§ 7.35 p.m.
§ Earl Howe rose to move, That the draft order laid before the House on 13th November be approved [Third Report from the Joint Committee].
§ The noble Earl said: My Lords, the order before your Lordships this evening seeks authority for the Construction Industry Training Board to raise a levy on the employers in the building and civil engineering industries, to finance the running costs of the board and to fund a range of training initiatives, including a grants scheme.
§ The basis of the proposals is a levy of 0.25 per cent. on the payroll of employers in the industry, and a levy of 2 per cent. on all payments made by employers for sub-contract labour. Employers with a payroll of £45,000 or less will be exempt from the levy. 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 this statutory training board. 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 663 record of compulsion through statutory levies in raising the quality and quantity of training is not a good one.
§ However, in the White Paper, Employment for the 1990s, we recognise that this industry has particular characteristics which create peculiar problems for training. The mobile nature of the work of the industry, 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.
§ Against this background, we consulted widely with the industry about the CITB. There was a widespread and strongly held view that the CITB should be retained but that its management should be streamlined and reformed. In addition, the employers in the industry argued strongly for the retention of a statutory levy because of the largely self-employed nature of the labour force.
§ We were persuaded to give the industry a chance to reform its training board, to remodel it as an employer-led body and to alter the basis of levy collection. I am happy to say that much progress has been made. The board was reconstituted with a majority of key employers from within the industry, its operations and financial systems have been restructured and a strategic plan produced which sets out clear objectives against which the success of the board's actions can be judged. New measures have been introduced to counter the effects of the recession on training and the board is on schedule to create national vocational qualifications for all major occupations by September 1992.
§ All these are indications that the board under its chairman, Sir Clifford Chetwood, is fully committed to demonstrating its value to the industry and others. In particular. I should like to draw the attention of your Lordships to the positive relationships the board has established with 102 TECs and LECs for the provision of the training of around 20,000 young people on its youth training schemes and the £6.5 million it is using from its reserves this year to maintain the momentum of training in the industry. This improvement in effectiveness will be taken into account next year when we review the continuing need for statutory arrangements in this industry.
§ I believe it is right for 1992 that the House should agree to approve the draft order before it. I commend it to the House.
§ Moved, that the draft order laid before the House on 13th November be approved [Third Report from the Joint Committee]. —(Earl Howe.)
§ Lord Dean of Beswick
I should like to begin by saying that this training levy order is not in any way controversial. I should also like to express my appreciation to the Minister for the clear, lucid and detailed way in which he has explained an order that comes forward periodically for the renewal of the CITB's funding. I am glad that he paid fulsome tribute to the work that the board has done. As the Minister has probably been made aware, it is probably the only industrial training board that is left. I think that at one time the Government were on the point of dispensing 664 with this board. But all parts of the industry—the employers' section of the BEC, led by Sir Clifford Chetwood, supported by the trade unions in the industry and, I believe, most of the people involved—were of the opinion that, due to the peculiarities and the nature of the building industry, it would be disastrous if the Construction Industry Training Board were dispensed with.
Another point that the Minister in his extensive explanation of the order did not manage to touch on was the question of safety in the building industry. The CITB plays a very profound role in making sure that the basics of safety in the industry are inculcated into young people at the earliest possible stage; they are taught that we do not do things shabbily—there is a way to do them, a safe way to do them and that is the way they must be done.
I do not think there is any need for me to take up much more of your Lordships' time. The Minister said that, at the moment, the CITB is scheduled to exist as it stands into 1992. I urge the Minister not to dispense with it. I make that fervent plea on behalf of those who are deeply involved in the industry and who hope for a good future when it starts to lift off from the recession. It would be a destructive act—I shall not say an act of vandalism—for the Government (if the same government are in power; who knows what will happen in the election) to speak in terms of dispensing with the training board.
If and when the economy starts to lift off what will be needed more than ever in this vital industry is a skilled labour force. It would be disastrous to dispense with the CITB. It would be able to indicate the areas where training was necessary to prevent some of the features of the building industry that we have seen in the past. I refer to unskilled labour, jobbing and botched work. A few years ago we saw rackets whereby improvement grants were claimed but the work was done by unskilled labour or unauthorised people. The grant was wasted and the buildings were dangerous.
I thank the Minister for his lucid explanation of the position. I ask him to give this matter the most careful consideration. It is our opinion, and I believe the general opinion of the building industry as a whole, that the CITB should continue with its present important role. That is progressive and augurs well if the board is left to get on with the job.
§ Lord Rochester
My Lords, I too thank the noble Earl, Lord Howe, for what he said about the order. It comes before us at a grim time for the construction industry. Sir Clifford Chetwood, who is chairman of both the Building Employers' Confederation and the Construction Industry Training Board is reported to have said only two weeks ago that he had been in the industry for 42 years and these were the worst conditions that he had experienced. He said that by next summer job losses since the start of the recession could have risen to a quarter of a million, recovery in the industry was not expected until 1993 and in terms of both current workload and future order books, things were still getting worse.
Against that background of continuing job losses it is vital that the skill level of the construction 665 workforce should be maintained through training and retraining, against the tendency of unemployment to reduce it. Otherwise we shall see once again what has happened so often before. When the upturn eventually comes the industry will find itself disastrously short of the craftsmen it will then need and that will lead in turn to inflationary pressure as employers compete with each other for scarce skills by offering higher wages.
