HL Deb 15 January 1996 vol 568 cc433-9

7.10 p.m.

The Minister of State, Department for Education and Employment (Lord Henley) rose to move, That the draft order laid before the House on 30th November be approved [3rd Report from the Joint Committee].

The noble Lord said: My Lords, I beg to move that the Industrial Training Levy (Construction Board) Order be approved. It may be for the convenience of the House if I also speak to the other order in my name, the Industrial Training Levy (Engineering Construction Board) Order.

The proposals before the House this evening seek authority for the Construction Industry Training Board and the Engineering Construction Industry Training Board to impose a levy on employers in their industries to finance their training activities, including grants schemes, and to fund the operating costs of the boards. Provision for this is contained in the Industrial Training Act 1982 and the orders before the House would give effect to proposals submitted by the two boards.

The proposals from each board 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 both Houses last year. As in previous orders they are based on employers' payrolls and their use of sub-contract labour.

As required by the Industrial Training Act, both boards have provided for the exemption of small firms from the levy. The level at which this exemption takes effect is unchanged from last year and aims to strike the right balance between helping small firms to grow and giving them unfair commercial advantage. However, all firms need a skilled, competent workforce if they are to be competitive, and small, non-levy paying fines in these sectors are encouraged to take advantage of the services offered by the boards and to provide placement opportunities for trainees.

The Construction Industry Training Board proposes to raise a two-part levy: 0.25 per cent. of payroll and 2 per cent. of net expenditure by employers on labour-only sub-contracting. Employers with combined payroll and labour-only payments of less than £61,000 are exempt from paying the levy.

The Engineering Construction Industry Training Board treats its head offices and construction sites as separate establishments and proposes to raise a four-part levy: 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. Those head offices employing 40 or fewer employees are exempt from paying the levy. 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. There is exemption for site employers with combined payroll and net labour-only payments of £75,000 or less. The higher rates on labour-only payments reflect the fact that employers using labour-only sub-contractors do not, in the main, play any active part in the training of the pool of skilled labour from which they recruit.

Both sets of proposals involve levy rates in excess of 0.2 per cent. with no provision for exempting employers who make their own training arrangements. In such cases the Act requires boards to demonstrate that the proposals have the support of the employers in the industry. I am satisfied that each of the boards has obtained that support.

The House will know that the two boards are the only two statutory industry training boards. They have been retained at the express wish of their industries and a crucial indicator of their effectiveness is the continuing level of support from employers.

The draft orders before the House will enable the two boards to carry out their training responsibilities in 1996, and I believe it is right that the House should agree to approve them. I commend the orders to the House.

Moved, That the draft- order laid before the House on 30th November be approved [3rd Report from the Joint Committee]—(Lord Henley.)

7.15 p.m.

Baroness Turner of Camden

My Lords, I thank the Minister for his explanation of these two orders. They were, of course, the subject of a lengthy debate and even, I believe, a vote in the other place. Much of that debate related to the quality, or rather the perceived lack of quality, of the Government's training schemes. Although there is much to be said on that score, it is a subject for another debate and I do not intend to follow that path tonight.

Moreover, after lengthy debate in the other place, the orders were approved. The Minister will know that it is not the custom of this House to seek to oppose what has already been approved in the other place; nor do I think it would be a good idea to do so. However, there are one or two points that I should like to make.

The Minister will know, as I have said so on many previous occasions, that I was a supporter of industry training boards, and in particular of the CITB and EITB. I was not opposed to the industry board system being subject to review—some ITBs were no doubt no longer performing a useful function. But the fact that the training provided was industry-specific was a tremendous point in their favour. Both the EITB and the CITB in particular were doing a very good job indeed. I regret that the Government did not see fit to permit the continuation of the Engineering Industry Training Board in its previous set-up, except in relation to construction.

I also favour the levy system, although I regret the exclusion of small firms. I believe all employers in the industry should make a contribution to training. Incidentally, it would appear that the Federation of Master Builders shares this view. I was somewhat agreeably surprised to find that was the case. I had expected it to support the exclusion of small employers, but I believe that it has not done so.

