§ Lord Davies of Oldham rose to move, That the draft order laid before the House on 17th January be approved [17th Report from the Joint Committee].
§ The noble Lord said: My Lords, on behalf of my noble friend Lady Ashton, I beg to move that the draft Industrial Training Levy (Construction Board) Order 2002 be approved. I shall also speak to the draft Industrial Training Levy (Engineering Construction Board) Order 2002. The proposals before the House seek authority for the Construction Industry Training Board and the Engineering Construction Industry Training Board to impose a levy on employers in the industries they cover.820
§ Industrial training boards, or ITBs, as we all know them, are non-departmental public bodies set up under the Industrial Training Act 1982. Their role is to ensure that the quantity and quality of training are adequate to meet the needs of the industries for which they are established. They provide a wide range of services, including setting occupational standards and developing vocational qualifications, delivering modern apprenticeships and paying direct grants to employers who carry out training to approved standards.
§ The Act contains provision for a levy on employers to finance an ITB's activities and to share the cost of training more evenly between companies in an industry. It is for the employer members of a board to make proposals for the rate of levy for the industry it covers and for the Secretary of State to make an order giving effect to the proposals.
§ The orders before your Lordships give effect to proposals submitted by the CITB and the ECITB for their 2002 levy. Each of them involves the imposition of a levy in excess of 1 per cent of payroll on some classes of employer. The Industrial Training Act 1982 requires such orders to be approved by affirmative resolution of both Houses.
§ In each case, the levies are based on employers' payrolls and their use of sub-contract labour. For both boards the proposals involve levy rates in excess of 0.2 per cent with no exemption other than for small firms. In such cases, a levy order can be made only if the proposals have the support of organisations representing the majority of those employers who pay most of the levy. It has been established through consultation with the main employer organisations in each industry that the proposals have that support.
§ The Act requires ITBs to exclude small firms from the levy and each of the proposals does that. In setting the level at which the exemption takes effect, the boards have tried to strike a balance between helping small firms to grow and giving them unfair commercial advantage. However, both boards are committed to supporting the training efforts of small firms, whether or not they pay levy. All companies need a skilled, competent workforce if they are to be competitive and small firms in those sectors are encouraged to take advantage of the services offered by the boards and to provide opportunities for trainees and apprentices.
§ In the construction industry, a higher levy rate is imposed on employers' use of sub-contract labour than on their direct workforce. That is because, according to the industry, the vast majority of training is carried out by employers with a directly employed labour force. Employers who opt to use labour-only subcontractors tend to have a transitory arrangement with those subcontractors and are not normally involved in their training.
§ In the order before your Lordships, the CITB proposes that both its levy rates should stay the same as those approved by the House last year: that is, 0.5 per cent of payroll for direct employees and 1.5 per cent of net expenditure on sub-contract labour.821
§ Employers whose combined payroll and net expenditure on sub-contract labour is less than £61,000 will not have to pay the levy.
§ In the engineering construction industry, head offices and engineering construction sites are levied at different rates to reflect the fact that head offices, where workforces are far more stable, are able to plan and manage most of their training needs themselves. In the second order before your Lordships, the ECITB proposes that both its levy rates should stay the same as those approved by the House last year; that is, 0.18 per cent of the total of payroll and net expenditure on sub-contract labour for head offices—head offices whose combined payroll and net expenditure on subcontract labour is £1 million or less will not have to pay the levy—and 1.5 per cent of the total of payroll and net expenditure on sub-contract labour for engineering construction sites. Sites whose combined payroll and net expenditure on sub-contract labour is £75,000 or less will not have to pay the levy.
§ The proposals are expected to raise between £90 million and £94 million for the CITB and about £10 million for the ECITB. Your Lordships will know from our annual debates that the CITB and the ECITB exist because of wide support from employers and employer interest groups in those sectors. There is a firm belief that without them there would be a serious deterioration of training in these cyclical, peripatetic and project-based industries and their skill needs simply would not be met. I know that each board is committed to ensuring that employers in their industries receive a high quality service and I take this opportunity to thank them and their staff for their continued hard work.
§ The draft orders will enable the two boards to carry out their vital training responsibilities in 2002, and I believe that it is right that the House should agree to approve them. I commend the order to the House.
§ Moved, That the draft order laid before the House on 17th January be approved [17th Report from the Joint Committee].—(Lord Davies of Oldham.)
§ Baroness Miller of Hendon
My Lords, I thank the Minister for introducing and explaining so well the two orders before the House. The Government Whips' Office told me that the orders were uncontroversial. Indeed, I believe that they are and we support them.
In essence, there are two industrial training boards, set up under the Industrial Act 1982, which, as we have heard, cover the construction engineering and the construction sectors. The boards provide a wide range of services and training initiatives, most of which could probably not be provided by individual employers alone. Thus, the 1982 Act provides for a levy on employers to fund training more evenly between companies. The ITB must propose the rate of the levy for the industry and the Secretary of State must make the order to give effect to it.
As I said, we support the orders but I should like to record one note of caution for the Minister. Employers whose combined payroll and net expenditure on subcontract labour is £61,000—as I thought, although the 822 noble Lord has just said that it is £75,000 this year—will be exempt from the levy. However, even if the employees were only on the national minimum wage—which is unlikely in the engineering industry—that would represent only businesses employing seven or fewer people.
