I beg to move,
That the draft Industrial Training Levy (Construction Board) Order 1987, which was laid before this House on 8th December, he approved.
The order requires parliamentary approval because one part of it—that covering labour-only subcontracting—involves a levy exceeding 1 per cent. of emoluments. Hon. Members will need no reminding of the importance of the construction industry, which last year accounted for approximately 8 per cent. of gross domestic product. Protecting the skill base of the industry is clearly vital. That is why it is essential that this order should be approved so that money is available to the Construction Industry Training Board to enable it to encourage firms to train in the industry.
The levy proposals are in the same format as those approved by both Houses last year and are expected to raise about £50 million. The levy is made up of three parts. First, there will be an occupational levy on directly employed construction workers in the main industry. A set amount will be raised for each occupation, but this is subject to an overall limit of 1 per cent. of employers' wage bills. The rates vary according to the type of craftsman trained and reflect the training costs of each craft. These rates are in the main the same as last year, but increases are proposed in five areas. These affect less than 10 per cent. of the total directly employed work force in the main industry. These increases are judged necessary to enable the board in particular to increase its contribution to the youth training scheme that it operates on behalf of the industry.
Secondly, with continuing strong support from the industry, the board proposes to retain the 2 per cent. levy on payments made by firms in the main industry for work done by labour only sub-contractors. This rate has remained unchanged since 1981. This reflects the board's continued judgment that labour only sub-contractors, in the main, undertake an inadequate level of training but rely on obtaining skilled manpower trained by other employers. For the sectors covered by those two measures, companies with payrolls of £15,000 or less will not be required to pay levy, and this will exclude about 37 per cent. of all construction firms coming within the board's scope.
Thirdly, for the smaller brick manufacturing sector, the board proposes a rate of 0·05 per cent. of payroll. This is a reduction on last year's rate. All employers with emoluments of £100,000 per annum or less will not be required to pay levy. This is unchanged from last year. These proposals have been unanimously approved by the board and are strongly supported by employer associations in the industry.
Hon. Members will wish to know in particular that the proposals are supported by the Federation of Master Builders, which two years ago expressed concern about the proposed method of calculating levy. At the same time, other employer organisations spoke equally strongly in favour of keeping the current system. The board set up a working party which included the federation to examine this concern and it has agreed that the issue needs to be re-examined when the board can evaluate the financial implications of participating in the new two-year youth training scheme. I am pleased that the industry has been able to come to at least an interim agreement on this matter, which we have always said is one for the industry to resolve. The proposals have the necessary level of consensus support under the Industrial Training Act 1982.
During the year the board has continued to work hard to develop training in the industry. I was pleased that in April the board signed a contract with the Manpower Services Commission for the new two-year YTS. The board currently has some 17,000 young people undergoing training in its YTS, and this is making a central contribution to training in the industry. In addition, the board is piloting practical skills tests for trainees seeking to qualify as building craftsmen. This represents a major step towards the objective of obtaining a more coherent and relevant structure of vocational qualifications, set by our recent White Paper, "Working Together—Education and Training". The board will be playing a leading role in following up the White Paper's recommendations on vocational qualifications.
The House may also be interested to know that I and my hon. Friend the Minister for Housing, Urban Affairs and Construction, yesterday had a very useful meeting about training with senior figures from the industry, including the chairman of the training board. We talked about a number of important issues which the industry needs to face, and the chairman of the board has agreed to produce by Easter an action plan for promoting training in the industry. This underlines the need for the House to support this order, and I commend it to hon. Members.
The proposals have been adopted by the board without opposition. They have support from the majority of employer organisations in the industry and have been approved by the Manpower Services Commission. They are necessary for the board to continue its important work to extend and improve training in the construction industry and to play a significant part in the Government's training initiatives.
First, I should like to confirm that the Opposition support the Order. We congratulate the Construction Industry Training Board on the work that it is doing and has done. We also congratulate the board on its strong commitment, which is a mark of the commitment on both sides of the industry, to training. Both sides demonstrate the strength of the industrial training board system. Perhaps the Minister does not like to hear that. His order is about a 1 per cent. levy, which Conservative Members seem to find amusing. They are derisory about it when it is mentioned in terms of the Opposition statement about the sort of training that we want throughout industry.
In this debate we are discussing the Construction Industry Training Board, and it has a sensible system. It has a commitment to training and imposes a levy on employers to make sure that the training that Britain's construction industry needs is carried out. I put that down as a marker. We support the development of skills testing for the construction trades. There have been teething troubles, but it deserves a cautious welcome, because I am sure that the teething troubles will be overcome.
There has been discussion about whether the 1 per cent. levy should be based on turnover or on sales, but what is important is that the industry should train and that a levy should be imposed. The sad fact is that this is one of the few industries which are left for which the Government have a responsibility to ensure that training is given.
During the next year we hope that the industry will make progress on equal opportunities. I had hoped that the Minister would refer to this. The Manpower Services Commission has taken the initiative, and that is to be welcomed. It should be supported at every level. The trade unions support the move towards equal opportunities. The construction industry has a poor image for equality in race and gender. The CITB ought to adopt a tighter and more co-ordinated approach, and the MSC needs to give an even clearer lead to the CITB and let it know what it must try to achieve.