The construction industry, unfortunately, appears to have been shedding labour recently. The looked-for upturn has not yet happened. That is no doubt because the housing market is still stagnant. Yet there is plainly a need for construction projects, most notably in housing. One would have expected local authorities to be leading the way in housing provision but, as we know, government policy has been to discourage local authorities from operating in this field, putting the emphasis on housing associations, which do not have the resources to provide the stimulus needed. I mention this because even very good training schemes founder if the participants can see no prospect of employment at the end of the training period. That is important in view of the much higher rate of unemployment among young males. As we all know, this can bring all kinds of social problems in its train. Government policy should be directed to ensuring that construction continues to offer employment to trained personnel—and employment, moreover, that appears to offer some degree of continuity and security. Trainee target numbers have, I am informed, been cut for two years. The reason is that there is simply not the work in the industry. I am informed by the CITB that public sector construction is grinding to a halt.

Safety is of particular concern in this industry. It is one of the industries in which there are inherent dangers, no matter what is done to try to diminish these. The CITB has an excellent record in health and safety matters. But there are still far too many accidents, some of them, unfortunately, fatal. I believe, however, that the record would have been much worse without the CITB and the programmes that it has introduced. We must remember that an accident can mean a considerable cost to an employer.

I recall that when the EITB was in existence it introduced a number of programmes directed specifically at women. I was on one occasion invited to speak at a seminar arranged by the EITB on one of its courses for women. I was much impressed by the enthusiasm and commitment of all concerned. The women were not all young. Many of them were attempting to rejoin the labour market after years spent looking after children. Some had switched, or wanted to switch, from other kinds of employment and relished the opportunity to acquire skills in a non-traditional area—at least, non-traditional so far as women were concerned. I do not know what happened to that kind of initiative with the demise of the EITB, but I like to think that courses of this kind are still available.

Finally, I am glad that the life of the CITB has apparently been extended by a further five years. Even so, I wonder why it was necessary to put a time limit on it at all. Perhaps the Minister will respond to that point. I understand that the excellent staff of the CITB have been much disturbed by the lack of continuity and security, and although they will welcome the five-year period, time goes very quickly and it will not be all that long before they start getting worried again. That is particularly true in the light of the philosophy of the Government in regard to training. As we know, they have been against industry specific statutory bodies and in favour of more diffuse local voluntary arrangements. The ITBs also involve unions, as the CITB still does. That is important, since unions have a strong commitment to training and in particular to health and safety. Therefore, I hope that the Government, in the light of experience, will see fit to drop the time limit altogether, so that the staff have some feeling of continuity and permanence.

Having made those points, however, we on this side of the House do not wish to oppose either of the orders which are before the House tonight.

Lord Rochester

My Lords, from these Benches I too thank the noble Lord, Lord Henley, for the customarily clear way in which he explained these orders. As he said, in each case the proposals are the same as those approved by the House last year. It is good to know that, once again, they have the support of the employers involved as well as that of the respective boards.

Whatever attitude is taken to the grant and levy system generally, I am glad that the Government have deferred to the view of employers and other interested parties in the construction industry that it has special features in the greater use of contract labour, short-term working and general fluidity of the workforce which together mean that their co-ordination under the two boards is essential. Incidentally, I prefer the term "contribution" rather than "levy", for that would recognise that training should be regarded as an investment rather than just another cost.

In commenting briefly on the progress made by the hoards over the past year, I shall refer particularly to the last available report of the Engineering Construction Board covering the year 1994 but much the same considerations apply to the Construction Board. It is a pity that it has not been possible to discuss the ECITB report until more than a year after the end of 1994, but there it is.

A disappointing feature of the report is that in it the chief executive of the board was obliged to acknowledge that for the first time training for which general grant was payable was down in the year to August 1994. I ask the Minister whether he has any more up-to-date information available concerning training in the industry for which grant was payable. I have not given him notice of that question, and so I shall quite understand if he is unable to answer immediately.

It is pleasing to note that the training of two groups of apprentices recruited in 1994 was sufficiently encouraging to enable the Engineering Construction Board to market its national apprenticeship scheme during 1995 as one of the Government's modern apprenticeship schemes. I shall be interested to hear anything that the noble Lord can tell us as to the progress that has been made in the development of that project during its pilot year.

The number of employees in the construction industry as a whole continued to fall rather drastically in 1994. To judge from the figures emanating from the Building Employers Federation this morning, numbers are likely to fall still further in 1996. More than that, I understand from the Construction ITB that trainee target numbers for each of the next two years—the noble Baroness, Lady Turner, made some reference to this point—have had to be cut very heavily from 15,000 to 10,500. All that will, no doubt, add in time to the number of long-term unemployed.

