Employment and Training

Opposition Day – in the House of Commons at 11:59 pm on 9th June 1992.

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Photo of Patrick McLoughlin Patrick McLoughlin Parliamentary Under-Secretary (Department of Employment) 11:59 pm, 9th June 1992

I beg to move, That the draft Industrial Training Levy (Engineering Construction Board) Order 1992, which was laid before this House on 27th February, in the last Session of Parliament be approved.

The proposals seek authority for the Engineering Construction Industry Training Board to raise a levy on employers in the engineering construction industry to finance the running costs of the board and to fund a range of training initiatives, including a grants scheme. The proposals provide for a levy based on the payroll of employers and their use of subcontract labour. They cover both the site and head office employment and also provide protection for smaller employers. The proposals have the support of the employers—as required by the Industrial Training Act 1982—and the full support of the board.

The engineering construction industry has characteristics that create peculiar training problems. The mobile nature of the work of the industry and its work force, both geographically and between employers, together with the large-scale use of subcontractors and self-employed labour, produce a unique set of circumstances in that sector of the engineering industry. For those reasons, the industry argued strongly for the need to retain statutory arrangements, including the power to impose a levy on employers. They argued that that was the best way of ensuring that sufficient numbers of new entrants were trained and brought into the industry, and that the skills of existing workers were kept up to date.

We were persuaded to accept those arguments, and the Engineering Construction Industry Training Board was established in its own right in the middle of last year. At the same time, the engineering manufacturing sector opted to set up its own independent arrangements, and was taken out of the statutory system. I am happy to say that the ECITB has worked hard, in partnership with the industry, to meet the manpower and skill needs of that important sector of the economy. Employers in the industry remain firm in their support for the board. That fact will be taken into account when the next review takes place in 1994.

We were concerned to ensure that statutory burdens on firms were kept to a minimum, and that firms that trained appropriately were rewarded. In the proposals, the small firms threshold has been raised for both head offices and sites. In addition, the exemption scheme has been replaced by a grant scheme designed to reward those employers who train in key skill areas and those who seek investors in people awards. Our preference remains for independent employer-led sector training arrangements, but we accept there are strong arguments for the exceptions to continue. I expect to lay before the House shortly an order to wind up the Road Transport Board.

Industry training organisations are a vital component of the national training framework, complementing the work of training and enterprise councils at local level, and the Government well recognise the value of their contribution individually, and collectively through their national council. The order will secure the continuation of effective training arrangements in the small but important engineering construction sector as part of the network of sector training arrangements. I commend it to the House.

Photo of Henry McLeish Henry McLeish , Central Fife 12:03 am, 9th June 1992

We have no intention of dividing the House, but we will take this opportunity to express our concerns about some of the Government's work in the training sector. The order relating to the Engineering Construction Industry Training Board is moved every year, and another order is moved for the Construction Industry Training Board.

It is a tragedy that what started as an impressive infrastructure of skills training in the early part of the 1980s has been reduced from 23 boards to two. The key worry about the Government's policies is that this may be one of the last times that an order is moved. The Government are considering reducing the final two boards to what they euphemistically describe as a voluntary situation. We take exception to that and I want to highlight the continuing crisis in skills in Britain and the Government's failure to face up to the reality of that crisis, and to describe some of the deficiencies in Government policies.

Nearly 100,000 young people are currently without a youth training place. For two reasons, that is a scandal. First, young people have neither training nor a job and, secondly, they have no benefit. The Government can dismiss that by saying that it is a matter for social security, but Britain is now the only country in Europe in which nearly 100,000 young people are not offered training, a job, or benefit. Consequently, they have no hope of securing a place in a society that is still dominated by the work ethic. In this decade the Government have led us to believe that there was an economic miracle. The recently published labour force survey for 1991 shows that there was a fall in the number of people in training in Britain. How can that be when the Government have told us—

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. I hope that the hon. Gentleman will address himself to the engineering construction board. He must relate at least part of his speech to that.

Photo of Henry McLeish Henry McLeish , Central Fife

The engineering industry has the most impressive record of all industries in training young people. The labour force survey, which I mentioned, includes people of all ages who are training in all industries, including engineering. My speech is germane not only to the engineering industry but to the wider skills crisis that the Government are ignoring. I shall deal with our specific worries about that industry's future.