The Government have a responsibility to underline the importance of equal opportunities to the CITB. Women's groups and the ethnic minorities have lobbied hon. Members. They say that opportunities in the construction industry must be open to all. Far too few women are given the opportunity to train in the traditional construction trades. There is no reason why women should not be good bricklayers, painters and plumbers and become an essential element in the construction industry.
The CITB is not too keen on the suggestion that contract compliance could be used to ensure that equal opportunities are provided for ethnic minorities and women. The Government sometimes ridicule contract compliance, but it has been taken a long way by, surprisingly enough, the MSC. If the managing agent for an MSC scheme, particularly a youth training scheme, does not take seriously the fact that opportunities should be provided for ethnic minorities and women, he runs into real problems.
The MSC has given a lead in contract compliance. The Government cannot parade the MSC before us as the looney Left. Bryan Nicholson is its chairman, and the MSC is carrying out pioneering work. Why should not the Government, local authorities and public enterprises say to those who want to sell their services to them that they will deal only with those companies which train, offer equal opportunities and take seriously their obligations to their employees? That is the question that industrial training boards can advance, and must seek to advance, and the Government have so far ducked that issue. Contract compliance, in terms of a sensible approach to using, in public contract work, proper employers who actually train, who have obligations to their employees, cannot be a bad thing.
There are other issues involved in tonight's order. The wider context of the CITB's work is also very important. In recent years we have seen a major reduction in construction training. All the fine words that the Minister used this evening cannot disguise the fact that yesterday's meeting between the Minister for Housing, Urban Affairs and Construction, himself and the construction industry was a crisis meeting. It was a meeting of people dreadfully concerned because—surprise, surprise—training in the construction industry is at such an all-time low that if the Government wanted to build more houses, construct more roads, or rebuild sewers they would be unable to do so because there is a national shortage of skilled workers in the construction industry. That is bad enough this week when we are talking about the construction industry, because no matter whether it is a plumber, a bricklayer or an electrician, there is a tremendous shortage of skilled building workers in a nation with nearly 4 million unemployed people, many of them building workers. It is true that many of them are not in the right part of the country at the right time, but the fact is that the meeting yesterday was a crisis one about how we can get trained people in the building and construction industry in a hurry.
One of the problems with the CITB and the levy system as it now works is that the CITB can work only on the basis of what employers say they need at this particular time. The big trouble with the CITB is that it cannot forecast a likely need in, say, two or three years' time for more skilled workers in the building industry, for which we should make plans, because since the present Government came to power in 1979 they have had an appalling record on housebuilding. There has been absolutely no certainty about how many houses and roads there will be and what other construction will take place.
The construction industry has been at an all-time low for the past seven years. In such a situation, employers, the people who decide what training will take place, even under the CITB system or the levy system, do not train.
No, I shall not; I have not finished making my point. The industry does not train, and because it does not train the ITB is unable to train either, or to plan for the future. Here we are in 1987, with a slight sign of an upturn in building, and with no possibility of finding the skilled workers that we need for that change. Even more significant, in a few short months there is likely to be a Labour Government. There will then be an enormous demand for skilled workers in the construction industry, because we will turn our hands to building up our country again, making decent homes for people to live in, having new public investment, and we wall inherit, as we always do when we get into government, the apathy and neglect of a Conservative Government, and in this particular respect, the very real problem of training skilled people in the building industry in a very short time.
The hon. Gentleman has said that there is now less training by firms. Is he aware that at the meeting yesterday, to which he referred—this crisis meeting—a paper submitted by the CITB said that the ratio of trainees to the directly employed work force is now the same as it was in 1976, so there has been no change?
If the hon. Gentleman would take the time to talk to CITB officials, as I do regularly, he would know that not only has the proportion declined over the years, but that the number of people being trained has dropped dramatically. In 1979 there were not an enormous number of YTS trainees. As the Under-Secretary of State knows, I am not against youth training. This is not skills training, but a possible introduction to skills training. The ratio of trainees to those who finish their apprenticeship is well down on 1979. As I understand from yesterday's meeting, the CITB said that if it was given resources, had genuine leadership from the Government and the Government said, "Go, boy, go for it", training under the CITB could be increased by 25 per cent. But there will not be a 25 per cent. increase in training in the short term, because the Government do not have the courage to show leadership in expanding training.
It is not just a matter of the CITB having a crisis meeting with the Government. The hon. Member for Bolton, North-East (Mr. Thurnham) admitted that it was a crisis meeting.
The hon. Gentleman can read Hansard in the morning to see what he said, unless he does some nifty footwork.
It is had enough that there are not skilled workers over the length and breadth of the country to start the task of rebuilding it, but only six days ago the Engineering Industry Training Board—the central training board for manufacturing industry—said that there was a crisis in training and an appalling level of skills at every stage of the engineering industry. Every industry is bedevilled by the Government's lack of concern for and neglect of training. Our work force is less trained and less skilled than ever before, and less trained and less skilled than that of any of our international competitors. All that was glossed over by the Under-Secretary of State, who said little about training costs.