If this Government are serious about helping small businesses, it is important to consider the burden on them when agreeing the levy. Nevertheless, we think that the orders are good and we support them.
§ Baroness Sharp of Guildford
My Lords, I echo the words of the noble Baroness, Lady Miller of Hendon, in saying that we on these Benches feel that the levies are an entirely good thing. The principle of imposing a levy to finance training across the board for an industry was originally introduced in the 1960s and applied to many industries. It now applies only to the construction industry—in the two aspects before us, the construction industry itself and the engineering construction board.
Besides saying that we are happy with the orders—I remember that we agreed them last year—I have one question for the Minister. I believe that in their manifesto last summer the Government said that they were committed to extending the principle of the training levy to other sectors which voluntarily wished to introduce it. Do the Government have any plans to move further on that?
§ Lord Puttnam
My Lords, it is not for me to delay the House any more than is necessary. I welcome these excellent orders, but it is worth mentioning that this is the 20th year that the orders have, to all intents and purposes, gone through on the nod. They ought to be considered in the context of an excellent debate in another place earlier this week on the overall decline of industrial manufacturing.
I welcome many of the Government's proposals on the consolidation of industrial training projects, but I have some questions. I have wanted to ask those questions for four years, and this seems to be as good an opportunity as any. How valuable do the two industrial sectors—in fact, as the noble Baroness, Lady Sharp of Guildford, said, it is a single sector—believe the levy has been to the sustainability of their industry during the past 20 years? Secondly, does either sector believe that the non-statutory provision made for other sectors offers the likelihood of a sustainable workforce in their own? I suspect that they do not. Thirdly, if the provision made by the statutory instruments is fundamental to the health of the sectors, why has it not yet been extended to others who are equally dependent on skills?
I refer again to what the noble Baroness said. There is, and always has been, a tacit commitment by the Government to extend the orders. I do not quite understand why there should be such reluctance to take that forward.
§ Lord Davies of Oldham
My Lords, I am grateful for the contributions to the debate. As the noble Baroness, Lady Sharp of Guildford, said, we have been here 823 before. In fact, I was at the Dispatch Box for this debate last year, and I remember that the questions were as informed last year as they were this year. This year, of course, I emphasise the fact that the levy rates are not changing. There was a change last year, which occasioned a little more debate.
I shall deal as precisely as I can with the questions that were raised. In response to the noble Baroness, I would say that the £75,000 was a cut-off point fox one hoard, and the £61,000 was for the Construction Industry Training Board. The other figure was for the Engineering Industry Training Board. That is why there are two figures for the definition, as it were, of firms whose activities are at such a low level that it would not be appropriate to place the levy on them.
§ Baroness Sharp of Guildford
My Lords, the Minister referred to the Engineering Industry Training Board. I must correct him. There used to be an Engineering Industry Training Board levy, but there is no longer. This is the Engineering Construction Industry Training Board.
§ Lord Davies of Oldham
My Lords, I stand corrected. I am talking about the Engineering Construction Industry Training Board. I emphasise that the cut-off point is different for the two industries, on the basis of the figures that I identified.
Of course, we reach the levy position and the cut-off point on the basis of proposals from the boards, after consultation with the industries for which they have responsibility. We have had no representations about the figure or about the use of the absolute cut-off point. so we can safely accept that they have the broad support of the industries affected.
The noble Baroness, Lady Sharp of Guildford, and my noble friend Lord Puttnam asked about the future.
I shall be as helpful as I can. As the noble Baroness said, we said in our manifesto that if both sides of industry in a sector agree, we will help to set up a statutory framework for training for that industry. I must report that, as yet, the only sector to express a positive interest in developing a statutory framework is the print industry. Discussions are going on for that industry. The House will recognise that, as far as concerns training arrangements, it is important to work with the grain of the industries involved. That is why we have expressed ourselves in those terms.
In response to my noble friend Lord Puttnam, I must say that I would like the debate to be broad enough for us to engage in a thorough analysis of the training needs of the nation and how we can respond to them. However, there is other business before the House tonight, in which several noble Lords present have an interest, so I shall not go on too long. I respect what my noble friend said about the importance of recognising that the training boards play a limited part in the overall training needs related to the two industries.
My noble friend will know that the Government have, of course, invested a great deal in training strategy, particularly the development of the Learning 824 and Skills Council, and we are considering the question of sector skills development. That will involve a great deal of intermeshing between these boards, between employers and the development of the local dimensions of the Learning and Skills Council. There is a great deal of work going on to ensure that the objectives—which, I know, my noble friend shares with the Government—are realised. We should not underestimate the fact that, as a nation, we have not invested as much in training as we would have wished. That shows itself in every conceivable statistic of measurement against our major industrial rivals. There is no doubt that it is an important priority for the Government. The only thing that I would say to my noble friend is that it would be remiss of me to dwell for the many minutes that I would like on the broader issues of training. I must restrict myself to the orders.
On the basis that I have answered the questions that were put this evening, I can commend the orders to the House.
§ On Question, Motion agreed to.