I am grateful to my hon. Friends the Members for Hyndburn (Mr. Hargreaves) and for Pendle (Mr. Lee) for raising such an important subject in this Adjournment debate. I pay tribute to the role played by my hon. Friend the Member for Pendle in establishing the training and enterprise councils when he was at the Department of Employment, and, as he said, this is the first debate that there has been on them. I hope that it will not be the last, and that future debates will be as well-informed and constructive as tonight's debate has been.
Training and enterprise councils have been a runaway success that certainly includes east Lancashire. The TEC initiative was launched in March 1989, and in less than two years we have seen established the full network of 82 TECs in England and Wales. Forty six are fully operational, and the remainder will join them by this summer. That remarkable achievement was possible only because of the enthusiasm and commitment of 1,200 key business and community leaders in all parts of England and Wales. They and their officers and staff have given time and energy in putting their TECs on the map, and east Lancashire is no exception. In my travels since last July, I have met many of the people concerned, and it is phenomenal to see the effort that is being deployed. I support the remarks made by both my hon. Friends about the work of particular individuals.
The chairman of east Lancashire's TEC, Mr. Tony Cann, has proved his ability in the commercial world many times over. He has set up a number of manufacturing companies which have become world leaders and which have won the Queen's award for export. He has built up a strong board of TEC directors, and continues to shape it, to ensure that it is representative of the business interests and people of east Lancashire.
We now have, for the first time ever, a training and enterprise structure led by top business leaders and other key local people who have the power and the resources to apply local solutions to local needs. The TECs have a major role at local level, in bringing about the high-skill, high-productivity economy that this country needs. There is a growing consensus about the importance of that initiative. Last week, I participated in a meeting of the National Economic Development Council, and was delighted to see support for the initiative coming from the Trades Union Congress as well as from the Confederation of British Industry. I pay tribute also to the hon. Member for Burnley (Mr. Pike) for his constructive intervention in tonight's debate.
My hon. Friend the Member for Hyndburn emphasised that the principle underlying training and enterprise councils is that they should be business-led and local. I may add that they are based also on the principle of voluntarism. Localism is important because of the immense variety in different circumstances, labour markets and training markets throughout the country. There is an enormous difference between, for example, east Lancashire and my own area of south-west Oxfordshire.
The fundamental reason for putting business in the lead in training emerged clearly from a study of training funding conducted in 1986, which showed that, at that time, individuals invested £8 billion annually; the state invested £7 billion, which included company tax concessions; and employers invested £18 billion. This country's training effort depends absolutely on the attitude and approach of employers, and it is a mistake to put the state at the centre of the picture. The situation can be transformed only by employers acting upon their responsibilities to pursue better profits, by improving their training efforts.
We must build on that through business leadership. The Government spending on training to which both my hon. Friends alluded increased substantially over the past decade—some threefold in real terms—but the fact remains that any real improvement will come by business leadership.
We attach great importance to the principle of voluntarism, and in that I do not entirely agree with the remarks of my hon. Friend the Member for Hyndburn about exhortation and legislation. One can make a good theoretical case for exercising legislative compulsion, but the translation of legislative compulsion into reality involves the creation of political and bureaucratic structures, which detract from the essentially market-based nature of training and from the necessity that training efforts should be employer-led. The TECs represent an option for a market-based and employer-led approach to training which is going to achieve what we need to achieve—a fundamental cultural change in attitudes to training, with ownership of training programmes by individuals and employers. The problem with legislative compulsion is that it does not support those as it should.
Britain has quite a lot of experience of legislative compulsion in training. That experience was not a positive experience. If we have a training problem, its roots go back to the 15 years when we exercised extensive structures of legislative compulsion. The only country which has such an extensive arrangement for compulsion is France. The other countries upon which we might choose to model ourselves, notably the Federal Republic of Germany, Japan and the United States, are essentially using voluntaristic approaches to training.
Therefore, our basic approach is to use the training and enterprise councils to ensure that local business leadership, under contract to the Government, can manage Government training programmes and build upon them as a basis for improving the total training effort under the auspices of business. In that connection, an important new initiative was recently announced by my right hon. and learned Friend the Secretary of State. The investors in people initiative sets a new national standard for effective investment in people. It is a standard which will be the foundation for an action programme, aimed at encouraging employers to plan, act on and to review the training needs of all their employees to achieve business objectives. The investors in people initiative has been developed by the national training task force, and the training and enterprise councils will lead on its local implementation in their area. It will be the device by which they are able to carry a crusade of training into local businesses and local firms, and that will play a key role in the transformations that we are seeking.