A much more important matter is the continuing uncertainty about what work will be available. If employers are uncertain about the industry's future workload, they will not train. They have not done so and they will not do so in the future. There are significant skill shortages across the board and large numbers of building workers—an estimated 450,000 or more—are out of work. Perhaps a Conservative Member will ask: if there are 450,000 workers out there, why do they not suddenly come on stream? The reason is that skills are not like investments in a bank which are conveniently there for use on demand. Skills rust and decay. If a building worker is on the dole for a few months and then a few years, he needs retraining and upgrading. Many of the highly skilled people in the construction industry who have been out of work for a long time now, tragically need retraining.
That brings me to a point that the Minister skated over niftily. We still do not have under this Government or under the CITB an adequate mechanism for dealing with labour-only contractors. Whether the levy is doubled or not, labour-only contractors do not train. I have not seen any mechanism under the ITB, under the Government's legislation or under the MSC's intervention to deal effectively with that enormous percentage of the industry that does not train and evades its responsibility to the work force.
It has been estimated in recent months that the major social and economic needs of the country could be met through new construction. Even on a conservative scale it is estimated that we could spend £20 billion on the repair and maintenance of local authority homes, £2 billion on the repair and maintenance of hospitals, £4 billion on roads and so on. To put it in perspctive, the total value of construction activity at the moment is only £23 billion. We could have a new building programme, under a decent Government, that would take us to a £28 billion investment in the future of our people. Tens of thousands of people could go back to work in construction. Rather than spending the whole of our North sea oil inheritance on the dole queue, we could have invested that money in new homes, new roads, new sewers and new hospitals. Under this Government we see that money being wasted and the skills of the people who could have produced that new development decaying.
Three ingredients are missing. The first, of course, is a Labour Government. [Interruption.] Conservative Members do not like that prospect, but they will meet it soon. The second is a commitment from a Government who have closed their eyes to the opportunity to get people back to work at a low cost to build things that are needed. Thirdly, the Government should ensure—the record of the Minister on this is disgraceful—that the unemployed have sufficient skills to produce the products that people want.
Here we see one of the deficiencies of the ITB system,. I am a great defender of the industrial training board system, but the boards have to be expanded. We do not say that everything that ITBs traditionally did was wonderful. We should not just restore them, but would improve them. We would learn from experience to make them even more efficient. Within the present structure, industries find the training remit too confining. They could do much more. That is what the EITB said last week and what the CITB is saying to the Minister at present.
ITBs cover only a meagre 25 per cent. of employees in British industry. Because they are not effectively linked to an economic and employment strategy, they cannot easily meet the challenges of training. What is missing from the Govermnment's policy is a link between a strategy for economic development and growth. As they set an objective of a target for growth, whether in house construction, public service construction or hospital building, they should at the same time plan—a word which the Minister and the Government do not like to hear—the construction targets and the training to go with it. Unfortunately, the Government are frightened to plan construction and the economy. They are incapable of planning the training of the British work force and all that that entails.
A Labour Government would set the challenges of generating economic growth and getting people back to work. Such a Government would plan for their training, and that is something that the present Government will never do. We have seen this with the EITB and the CITB, the two major training boards that still remain. I fear to think what is happening in the rest of British industry where industrial training boards were thrown away, where they were wasted.
Under a Labour Government there will be a commitment to link training with a strategy to get people back to work. We shall bring them back to build our homes and to rebuild houses and our infrastructure. We shall encourage the stability and continuity of growth in the industry. That will make training a sane possibility.
I am bringing my remarks to a conclusion. If the hon. Gentleman is able to catch your eye, Mr. Deputy Speaker, he will be able to make his contribution to the debate.
I am sure that the ITBs want to encourage and see occur the decasualisation of construction employment, and that will happen under a Labour Government. We shall tackle the problem of labour-only supply. That is the effective way of getting the amount of training that we need by the community as well as by the industry. We shall move towards a more regular employment structure throughout the construction industry.
The Government must take responsibility for training. So far they have denied that responsibility and we have seen the end of industrial training as we used to know it, along with skills training. Nothing that the Government have done has fooled the British public into believing that the highly skilled men and women whom we need to compete in international markets and to meet the challenge of technology have been trained under their stewardship. The Opposition support the order, but we must use this occasion to point out that industrial training has been left to go to rack and ruin.
Having listened to the hon. Member for Huddersfield (Mr. Sheerman), I am surprised that he did not suggest that there should be an industrial training board for Opposition spokesmen. I should think that the electorate will continue to ensure that the Labour party remains the missing ingredient in the mixture that has been advanced in all the hot air that has been generated this evening.
I support the order, although it is not on every occasion that an employer wishes to support a levy on his operations. The characteristics of the construction industry, however, support the need for a collective training organisation. I pay tribute to the good work that is done by the Construction Industry Training Board. As a member of the Electrical Contractors Association, I should like to say how much the employers welcome the way in which the board has co-operated with all the training arrangements which have been made.
