not be surprised to know that I regret that this is apparently the last time a levy will be raised by the engineering manufacturing sector. I still believe that the EITB performed a very useful service in difficult circumstances, particularly during the manufacturing industry decline in the early years of the 1980s, when people simply did not see the manufacturing sector as providing any kind of job or career prospects. Now of course we need the skilled people we might have trained then. I do not believe that the voluntary system will work in this sector. I regret very much that the Government have chosen that path, in particular as I am concerned about the fate of special projects initiated by the EITB; for example, the special project for women. I do not see this being taken up on an industry-wide basis under the present arrangements.

Moreover, there is also the question of the money from the European Social Fund. I am informed by the EITB that it was managing to increase this year by year, with figures for 1989 of around £12 million. It is doubtful whether we shall be able to secure sums of this order, or indeed of any order at all, under the voluntary system. I understand that in order to qualify there has to be some input from public funds. I can only hope that the newly constituted independent Engineering Training Authority, to which the Minister made reference when introducing the order, will continue with the good work of the EITB and build upon it, not only for the benefit of women but for the benefit of the disadvantaged generally—for the disabled and for ethnic minority groups. I repeat that we on this side of the House do not oppose the orders, which we understand have the unanimous support of the members of both boards.

5.55 p.m.

The Earl of Strathmore and Kinghorne

My Lords, these industries need sound training arrangements. As I mentioned in my opening address, an independent engineering training authority covering engineering manufacturing has already been established and has secured an excellent level and balance of representation, with all of its employer members being chairmen, managing directors or directors of their respective companies.

The authority has already met twice. I understand that, at its second meeting held last week, the authority agreed that its major focus would be on setting standards across the whole engineering industry and identifying and reviewing the industry's skill requirements. The authority is also preparing a timetable for the transfer of other key functions to ensure a smooth transition to the new arrangements.

I am pleased that the new authority has started work so swiftly and the enthusiasm shown clearly demonstrates that, if offered responsibility, employers will not only take it but discharge it well. This is also evidenced by the new training and enterprise councils. In this respect, 62 groups of local employers have already been awarded development funding. The first TECs will become fully operational in the spring.

Since the White Paper Employment for the 1990s was published at the end of 1988, we have had many discussions with the construction industry, and in particular with its leading employer organisations. As a result we announced last November that the board would continue as a levy raising body. There was a unanimous view amongst employers that we should do that; and we agreed. There was also a clear view that the board needed to be a good deal smaller and that two-thirds of the membership of the new board should be chief executives and chairmen from the industry. We asked for nominations from the employer organisations and we now have them before us.

We have also consulted about the chairmanship of the board. The present chairman, Derek Gaulter, has given, and continues to give, loyal and committed service to the sector. I want here to place on record the Government's recognition of that and our gratitude to Mr. Gaulter for all that he has done, and continues to do, for the industry and for the board. We have agreed with Mr. Gaulter that the new board—the new start—will mean that, at the appropriate moment, a new chairman should take over. How soon that moment will come depends on the willingness of a leading individual from the industry to take up the responsibility and the date from which the individual is willing to do so. We hope to be making an early announcement about the chairmanship and the membership of CITB.

The noble Baroness referred to fatal accidents in the construction industry. In 1986–87 there were 139 fatal accidents; and in 1987–88 there were 158. Those are the only statistcs that I have at the moment.

For both boards the time had come for change; the time had come to tackle new priorities in new ways with the wholehearted commitment of employers. It is now up to employers in both industries to deliver what they say they seek. In the meantime, the proposals before us tonight will allow the work of the boards to progress. I commend them to the House.

On Question, Motion agreed to.