My hon. Friend the Member for Hyndburn referred to the idea that TECs should be local. We are very keen that they should be given the freedom to find local solutions to local problems. That is something which the TECs have stressed very strongly and which we have been meeting. At least 25 per cent. of payments for youth training and employment training will normally be based on outputs, rather than time spent on programmes, and that will give the TECs a powerful incentive to decide how they will arrange for the people in their community to have high-quality training, leading to nationally-recognised vocational qualifications and to worthwhile jobs.
We have changed the system for the funding of the enterprise allowance scheme to give greater flexibility, and we have also merged budgets for business training and the enterprise allowance scheme so that TECs will have the flexibility that they have been asking for. Furthermore, we have transferred the responsibility for work-related further education—a programme worth about £100 million a year —to the TECs. That is evidence of our confidence in the future of TECs. Overall the budgets available for training enterprise councils have increased.
My hon. Friend the Member for Pendle asked about the possibility of community-based projects. That is an interesting idea and there may be a possible role for TECs in that. I have tried to outline the way in which we intend the TECs to develop and to grow. My hon. Friend the Member for Hyndburn asked for an assurance that the Government will listen to the training and enterprise councils and I am happy to give that assurance. We have indeed listened very closely to what they have been saying, and that is the basis upon which we have given the flexibilities that I have just described.
TECs can benefit from a provision announced in the last Budget which means that companies making donations to TECs can claim tax relief.
As I have emphasised, we have also cut down the bureaucracy to a minimum compatible with the principle of accountability to Parliament for the spending of taxpayers' funds.
TECs are unique and are learning from one another. We are striving to achieve the right balance between giving them the freedom that they need and the accountability required. TECs, more than any other enterprise, have the ability to bring about far-reaching and lasting benefits in the local economy. They will directly impact upon the well-being of a great number of people, from management to the operative level in every part of England and Wales, and it is in everybody's interest to ensure that they succeed.
My hon. Friend knows that ELTEC has been operational since May of last year. The board has drawn up creative and challenging plans and set itself a number of major tasks. Its members are using youth training and employment training to create more opportunities in the manufacturing sector, which, as both my hon. Friends stressed, and as the hon. Member for Burnley said, is so important in the east Lancashire economy, by offering training in greater skills.
They are encouraging manufacturing companies to recruit more from the ethnic community. At the same time they seek to develop the skills of the ethnic community to meet the needs of local industry. They are promoting greater co-ordination of enterprise agencies and others to improve the quality of services offered to start-ups and small businesses.
The centrepiece of east Lancashire TEC's plans is the establishment of a lifetime training programme. The programme's objective is to promote, organise and pump-prime the development and training of the existing workforce in east Lancashire. It aims to commission by March this year some 20,000 hours of training. This is an exciting proposal and it may well provide valuable lessons for replication in other parts of the country. It sits well with the investors in people initiative. I am certain that encouragement by way of pump-priming activities and the fostering of commitment to training and development will be much more effective than compulsory levy systems, which have failed us in the past. I look forward very much to hearing how lifetime training develops.
East Lancashire TEC also recognises the potential for developing education and industry links and has already drawn up plans to develop compact arrangements, to which my hon. Friend the Member for Pendle referred, in its area. As my hon. Friends know, east Lancashire's objectives have an important economic focus, as clearly set out in the TEC board's objectives. But let me quickly say that the TEC board also has a clear understanding of the social aspects of its responsibilities and of the need to include the disadvantaged within the provision and initiatives of the TEC. I have already given the example in respect of the ethnic communities. The fundamental measure of east Lancashire TEC's success will be the added value that it will bring to the local community.
I know that my hon. Friends support the TEC initiative and east Lancashire TEC in particular. I give my hon. Friend the Member for Hyndburn my assurance that the Government will do everything in their power to ensure that the TECs prosper and grow and become a major vehicle for economic regeneration and development in every part of England and Wales, including east Lancashire itself.
Question put and agreed to.
Adjourned accordingly at fourteen minutes to Eleven o'clock.