I draw the attention of the hon. Member for Huddersfield to a characteristic of the electrical contracting industry's training arrangements. The fact is that many more apprentices were taken on once the high starting rates for apprentices had been reduced to levels more comparable with those that prevail on the continent. The present starting rate is 22·5 per cent. of the adult craft rate, which enables employers to pay for training in a way that they seem unable to manage in other parts of the construction industry. If the hon. Gentleman feels that there is a lack of training, I suggest that the high starting rates which have been imposed by union agreements in the past must be one of the reasons.
The hon. Gentleman did not seem to appreciate the argument advanced by the CITB that an average of 9·5 per cent., as a ratio of trainees to the directly employed work force, has prevailed from 1976 to 1985. Therefore, when the hon. Gentleman says that the ratios have changed, he is not looking at the figures.
There are two points of concern. One is shoddy work. I was appalled to read that the Department of the Environment had received 42,000 complaints of shoddy work. I am sure that one way of overcoming that is to ensure that there are skill tests for those who undergo training in the industry. I hope that the pilot work taking place at present will lead to skill tests for all branches of the industry, as has been done in the electrical contracting industry for some years.
The suggestion that there should be a kite mark to tackle cowboys may well help to reduce the vulnerability of the public to shoddy workmanship. I hope that that idea is successfully developed.
I should like to deal with what the hon. Member for Huddersfield called the problem of labour-only subcontractors. It is unfortunate that he was not able to visit Japan last year with the Select Committee on Employment and learn some of the different ways in which the industry there is organised and the training methods that are used. As far as I am aware, there is no great crisis in the construction industry in Japan, although many firms have 100 per cent. arrangements for labour-only subcontracting. It is instructive to know that people in Japan still look on some matters as we do here. The Japanese Ministry of Labour's book on human resources development said:
In Japan, however, skilled workers are still socially underestimated. Because of excessive importance attached to academic background, they do not yet enjoy an established social position.
Therefore it seems that we have the same problems in both countries.
I know that my hon. Friend the Minister visited Japan in May. Looking at his itinerary, I know that he did not have the time to talk to people in the construction industry. Perhaps next time he goes he might be able to do so. I am sorry that my right hon. and learned Friend the Paymaster General had to be called back so suddenly from Japan because of the confused ideas on the Opposition Benches as to exactly what debate we were going to have today. Had they been able to make up their mind at a proper time, my right hon. and learned Friend would have been able to continue his visit.
I should like to mention to the hon. Member for Huddersfield a typical Japanese company—Kokko Shisetsu Kogyo Company Ltd. The president is an excellent gentleman. His name is Hiroshi Sakanishi. He told me that the turnover of his firm was a figure in yen equivalent to £10 million a year. However, he employed only 80 people. That ratio would be out of proportion for any electrical contractor in this country. However, he said that, in addition, up to about 300 people worked for his firm on a self-employed basis, working in small groups of five, 10 or perhaps more on a labour-only subcontracted basis. Although he is a leading electrical contractor in Japan he does not employ any electricians at all. We should look at that example and see—
Order. I must remind the hon. Gentleman that we are debating an order that is concerned with the levy and the purpose of it. He should relate his remarks to that.
I apologise, Mr. Deputy Speaker.
We are talking about a 2 per cent. levy for the labour-only element. It is because of that 2 per cent. that we are having to address the matter tonight. I should like to draw attention to the fact that it should be seen not as a problem but as an opportunity for more flexible working practices to be introduced into the industry, as long as the measures that are carried out for training in Japan are looked at closely by the CITB as a model for what can be done in this country. I recommend the CITB to pay close attention to the way in which licences are issued to skilled operatives in Japan as an incentive for people to undertake training with the provision of loans for training costs from the Government.
I believe that we can learn considerably by looking at other countries—for example, Germany, where four times as many apprentices are employed because of a much lower starting rate of pay.
I support the order inasmuch as it provides for the continuance of training by the Construction Industry Training Board, but I have one or two questions to which I hope the Minister will have time to reply.
The industry, according to my information, perceives itself as having problems. The hon. Member for Huddersfield (Mr. Sheerman) referred to a "crisis meeting". Whether or not that is the case, it is clear that, first, the amount of training is directly related to confidence and optimism in the industry and, secondly, that various figures seem to be bandied about. The proportion of the work force in the industry engaged in training at any given time has fallen over the past six or seven years. If that is in dispute, perhaps the Minister can clarify the situation, because there is no point in arguing over spurious statistics. It seems to me that that is maintained by the board itself to be part of its problem.
I want to take up the comments of the hon. Member for Bolton, North-East (Mr. Thurnham), because I notice that the Construction Industry Training Board points to the increase in the number of self-employed in the industry as a problem. I do not believe that the Minister would regard the increased number of self-employed as a problem. I certainly do not regard it as a problem in the sense that we should not welcome it. The problem is how we absorb them into the mainstream of the training activity. If I am right in my presumption, part of the way of getting them to contribute is to go for the 2 per cent. levy, which is why we are having this debate.
I do not accept the presumption that people who are small by definition—self-employed, labour-only contractors—even if they do not directly contribute to the training process in the terms of the training that they do, are not a proper and legitimate component of the industry.