Under its strategic plan for the next three years, as the noble Earl told us, the CITB has decided, rightly in my view, to replace the per capita levy with one based on payroll and to increase the exclusion level for small firms from £15,000 to £45,000 per annum. That is a controversial point within the industry but I believe it is justified by the overriding need to ensure that small firms survive the recession. Under the order, the levy has been set at 0.25 of 1 per cent, of payroll. That is a very small figure. The Government's proposals are said to have the support of employers, as required by the Industrial Training Act 1982, and of the board. The noble Earl reminded us of that too. But we hear also that both the Building Employers' Confederation and trade unions argued for a minimum of 0.5 per cent. of payroll. I should be glad if the Minister would clear up that point.
What is certain is that in order to maintain the momentum of training, the board is having to dip into reserves to the tune of £6.5 million this year. For the longer term that sounds like a pretty hefty hostage to fortune and at a time when, according to Sir Clifford Chetwood, a revival in housing sales, essential to the industry's recovery, is unlikely before next autumn. His prediction is all too understandable when one considers; the increasing number of mortgage repossessions in the housing market. It has been estimated that those may reach 100,000 by the end of this year. On these Benches we are so concerned about that that my noble friend Lord Ross of Newport is to introduce a Motion tomorrow calling attention to the case for finding other ways of dealing with mortgage debt. I do not want to anticipate that debate now except to say that, having regard to the scale of mortgage repossessions, it is in our view high time for the Government to initiate more radical action in this field than merely to let repossessed property to the homeless.
For the rest, I shall content myself with saying that I believe that the Government may soon have to accept a greater share of responsibility for the financing of training generally if we are to retain our skills base and improve our productivity and our competitiveness. I have nothing further to say about the order itself. Accordingly, I am willing, on behalf of my noble friends, to approve it.
My Lords, I am grateful to both noble Lords for their welcome of the order. The noble Lord, Lord Dean, said that the CITB was the only industrial training board still in operation. In fact, that is not quite correct. The Road Transport Industrial Training Board is still in operation although it is due to wind down in September next year. The Engineering Construction Industrial Training Board is still very much alive and kicking.
666 The noble Lord, Lord Dean, quite rightly mentioned the role of the CITB in maintaining health and safety in industry. I could not agree with him more. That is an important function. The CITB has an important training role and that to some extent affects health and safety. The Government recognise the particular problems of the industry. Those problems are mainly connected with its fragmented nature and highly mobile workforce and the many firms involved in labour-only sub-contracting. That is why special consideration has already been given to the industry. Those factors will all be taken into account when we review the situation again in 1993.
The noble Lord, Lord Dean, said that the review is to take place next year. That is correct, but the date by which a decision must be made is the end of April 1993. Both noble Lords mentioned the effect of the recession on the industry. I am aware, as are the Government, of the impact of high interest rates and the recession on the construction sector, especially house building. The arguments for the Government's economic policy have been well rehearsed. There is now real hope that the recession has bottomed out, but there is a long way to go before we see the property sector thriving again.
The Government's priority is to reduce inflation, which is falling sharply. I am sure that we can all take encouragement from that fact. However, it is worth saying that investment in roads and in public transport is now at an all-time high. Investment in other public sector developments and in the recently privatised industries is also high.
I have no need to tell either noble Lord that experience shows that the construction industry is cyclical in nature; for example, it enjoys several good years followed by two or three bad ones. We enjoyed a very healthy few years in the 1980s. We are now in a recession which, as I said, looks likely to come to an end next year.
The noble Lord, Lord Dean of Beswick, asked about the future of the board. As I have already said, a review of the continuing need for the CITB will be carried out next year before a decision on reconstitution is made in April 1993. In advance of that review I cannot say what the Government's opinion will be; nor would it be right to pre-empt that opinion. However, what I can say—I shall go as far as I can—is that, while the Government remain committed as a general rule to independent employer-led training arrangements, nothing has happened so far to make them regret their earlier decision to allow the CITB to continue in its re-modelled form. We very much welcome the progress that has since been made in re-shaping the board's operations and priorities. That progress will be taken fully into account in the review. I must stress that the opinions of the industry will be an important factor in leading the Government to their conclusions. I hope that that response is of some help to the noble Lord. It is as far as I can go at present.
The noble Lord, Lord Rochester, asked about the percentage levy. He said that he felt that 0.5 per cent, was nearer the mark so far as concerns some sectors of the industry. I can tell the noble Lord that it was the 667 employers who chose the figure of 0.25 per cent., not the Government. The board proposed that rate based on its view of the industry, taking into account its use of its own reserves in boosting the number of training places this year. I believe that the noble Lord is right in saying that the figure was the subject of some debate, but the board was unanimous in its recommendation to the Government.
The building and civil engineering industries are different from most, if not all, other industries and need to be treated accordingly. The proposals have the support of the employers in these industries and, as I said, have been approved by the board. That they should be approved by your Lordships is not in dispute. I commend them to the House.
§ On Question, Motion agreed to.
§ Moved accordingly, and, on Question, Motion agreed to.
§ [The Sitting was suspended from 7.54 to 8.30 p.m.]