The proportion of people in training has gone down from 15.4 per cent. of the population in 1990 to 14.9 per cent. The Government cannot take any comfort from that, because it suggests that, setting aside the quality and qualification issues, there is a volume problem in that the number of people in training is falling. The situation has been dramatically worsened by cuts over the past few years. There is press speculation that the Department of Employment may be forced to make further cuts at a time when the need for skills is great and the need for training for the unemployed is significant. That sets the general context in which any debate on skills should be set.

The Government response will be, "What about TECs and their local delivery of training?" The innovation of TECs has been warmly welcomed by all hon. Members. The Government have invested in them as a flagship policy, but TECs can function properly only if they have a clearly focused policy and the right resources to undertake their tasks. One of those tasks is much better and more effective co-ordination with sector organisations such as the Construction Industry Training Board and the Engineering Construction Industry Training Board.

The Government have invested a great deal of time and resources in TECs, but have given no time whatever to the development of sector policy which is important in other European countries. They have simply tinkered with the problems surrounding the skills crisis. Voluntarism is a euphemism for the market model, and it is failing Britain, young people, our skilled engineering sectors and the unemployed. At a time of economic crisis the Government will make matters worse by further cuts in training expenditure. Why will the Department of Employment and the Government not look at the deep-seated, long-term structural problems that Britain faces? It is not a partisan issue. Compared with every competitor country in Europe and the Pacific rim and with America and Japan, we lag behind on the key indicator of skills.

Many hoped that after 13 years of Conservative Government—like many other parties, the Conservative party has extolled the virtues of training—we would see a closing of the gap that has opened between Britain and its European and worldwide competitors. It is sad that that has not happened. The Opposition contend that the wrong agenda is being pursued. If there is any doubt about Britain's position in the 1990s, and there is, we must compete, produce and improve our economic performance by ensuring that along with our TECs, which are good for local delivery and which tackle a wide range of issues, we have strong, responsive and well-funded sector initiatives. There are real fears among members of the CITB, the Engineering Construction Industry Training Board and the newly established Employment Training Authority that the Government are not interested in and committed to seeing through the fundamental changes that will improve our competitive position. I shall quote from the CITB news release of 2 June. The chairman of the board, Sir Clifford Chetwood was talking to the Union of Construction, Allied Trades and Technicans when he said: Without a statutory levy the board would not be able to afford to pay grants to employers using approved courses. That is not a socialist speaking. Sir Clifford has a wide knowledge of the construction industry. He has constantly lectured the Government on the wisdom of having a statutory framework, and up to now the Government have accepted that argument.

The argument that the Government have used to support the CITB has been deployed to support the existence of the ECITB, and that is the need for a statutory framework that provides a levy. Two reviews are taking place of the future of the boards and it is against that background that I say categorically that if the membership of the boards and the employers within the industry want to continue with the statutory framework, they should be allowed to do so. I hope that the Minister will respond to that when he replies to the debate, for the issue is crucial to confidence for the future. I hope that the Minister is taking notes as he laughs his way through. We are facing a crisis and the level of debate from the Government Front Bench is pathetic, as is the support that is being given to important boards that are trying to do important work.

I shall mention some of the achievements of the ECITB. Despite the recession, it is undertaking 26 per cent. more training this year than in the previous year. It has concerns about the future, however, because of the Government's menacing approach to anything that smacks of statutory provision. When will the Minister start to put the skills needs of the nation above the political dogmas of his party? Unlike Germany, France, Japan and Korea, we have a Government who are not committed to the policies that Britain and its economy need. That is sad.

Reviews are being undertaken and I hope that the Government will listen and not lecture. I hope also that they will acknowledge experts who are at the frontiers of new provision, who are doing an excellent job and who are in a better position to tell the Government what is happening than the Government are to tell the experts what they should be doing. It is fundamental that we should have a commitment to allow the boards to continue, if they so wish, with a statutory framework.

It is clear that training is a market failure. Anyone who has examined the history of Britain's economy over the century, or over a longer period, will readily admit that training is a market failure. Against that background, it seems ludicrous that the responses have not overcome the failure but have reinforced it by rejecting a statutory framework and introducing voluntarism regardless of the consequences.

Twenty-three training boards became seven and now there are two, both of which are faced with an uncertain future. There is a crisis of confidence within the boards, which the Government could easily alleviate by making it clear that they intend to listen, as I have suggested.

It is tragic that we can debate such issues only on a order continuing the levy. I challenge the Government to hold a debate on the wider issues that affect skills training which we cannot consider this evening.