I have watched the oil industry in my area and the way that it has developed, with a number of sub-contractors. The big companies tend to do the bulk of the training, which spins off into the foundations of smaller companies which still feed back into the industry. I am not objecting to the point of the levy; I am simply saying that I hope we do not get into a bureaucratic way of restricting the flexibility within the industry so that we discourage flexible developments.
The Government have got themselves into a slight bind, because they have come forward with an order fully endorsed by the industry and fully backed by the MSC, which basically is saying, "We have a training board that imposes a levy. It is working well and we want an order to support it." Yet it is the same Government who disbanded the training boards.
According to the Minister:
Training has improved significantly since the demise of the 16 industrial training boards.
I have been unable to find any evidence to support that. If that sort of statement is made by a Minister, it requires proof and support.
I would not dare to suggest that the hon. Gentleman is taking my words out of context, but, if he studies Hansard and reads the various exchanges at Question Times, he will discover that I have made it clear that I have undertaken an investigation into the work of the non-statutory training organisations. I have informed the hon. Member for Huddersfield (Mr. Sheerman) of that and am awaiting the result.
I accept what the Minister says, but we need the evidence to substantiate that statement. I hope that the hon. Gentleman will be able to substantiate it.
There is a widespread view that the Government have substantially dismantled training organisations for reasons which, if one were fair-minded, one would say might or might not be justified, but they certainly have not convinced people that what has been put in their place is adequate or will enable us to cope with our existing problems, never mind the challenges of the future.
In that context, the Government are saying in the order that the Construction Industry Training Board effectively wishes to extend its existing functions, and they ask the House to support it. In principle, of course, there is support from both sides of the House. However, let me ask a few pertinent questions.
If the Government support the order, it behoves them at least to explain the continuation of the levy. I think that I know the answer. The board currently has reserves of £73·5 million, and, if I heard the Minister correctly, the continuation of the levy is likely to yield something in excess of £50 million in the current year. Is the Minister satisfied that that is the kind of money that the industry needs and that it will be sensibly and intelligently spent, rather than it being just a matter of, "That is what we have been getting for the last few years, so let us carry it through."? It is important that that should be justified. I am not suggesting that it is not, but it should be explained.
It is reasonable to ask the Government to explain how they satisfy themselves that the work of a board, for which Parliament has to approve the levy, is being conducted fully and satisfactorily. I am not suggesting that it is not. All the comments from other speakers shows a general satisfaction with the board. However, I should be interested to know how the Government go about satisfying themselves that a levy is justified, both in terms of reserves available, and the proposals to go with it.
It would be helpful if the Government would say how the labour-only contractors have been affected by the 2 per cent. levy. I understand the reason behind it, but is there an effect in terms of their trying to evade it, because, after all, at that end of the market there are ways of getting round such things, and, given the extra levy that they are being asked to pay, are they getting a perceived benefit at the end of the day? I would be prepared to accept that their perceived benefit is their ability to recruit trained people from larger companies. That is the way that it tends to work. I do not regard that as an unobjectionable argument, but it is right that it should be explained and justified.
Over the past two or three years we have experienced a depression in the construction industry that has clearly had an effect on training within that industry. We have had a general debate on the importance and merits of training. We have, I think, acknowledged that the amount of training that goes on is directly related to activity. Therefore, it is important that the Government should recognise that they need to instil confidence within the industry if they are to get training moving.
Anything that the Government can do over and above the order to stimulate and to instil confidence in the construction industry will provide the framework wherein the levy will produce the trained people who, regardless of who wins the next election—I hope that the Minister believes this—will be necessary.
Britain wants to see some investment in our infrastructure and in the quality of our housing stock. That must be confronted and we need trained people in industry to do the job. To the extent that the order will contribute to that, I welcome it, but I hope that the Minister will acknowledge that I have asked some pertinent questions which he should answer.
My hon. Friend the Under-Secretary of State will by now be bathing in a rosy glow of satisfaction, having heard plaudit for his order from Members on both sides of the House. Therefore, it is almost churlish of me to enter a minor note of dissent and anxiety about some aspects of the order.
Were I my hon. Friend the Under-Secretary I would be rather worried about the order because, listening carefully to the hon. Member for Huddersfield (Mr. Sheerman), this sort of order is but one brick to the foundations of the centralised planning for which the hon. Gentleman so wonderfully looks.
On the macro level and almost going off at a tangent, if the hon. Gentleman is so concerned and regards centralised planning as such a key factor in the regeneration of the nation, he should go for a few months to countries behind the iron curtain, as my hon. Friend the Member for Basildon (Mr. Amess) and I have done recently, and he will see the effect of that centralised planning.
On the micro level, I am rather concerned about how the order will relate to small firms within the construction industry. I hope that my hon. Friend the Minister will take account of those worries in any future consideration of the issues.
The construction industry is dominated by a plethora of small firms. I accept that, as a group, small firms receive a large amount of assistance with training. Some of the small firms are unable to take advantage of the Construction Industry Training Board's facilities but are, nevertheless, required to pay the levy.
For some time the exemption limit has been set at £15,000 of payroll. In effect, that means a firm with, at most, three employees. The order maintains that exemption level. Every firm that has more than three employees must pay the levy. For many small firms—my hon. Friend is the Minister with responsibility for small firms—that represents a considerable financial burden. If those firms received their money's worth from that levy, it would not be a burden, but, in many cases, they do not.
