HL Deb 05 December 1994 vol 559 cc798-801

3.14 p.m.

Lord Inglewood rose to move, That the draft order laid before the House on 17th November be approved [1st Report from the Joint Committee].

The noble Lord said: My Lords, it may be for the convenience of the House if I speak to this order and the following order together.

The proposals before your Lordships this afternoon seek authority for the Construction Industry Training Board and the Engineering Construction Industry Training Board to impose a levy on the employers in their industries to finance the operating costs of the boards and to fund their range of training initiatives, including grants schemes.

Provision for this is contained in the Industrial Training Act 1982 and the orders before your Lordships would give effect to proposals submitted by the two boards. Both proposals include provision to raise a levy in excess of 1 per cent. of an employer's payroll. The Industrial Training Act 1982 requires that in such cases the proposals must be approved by affirmative resolution of both Houses.

In each case the proposals are exactly the same as those approved by your Lordships last year. As in previous orders they are based on employers' payrolls and their use of sub-contract labour. Both have special provision for excluding small firms from paying levy.

For the CITB the rates are 0.25 per cent. of payroll and 2 per cent. of net expenditure by employers to labour-only sub-contracting. Employers with a combined payroll and labour-only payments of less than £61,000 a year are exempt from paying levy.

The ECITB treats its head offices and construction sites as separate establishments and applies different levy rates which reflect the costs and the different arrangements for training particular workers. For head offices the rates are 0.4 per cent. of payroll and 0.5 per cent. of net expenditure by employers on labour-only sub-contracting. Firms employing 40 or fewer employees are exempt. The rates for sites are 1.5 per cent. of payroll and 2 per cent. of net expenditure by employers on labour-only sub-contracting, with exemption for employers with a combined payroll and labour-only payments of £75,000 a year or less.

In each case the proposals have the support of the employers in the industry, as required by the Industrial Training Act, and have the full support of the respective boards, which consist of senior employers, trade unionists and educationalists.

Your Lordships will know that the CITB and the ECITB are the only two statutory industry training boards. Most other sectors of industry are covered by independent, non-statutory arrangements. In those two industries employers and their representative organisations have remained firm in their support for a statutory levy system.

Both boards have recently undergone major reviews of the need for their continuance. Following those reviews, we reconstituted each of them for a further term of office up to 1998. In doing so, we recognise the strong feelings of the employers and the performance and achievements of the boards.

The draft orders before the House will enable the two boards to carry out their training responsibilities in 1995 and I believe it is right that the House should agree to approve them. I commend them to the House. I beg to move.

Moved, That the draft order laid before the House on 17th November be approved [1st Report from the Joint Committee]. —(Lord Inglewood.)

Baroness Turner of Camden

My Lords, I thank the Minister for his explanation of the two orders. As he rightly said, they are very similar to the orders that were discussed in this House last year. We approve and support them on this side of the House.

However, I am concerned that there is still a terminal date, so to speak, of 1998 in respect of the continuance of those training boards. It would be very much better, since both boards do an excellent job of work and are acknowledged by everyone in the industry to do an excellent job of work, if they had a little more assurance of continuity than a term point of 1998 put upon their future existence. We raised the matter earlier. In fact, I raised it last year when I said that it was necessary for continuity and a feeling of security among staff, who do a very good job working for the boards. I still feel that it is a pity that 1998, although some time in the future, should be put as a term when the boards may face discontinuance. They are both very necessary.

The other point that I should like to make, which I also raised last year, concerns the small firms exemption clause. I know that it has been agreed, but it has always seemed to me necessary for small firms to have trained personnel. It is perhaps an even greater necessity for small firms than for larger ones which may have in-house training schemes anyway. In the construction industry in particular, as everyone knows, there are inherent dangers; a high rate of industrial accidents and so forth. No matter what is done it is likely to remain an inherently hazardous industry. It is all the more necessary therefore that small firms should have trained staff capable of coping with safety provision. In that case it is unfair that they should be exempted from the need to pay the levy. I know that that has been generally agreed and that we have raised the matter on past occasions. Nevertheless, that is still my view. Having said that, I offer no objection to the orders.

