HL Deb 25 April 1991 vol 528 cc429-31

7.28 p.m.

The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater) rose to move, That the draft order laid before the House on 21st March be approved. [15th Report from the Joint Committee].

The noble Viscount said: My Lords, the proposals before your Lordships seek authority for the Engineering Industry Training Board to raise a levy on the employers in the engineering construction and steel erection industries to finance the running costs of the board and to fund a range of training initiatives, including a grants scheme. The proposals do not relate to engineering manufacturing as that part of the engineering industry will move to independent training arrangements around the middle of this year.

The basis of the proposals is a levy of 1.5 per cent. on the payroll of site employers in the industry, although no levy will be paid on the first £50,000, and a levy of 2 per cent. on all payments made by employers for sub-contract labour. Additionally there is a levy of 1 per cent. on the payroll of head office establishments with more than 30 employees. Those head offices which train satisfactorily will, however, be exempt from all but a small non-exemptible levy. Because of these provisions 40 per cent. of firms will pay no levy at all and a further 8 per cent. only a small amount towards the board's operating costs. The proposals have the support of the employers as required by the Industrial Training Act 1982 and have the full support of the board.

Your Lordships will know that the Government thought long and hard about their decision to retain statutory arrangements for these sectors of the EITB. In principle we believe that independent employer-led arrangements which have the full support of employers offer the best way forward for industrial training. In general the track record of compulsion through statutory levies in raising the quality and quantity of training is not a good one. However, we have retained the statutory principle in the case of this part of the industry because of strong support from employers. The engineering construction industry has particular characteristics which create peculiar problems for training. The mobile nature of its workforce, both geographically and between employers, together with the large scale use of sub-contract and self employed labour produce a unique set of circumstances in this sector of the engineering industry.

We consulted widely with the industry about the EITB. There was a widespread and strongly held view that independent arrangements should be set up for engineering manufacturing but that statutory arrangements needed to be retained for engineering construction.

We were persuaded to accept these proposals and intend laying an order before Parliament around the middle of the year which will remove engineering manufacturing from the scope of the EITB and define the boundaries of engineering construction. At the same time the board will be renamed the Engineering Construction ITB to reflect this change.

We are concerned though to ensure that statutory burdens on firms are kept to a minimum and that firms which train appropriately are rewarded. To this end we have asked the new board to replace its head office exemption scheme by a voluntary code of practice based on the investors in people initiative, to raise the exclusion level for small firms and to review the effects of its grant scheme on training employers. My right honourable friend the Secretary of State will be looking to the new board to address these issues in 1991–92.

We intend to keep a close watching brief on the new board. Its powers to raise a levy will be exceptional, and the Government, like your Lordships, must be convinced that they are necessary to preserve the basis of training in the engineering construction industry. The Government have decided, because of the peculiar nature of the industry, to continue with a statutory board for the time being.

The Government continue to believe, as set out in the 1989 White Paper, that the most effective incentive for companies to train is a knowledge and understanding of the skill needs, not centralised regulation based on statutory powers.

I believe it is right for 1991 that the House should approve the proposals before it. I beg to move.

Moved, That the draft order laid before the House on 21st March be approved. [15th Report from the Joint Committee]. —(Viscount Ullswater.)

Baroness Turner of Camden

My Lords, I rise to thank the noble Viscount for explaining with his usual lucidity the meaning of the Industrial Training Levy (Engineering Board) Order now before your Lordships. As it stands, it is non-controversial because it is the product of consultation among all those involved.

However, I can hardly let this opportunity pass without expressing some regret from this side of the House that the EITB as originally constituted has ceased to play the statutory role which it once played. I made that point yesterday in the debate on unemployment, and I repeat it today. I believe that, with its grant and levy-raising powers, had the EITB not been in existence during the period in which it was in existence, a number of important initiatives in the industry would not have been taken. I am still anxious that those initiatives will not be pursued by the successor body.

I note that the new system is to be watched and I am glad about that. I am glad also that the Government have accepted, after due consideration, that the engineering construction industry is rather different and has special needs and requirements. For that reason, the grant and levy arrangements will continue to apply. There will be a new board, as I understand it, concerned only with the construction engineering industry in the near future. We shall all watch very carefully to see how that arrangement works.

Your Lordships will be aware that from this side of the House we wish to ensure that there is a good system of training in this very important industry. We are concerned lest under the employer-led, voluntary system there may be a situation in which large employers will carry out their share of training but that other employers, who do not spend money on training, will poach those trained by other people. That situation existed widely before there were industrial training boards. We hope that we shall not see a return to that.

Having said that, as I said earlier, this is a non-controversial order. On those grounds, I offer no opposition from these Benches.

Earl Russell

My Lords, in the absence of my noble friend Lord Rochester, on behalf of the Liberal Democrat Benches, we offer no opposition to this measure.

Viscount Ullswater

My Lords, I thank the noble Baroness and the noble Earl for their support for the order. These proposals are particular to the engineering construction industry. They represent no change in the Government's view that independent, employer-led and employer-supported arrangements are preferable to compulsion. The engineering training authority, supported by employers in the engineering manufacturing industry, will now take forward the training initiatives for that sector of the industry. It has the full support of the employers whereas the EITB lacked that support.

The engineering construction industry is different from most if not all other industries and it needs to be treated accordingly, as I explained. I commend the order to the House.

On Question, Motion agreed to.

7.37 p.m.