At this stage, I must enter a caveat. Many representations that I have received about the order have come from a small firm of civil engineering contractors. However, my inquiries suggest that those problems are common to many other similar companies, especially in the north of England.
Such small firms are seldom able to allow staff time off for off-site training. In today's competitive climate such firms cannot afford to carry surplus staff. They need to be able to react to an extremely competitive market place. Even with grant aid, the course fees and other associated costs can make the training offered by the CITB almost prohibitive. Courses cannot always be specifically designed to the needs of particular firms. Even courses held at local colleges, for which grant aid may be available, are not necessarily relevant to the firms' specific work. When appropriate courses are available they are often held too far way. The firm in Halifax—which has made representations to me—is aware of a relevant course that is held in Norfolk. That is too far away.
When operatives have been trained and have obtained a new qualification, they often move to a larger firm where they receive higher wages. Thus, the small firm pays the levy and takes advantage of the training facilities but the trained staff go off to other employers.
If one considers the global figures, small firms may represent a high proportion of the grant take-up. That tendency relates specifically to building firms, not to civil engineering firms or other disciplines.
I wish to apologise to the hon. Member for Halifax if he thought that I was impugning his honour. I merely think that it is suspicious that he cannot name the firm that is having such terrible troubles.
It would be wrong and invidious to name a particular firm. I have consulted more than one firm. The hon. Member for Huddersfield was impugning my honour because he suggested that the firm does not exist. It jolly well does, and it will be deeply concerned about the hon. Gentleman's comments.
In some sectors of the construction industry it may be that the large firms are receiving a disproportionate share of the benefits while small firms pay a disproportionate share of the levy. In smaller companies the emphasis is often placed on on-site training, but they may then lose experienced staff to the larger companies. As a result, small companies may be given no recognition of the contribution that they make to on-site training. [Interruption.] The hon. Member for Huddersfield has again impugned my honour from a sedentary position, and is quite wrong.
My hon. Friend the Minister may well say that the levy arrangements are subject to consultation with the industry, but the evidence seems to be that many of the representative bodies are, of necessity, dominated by the large firms, and that the smaller firms have a relatively small voice in those consultations. In specific sectors there is, therefore, some evidence of small businesses being treated unfairly. However, there are ways of mitigating that.
I am very disappointed that the order does not address itself to those problems. The Engineering Industry Training Board excludes from any levy all those firms with fewer than 40 employees. Such a blanket exemption may not he appropriate for the construction industry, but it is surely possible to have two or three grades of payment, whether devised on a pay roll or number of employees basis. It may be possible to say that people with 10 to 20 employees will pay one rate while those with more than 20 employees pay another. Alternatively, the Construction Industry Training Board is very much taken with the idea of the pay roll, and so one could say that firms with pay rolls o £15,000 to £30,000 should pay one levy while those with bigger pay rolls pay another.
The order makes special provision for certain groups, with particular reference to brick manufacturers. Similar arrangements could be made for other specific sectors of the construction industry that do not fully benefit at present. Therefore, I hope that my hon. Friend the Minister will note the concerns of small firms when making any future arrangements for the Construction Industry Training Board.
I shall make a brief speech. I am delighted to see my right hon. and learned Friend the Paymaster General in the Chamber, fresh back from Japan in order to hear this important debate.
I have no direct experience of the construction industry, but I have experience of training boards and of filling in the necessary forms for them, with all the bureaucracy that is involved. Indeed, I take on board the comments made by my hon. Friend the Member for Halifax (Mr. Galley) about the effect that the order may have on small firms. I fully endorse the remarks made about the national shortage of skilled workers. I realise that we must ensure that more and more people can pursue the various necessary crafts and professions if we are to maintain our export drive and remain a competitive nation.
The training boards were launched in the 1970s with every good intention, particularly with regard to matching the training programmes being introduced by other countries, such as West Germany. We had only to consider the number of apprentices and training courses that those countries had in place to know that we came out very badly. Mention has already been made of the trade union rates being applied to apprenticeships in Britain compared with the situation in West Germany. British employers were consequently reluctant to take on unskilled youngsters at such high rates.
However, the bureaucracy often escalated to match the activities of those training boards and that hit small firms. They started to rebel against all the form filling. Often the levy grant system turned out to be just a recycling process with no real influence on the level of training to be provided for those working in those companies. Many small firms endured that, along with all the other centralised taxes, such as rates and national insurance, and just added the training board levies to those figures. We must ask what effectiveness is being achieved by our training boards in providing the skills and expertise that we need for the future. My hon. Friend the Member for Halifax and others have made the point that training is carried out by large firms. They produce the skilled people who take the more senior managerial positions within industry.
Although I shall support the order, I should like my hon. Friend the Minister to consider whether the £15,000 exemption level will be too low in future and whether it should be considerably higher. Small firms cannot effectively carry out training if they are levied at above £15,000. It must be a considerably higher figure. They do not have the management time to devote to training and they do not have time to send their young trainees on courses. They do not get contracts that produce the necessary revenue for them to finance young apprentices or trainees on day release and other courses.