The noble Lord, Lord Henley, will recall that last Wednesday the noble Lord, Lord McCarthy, asked the Government what steps had been taken to implement two particular schemes aimed at assisting the long-term unemployed. Admirable though those schemes may be in encouraging employers to take on such people, as my noble friend Lady Seear said in the debate on the Address last November, unemployment will only be alleviated when we have the investment in training and education or learning that will enable people to acquire new skills of a kind that means that they can adapt successfully to changes in the labour market.

There may not be much that either of the training boards can now contribute to that end, but it helps to explain why my party is prepared, if necessary, to help finance the resources required for that purpose by an increase in taxation. I appreciate that this is not the occasion on which to develop that theme. For the moment, I am content, on behalf of my noble friends, to approve these orders.

Lord Henley

My Lords, let me start by saying to the noble Lord, Lord Rochester, that I believe that there is a fairly fundamental philosophical division between us if he thinks that merely by increasing taxation we can deal with the scourge and problems of unemployment and long-term unemployment. We believe that the policies that we are pursuing have led to a considerable decline and fall in unemployment. It is now lower than that of virtually all our competitors and colleagues in the European Community and has been coming down much faster and further. The noble Lord will know that youth unemployment is considerably lower in this country than it is in, say, France or Germany; and, for that matter, long-term unemployment is not nearly the menace in this country that it can be in some others.

I am grateful to the noble Lord for his support for the two draft orders. He said that he would prefer the word "contribution" to the word "levy". I suspect that we should all like to rename taxes in one form or another, whether we call them contributions, taxes, levies or whatever, and try to make them sound more user friendly. But that does not get away from the fact that they still have to be paid. Therefore, one has to bear in mind that they are a burden, even if they are an investment, on the employers concerned. For that reason it is important that a degree of agreement is sought by the employers—I believe, that is what the two boards have done—in terms of getting these contributions, levies, taxes or whatever one calls them, set at the right level.

I am also grateful to the noble Lord for raising one or two other points. He said that he would accept my writing to him. I shall take him up on that offer, if he will bear with me. I shall write to him in due course.

I turn to the points raised by the noble Baroness, Lady Turner. Again, I sense that she supported the two orders. I can assure her that her colleagues did not divide on these regulations in another place. Her colleague, Mr. Stephen Byers, made it quite clear when he spoke in the debate in another place, that it would not be appropriate to divide on the regulations. I understand that in the other place the debate went on to matters not entirely related to the regulations concerned.

I also note that, as usual—I say "as usual" because I believe that I debated these matters with the noble Baroness not last year (when my noble friend Lord Inglewood debated them with her) but the year before—the noble Baroness is in favour of such boards and would like to see many more of them. She rather regretted the review following the 1988 White Paper. Again, I note what the noble Baroness had to say but do not intend to rehearse the arguments that have been addressed on previous occasions.

The noble Baroness then addressed the question of whether small firms should be excluded. Again that points to a fairly fundamental difference of opinion between those on these Benches and the noble Baroness and her noble friends. We believe that small firms should be and must be protected from unnecessary administrative burdens in order to help them to thrive. The legislation governing the industrial training boards requires exemption from the levy for small firms but does not prescribe the level at which it should be set. It is for the Government as they bring the orders before the House to judge whether the level proposed by the hoard is appropriate. In doing so, we shall try to ensure that a balance is truck between helping small firms and making sure that they are not given an unfair commercial advantage. That certainly does not mean that small firms will have no incentive to train. All employers, whether large or small and whether or not they need to pay the levy, need to ensure that they have a skilled and competent workforce if they are to be competitive. I am sure that the noble Baroness accepts that.

Perhaps I may move on to the question of the lifespan of the training boards. The noble Baroness regretted the fact that they had not been given a life lasting forever in the future. I can assure her that the review that the boards went through—the next review is in March 1998—involves nothing suspicious. It is merely the process that all non-departmental public bodies go through on a quinquennial basis. All have to be reviewed on that basis; first, to see whether the board or organisation is necessary and, secondly, if it is necessary, to see that it is fulfilling its role in the appropriate manner. It is nothing more nor less than that that the boards will go through at the appropriate time in 1998. It is simply part of the quinquennial review that all such bodies go through.

Lastly, in relation to women workers, I can assure the noble Baroness that both boards have equal opportunity policies and set targets for female participation in training. I hope that that assures the noble Baroness that they are alive to her anxieties regarding female participation in this industry.

Having dealt with a number of points raised by both the noble Baroness, Lady Turner, and the noble Lord, Lord Rochester, and having noted their general support for the orders, I commend the order to the House.

On Question, Motion agreed to.