I want to suggest a number of key issues that should start to shape Government policy. The first is the rejection of voluntarism, which is not working. Every statistic suggests that we have a gender gap, a regional gap and a widening gap between ourselves and our international competitors. When will the Government realise that the market failure in training must be treated with a combination of the marvellous response that we see from private and public employers and from a Government who are willing to invest their time and energy in providing a statutory framework, which our more successful competitor countries have?

The second issue is public investment. It is a measure of Britain in the 1990s that we are still having a debate on public investment. All the signs are that the public expenditure round, which is under way, will be tough on training. Given the crisis in skills, the Government cannot run away from their responsibilities by pretending that the Treasury is holding a pistol to their head and is saying that they will have to shave off further expenditure on YT, ET or TECs. It simply does not add up. I challenge the Government to say that in the public investment round the Secretary of State for Employment will not only fight her corner but will seek extra resources in a key area for Britain's success in the 1990s.

My third point is that, despite the market rhetoric of the Government, the key to success is the individual. The Government have failed to empower the individual to take advantage of training. They have talked and talked—a bit like their attitude to child care: they talk a lot but action is limited. Why do not they accept that unless we can motivate and empower individuals we shall make little impact on skills problems?

Photo of Mr Phil Gallie Mr Phil Gallie , Ayr

We have heard many words from the hon. Gentleman, but on what facts are they based? Until recently, I worked in engineering and in industry. I found the standards of our young people exceptionally high. I had little problem in finding the skills that were required. Employers are increasingly putting cash and resources into training. What we are hearing from the hon. Member is nothing but words.

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. The hon. Member for Fife, Central (Mr. McLeish) has strayed quite wide. I have been rather tolerant, considering what the Chairman of Ways and Means said earlier. I hope that the hon. Gentleman will stick to the narrow subject of the motion.

Photo of Henry McLeish Henry McLeish , Central Fife

I shall, and I hope to respond to the hon. Member for Ayr (Mr. Gallie). Training impacts on engineering and construction, yet the Government never want to discuss training. The impact on engineering and construction should be discussed widely, even under an apparently limited order.

I could give the hon. Member for Ayr volumes of statistics from the CITB—the Government's labour force—from Europe and from the Employment Gazette contradicting his argument. Britain is not producing enough volume. It certainly is not producing enough quality and, although engineering is doing extremely well in the recession, it is not enough to narrow the skills gap between ourselves and Europe in intermediate qualifications, in the training of young people and in the reskilling of old people. There is no dispute—the statistics show that the Government face a crisis, but they are doing nothing about it.

The fourth issue is that of intermediate qualifications. The key in any sector, whether engineering or construction, is to have more and more people with what in this country we call A-level and equivalent qualifications. In the engineering and construction sectors we must have more people at that intermediate stage because that is the area in which the Japanese, for example, invest. They know that the extra 0.5 per cent. added to value means that the economy and production are enhanced in terms not only of volume but of quality.

I have no hesitation in saying that the main message to the Government is that voluntarism is not working. They should listen carefully to the Construction Industry Training Board and the Engineering Construction Industry Training Board before embarking on a review based on the dogma of the Conservative party rather than on the skill needs of the nation. That is crucial, and I look forward to the Government finding a day of their own time for us to debate the issues so that hon. Members can debate them more fully than we have been able to do this evening.

Photo of Patrick McLoughlin Patrick McLoughlin Parliamentary Under-Secretary (Department of Employment) 11:20 pm, 9th June 1992

The hon. Member for Fife, Central (Mr. McLeish) accused me of treating the subject lightly, but that is not the case. If anyone is taking it lightly, it is the Labour party, as shown by its massive attendance. Before we take any lessons from the hon. Gentleman, perhaps he should look behind him at the great level of support he has. We certainly do not take lightly the training of young people in industry. We take it seriously, which is why we are giving more money than has ever been given before; but, of course, discussions will take place in the usual expenditure round.

The hon. Gentleman asked a number of questions. I have no intention of pre-empting the reviews that are under way, but I can say that the Government are not being dogmatic about the way to proceed. We are looking to independent training organisations in industry where that is the best solution. As I have made clear, where that is not the best way to proceed we are open to representations. We shall be listening very carefully during the reviews. The statutory system has not worked properly so it is right to look for new methods. If they are the best way forward we shall accept them. We shall not be stuck to dogma like the Labour party. My hon. Friend the Member for Ayr (Mr. Gallie) was correct. We regularly hear the Labour party whinge.

The order has general support and I commend it to the House.

Question put and agreed to.

Resolved,That the draft Industrial Training Levy (Engineering Construction Board) Order 1992, which was laid before this House on 27th February. in the last Session of Parliament, be approved.