When the measure comes before the House in a year or so, I urge the Minister to consider raising the exemption level to a considerably higher figure than £15,000, to give small firms relief from the bureaucratic form-filling involved and, possibly, give large firms the opportunity to carry out the training schemes that will be necessary for the industry in future.
This has been an interesting and wide-ranging debate. I join my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) in welcoming the presence of my right hon. and learned Friend the Paymaster General, who, due to the stupidity of Her Majesty's Opposition, has had his essential visit to Japan curtailed. We all regret that fact, but are delighted to see him.
The CITB will welcome the complimentary remarks made by hon. Members. Obviously, I wholly endorse them. I was sorry to hear the hon. Member for Huddersfield (Mr. Sheerman), in his initial address, refer to the proposed 1 per cent. levy which the hon. Member for Kingston upon Hull, East (Mr. Prescott) suggested, perhaps not with the total agreement of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). In fact, as the hon. Member for Huddersfield has heard me say in the past, the Department of Employment has calculated that, if this were to be applied across industry and commerce, it would lead to an increase of about 15 percentage points in corporation tax.
The hon. Gentleman seems to doubt the statisticians in the Department of Employment. These are not politicians' figures. The prospect of such a levy being imposed on the industry would fill the hearts and minds of the employers represented on the CITB with absolute terror. As the hon. Member for Gordon (Mr. Bruce) was prepared to admit, there are people operating in small business—which he supports, as I do—who are taking a risk. The construction business is a more risk-taking one than many others that we might think of. It is vital for us all to recognise that those who are prepared to take risks should not be over-regulated and over-penalised by increases in corporation tax or in direct taxation. Government Members totally disagree with the hon. Members for Huddersfield and, dare I say it, for Gordon on this and similar issues.
The hon. Member for Huddersfield made a point about equal opportunities. I agree wholeheartedly with what he said, with the exception of the point that he made about contract compliance. I had a meeting with members of the CITB in the Department of Employment about progress on equal opportunities. The hon. Gentleman is absolutely right to point out that it appears that we have a problem in the construction industry. But he was a little unfair to suggest that only the MSC, with the construction industry and the CITB, was taking the lead because both my right hon. and learned Friend the Paymaster General and I have played an active role and are anxious that this type of initiative should develop. I am glad that we shall enjoy the hon. Gentleman's support. It is right to pursue the initiative, and we are intent on doing that.
It is important that the House should know that the CITB could not be recoganised as an approved training organisation for YTS unless it complied with a new mandate being given by the MSC which also emanated from the meeting in the Department in September.
I did not agree with what the hon. Gentleman said about contract compliance. The employers' representatives on the CITB would run a mile from contract compliance. The hon. Gentleman should see some of the mail that I receive on this issue from employers in the industry who must comply with the regulatory paperwork introduced by some Left-wing head bangers in local authorities, especially in London and the south-east. If they have to dance to the tune of that sort of regulation—they are prepared to do that because they need to work—they are prohibited from getting on with the job that they do best, which is creating wealth and work. I could not wait to hear what the CITB would say about contract compliance, but I was certain that there would be nothing unanimous about its decision.
What is the difference between the sort of contract compliance that the MSC under Bryan Nicolson is introducing for recognised approved trainers under YTS and what the Minister constantly refers to as that of head bangers and the loony Left? He knows that exactly the same is going on in contract compliance in terms of ethnic minorities, equal opportunities and the employment of women. He knows as well as I do that the CITB has swallowed what for some employers was a bitter pill in terms of the MSC's demands for contract compliance. What is the difference between that and what local authorities demand?
There is a great difference. If the hon. Gentleman has taken the time and trouble to study the documents sent out by local authorities, he will realise that it is madness for authorities to issue them because of the problems that must be tackled by employers. We are talking principally about a problem with regard to YTS. If I could just have the hon. Gentleman's attention for a moment, he will find that we have another point of agreement.
Our concern is with YTS in particular. The CITB should be proud that it has a higher number of YTS trainees than any other sector in industry generally. That is fine. We have detected a problem, and one does not have to be clever or a genius to see that few coloured people appear to be taken on by the industry. If that point will unite the Opposition with the Government, I welcome it. Certainly, the CITB has undoubtedly taken that point firmly on board.
The hon. Gentleman referred to a meeting yesterday with the Minister for Housing, Urban Affairs and Construction and me as a crisis meeting. It was called some months ago by my hon. Friend the Minister. I reached the same conclusions as he reached, but from an entirely different route—a report issued by the Federation of Master Builders. My right hon. and noble Friend the Secretary of State thought that it was rather quizzical that we identified several skill shortages—about 4,000—yet we had an unacceptably high level of unemployment. [Interruption.] With respect, I am about to deal with the hon. Gentleman's point.
If yesterday's meeting was not a crisis meeting and the Government had for some time recognised severe skill shortages in the construction industry, why have they waited since September to have a meeting to talk about them? That is a dereliction of duty if ever I heard one.