Baroness Seear

My Lords, we too welcome the continuation of the work being done by the two training boards and support what the noble Baroness said in relation to the exemption of small firms.

Industry as a whole is woefully undertrained and we are facing reductions rather than increases in government spending. That makes it all the more important that the training boards should continue and, as the noble Baroness, Lady Turner, said, that there should be confidence about their continuing into the future.

Throughout industry we are suffering from under-training. It is one of the most serious obstacles in the way of recovery. It is therefore extremely welcome that the boards will be able to raise the money in order to carry out the training needed. However, it raises the broader question of whether the Government were ever right to stop putting charges of this kind on industry as a whole. I dare say it is a forlorn hope, but I shall not lose the opportunity of saying that we would welcome the Government reconsidering the question of how the money for training, which is at present so woefully inadequate, should be raised. That money, if we are to have any future as an industrial country, needs to be greatly increased.

Lord Monkswell

My Lords, in rising to support these measures perhaps I can ask the Government one question. One of the benefits of the industrial training levy is that it involves firms directly in the whole training regime. Having paid the levy they then have an incentive to get something out of it either through being involved in training or undertaking other activities which bring them into the system. One of the difficulties of not imposing a levy on small firms is that they are then not within that regime. Can the Minister say what efforts the Government are making to ensure that small firms are involved in training regimes, either as providers of training or in the use of trained personnel?

Lord Inglewood

My Lords, the proposals before the House relate to the construction and engineering construction industries. Both industries have specific training problems due to a largely mobile workforce, the prevalence of small firms and the use of labour-only sub-contractors. The employers believe they need collective funding with the statutory underpinning provided by the levy system. They feel strongly that any other solution would be unrealistic and lead to a shortage of skilled labour in those sectors.

The noble Baroness, Lady Turner, asked about the conclusion date for the boards of 1998. There is no magic in the date of 1998. It is merely that any such board should from time to time be reviewed. The noble Baroness may recall that last year the term of the Construction Industry Training Board had been agreed but not that for the Engineering Construction Industry Training Board. In the circumstances, because they are similar to each other, it seems sensible for the two boards to be reviewed at the same time.

I hasten to add—without wishing to pay tribute to the work the boards are doing because it was after all the collective view of all those involved in the industries that the boards, in the specific circumstances, played a useful role—that it is accepted by the Government that, while we are not in favour of statutory boards in general, these specific boards should continue.

In relation to the small firms' exemption—as the noble Baroness said, it is a point she raised last year and I reiterate the remarks of my noble friend Lord Henley on that occasion—we are anxious to see small firms thrive in this country. We believed that on balance it was better not to impose this burden on small firms in this sector. But merely because small firms are not paying a levy does not mean that they are not thereby able to avail themselves of the services provided by the boards. When one looks at the range of courses provided by TECs throughout the country, a considerable amount of help is available to the construction industry, using the word in the widest sense. It is important that that continues for reasons, not least, of health and safety, as mentioned by the noble Baroness.

The noble Baroness, Lady Seear, commented on the reduction in spending by the Government on training. In this case it is important to recognise that the Government are ever more carefully focusing the expenditure they devote to training. As a result we believe that we shall be able to provide at least as good a training as we have done in the past at less cost. That is extremely important. Again in that context it is worth recalling that while government provide of the order of £2 billion a year on training, that is matched by provision and funding from the private sector of a further £20 billion or so. It is a mistake to see that simply as an exercise in provision by the Government. It must be looked at in a much wider context.

The noble Lord, Lord Monkswell, remarked on the involvement of small firms in the training process. That is a matter for the proprietors and managers of small firms, bearing in mind the circumstances of their businesses. A whole variety of initiatives, such as Investors in People, are available for small firms to use if they wish to go further in that direction.

The proposals have the support of the respective employers and have been approved by the boards. I believe that it is not in dispute that they should be approved by your Lordships, and I commend the order to the House.

On Question, Motion agreed to.