I do not think so. The hon. Gentleman ought to do his homework a little more carefully. He does not seem to appreciate that the CITB has considerable reserves of money. He did not mention that and I do not think that he even knows about it. That helps to answer one of the questions asked by the hon. Member for Gordon in his intervention. We drew the attention of the CITB to this problem because we knew that it had reserves which we thought could be better spent. The hon. Member for Huddersfield cannot have it both ways. On the one hand, he says that he wants to see a replication of statutory training boards right across Britain in different sectors. On the other hand, here is a training board which is not meeting a specific shortage—the shortage of skill.
Yesterday's meeting was not a crisis meeting. We wanted it to be properly prepared. We wanted the trade unions to be properly represented—which they were—and we wanted to see the representatives and leaders of industry from various trade associations. It was a most constructive meeting, and, as a result of it, we have asked the CITB to come back to us by the end of March with a specific proposal to deal with the skill shortage which I have already said will be about 4,000 apprenticeships. I have no doubt that the board's response will be positive.
The hon. Members for Huddersfield and for Gordon were wrong when they said that the number of people being trained in the industry was falling. Between 1985 and 1986 there was an increase of 2,000 apprenticeships in the industry. The number of YTS trainees was also on the increase. [Interruption.] I am talking about 1985 to 1986. Certainly, there have been ups and downs, but it is unfair to say that the figure is still going down, because it has increased.
As I have said, between 1985 and 1986 there was an increase of 2,000 apprenticeships in the industry. Given that the shortage is 4,000, I do not believe, nor does the CITB, that the problem is insurmountable. We are spending £1·5 billion annually on training—more than double the amount that was being spent when we took office. It is grossly unfair for the hon. Member for Huddersfield to suggest to the House that we are not taking a lead in training. I have already said how we are doing that with the CITB in two specific areas. We are convinced that the CITB, however good a job it is doing at the moment, could do much more by encouraging employers to regard training as an investment and not as a cost.
I listened carefully to the speech by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham), who spoke about the skill tests. He may be interested to hear that at yesterday's meeting one of the employers' representatives talked about quality assurance—a point which my hon. Friend touched upon in his speech. I agree with him that quality assurance needs careful study. I hope that by March, when the CITB is to come forward with the other proposals that I mentioned, it will also deal in some detail with how quality assurance can be improved.
The CITB is also to report on the labour-only subcontracting problem, about which my hon. Friend spoke. I have no doubt that the CITB will read with interest his contribution to this debate.
I have answered the first question put to me by the hon. Member for Gordon. He made a fair point when he spoke about the self-employed, but it is incorrect to suggest that people who are exempt from paying the levy cannot receive grants from the CITB. I think that my hon. Friend the Member for Halifax (Mr. Galley) got that a little wrong. It is wrong and it is important for me to put it right. Of course, there are exemptions for those who have a payroll of under £15,000, but they can certainly enjoy the training facilities available for employers and employees, although it would be principally those who are self-employed who would use those facilities, either locally and organised by the CITB or through distance learning modules. My hon. Friend the Member for Halifax did not mention that, but it holds the key to the problem that he identified. They can also use open learning generally for which the Manpower Services Commission is responsible. It was again raised at the meeting yesterday afternoon and we all agreed—the Government, unions and the employers' organisations—that this must be the way forward. Distance learning and open learning should be developed and strengthened.
Even with open learning and distance learning, is my hon. Friend able to guarantee that the facilities that will be made available will be relevant to firms throughout the industry, including civil engineering? I do not see how he can give such a guarantee.
I have to be careful how I answer my hon. Friend, because he has asked for a 100 per cent. guarantee. My hon. Friend said that for a firm in his constituency the specific kind of training that was required was available only at the other end of the country. The only answer to that problem is distance learning, and it can be provided relatively cheaply. If that need is not being met, I should like to discuss with the CITB and the MSC how it could be met, and I shall do everything in my power to try to put it right.
The hon. Member for Gordon asked me how the Government monitor the spending of the CITB. Initially, it is monitored by MSC officials, the Department and Ministers. I do not suggest that the CITB has been irresponsible, but the CITB's spending led to the meetings to which I referred earlier. We are anxious to get the extra value for money to which the hon. Gentleman referred.
The hon. Members for Gordon and for Huddersfield referred to the depression in the industry. The Labour, Liberal and the Social Democratic parties have a vested interest in trying to paint as black a picture as they can, but output in the construction industry has grown steadily since 1981. In 1985 it was 11 per cent. above the 1981 level, and 1986 promises to be the fifth successive year in which output in the industry has grown. It will be the first time that that has happened since the 1960s. In the first nine months of the year, output was nearly 3 per cent. higher than in the same period in 1985. It is particularly encouraging that the growth was led by the private sector. Private industrial and commercial output in 1985 was the highest for 14 years and the second highest ever. In the first nine months of 1986 private commercial output was at the highest level ever—up by 12 per cent. over the same period a year ago.
It has been claimed again tonight that the Government should spend more on the infrastructure to help to create additional jobs in the industry. The Government are aware of the need for spending on the infrastructure and they will direct whatever resources can be afforded to those areas that the public sector can tackle. In the autumn statement the Government were able to increase the provision for capital expenditure on construction by nearly £1 billion and they have provided £450 million for housing. That illustrates the support that the Government are giving to the industry and to training in the industry.