Clause 22

Further Education and Training Bill [Lords] – in a Public Bill Committee at 1:15 pm on 14th June 2007.

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Conditions relating to levy proposals

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I beg to move amendment No. 31, in clause 22, page 15, line 4, at end insert ‘and

(c) the class must include organisations representative of persons who are liable to make payments by way of levy in consequence of the levy proposals.’.

You will know, Mr. Atkinson, that the levy system affects a small number of organisations that contribute to training in two particular sectors. We have debated  the matter at length. It is a relatively technical affair and, from my discussions with Ministers, I understand that this part of the Bill is also technical and not intended to act as a catalyst for a change in that process.

It is perhaps worth saying for the record that, as Ministers know—we have discussed this publicly and privately—I support the way in which the levy system currently operates. There is a slight risk that by changing the way in which the representative organisations and employers work in this field, we might weaken take-up of the levy. Some employers—very small employers, new employers and employers who are going through changes of circumstance—are exempt from paying the levy. However, I am anxious that we should maintain the commitment to the levy from within the relevant industries and am therefore somewhat concerned—I put it no more strongly than that, for this is a probing amendment, as hon. Members may have guessed from what I have said—to ensure that we do not endanger that level of commitment by any albeit small changes that we might make.

I know that we broadly agree on this matter, but I am interested to hear the Minister’s reflections on it. I shall pose two or three questions that he may want to address, and then I shall draw my remarks to a conclusion. First, I understand that there has been a decline in levy take-up over time, which we have discussed in Statutory Instrument Committees and elsewhere. I want to hear the Minister’s view on that and what we might do about it.

Secondly, what role do the sector skills councils play in all this? They seem to be a helpful tool in that respect. I do not think that they have a statutory role, but it would certainly be desirable for their involvement in the process to assist in the collection of and commitment to the levy that I have described.

Thirdly, it would perhaps be useful for the Committee to have some kind of profile of who pays the levy. In the construction industry, which is one of the industries involved, a broad range of types of business is liable to pay the levy. I would be interested to hear whether the smaller companies are depending on the very large companies, which, of course, pay the levy, and what the balance of payments is.

Those are all fairly narrow points, but I know that the Minister will appreciate that the questions have been posed in the interest of trying to get the provision right. I look forward to his response as to precisely why the changes proposed in this part of the Bill are, in his view, necessary.

Photo of Phil Hope Phil Hope Parliamentary Under-Secretary (Skills), Department for Education and Skills

I think that I can give the hon. Gentleman the assurances that he seeks. The clause updates the legislation dealing with how an industrial training board shows that it has the support of employers to raise a levy. The changes made by the clause will give an ITB the freedom to consult employers in its industry more widely. That might include consulting any organisation authorised to speak on behalf of its members who are likely to pay the levy, seeking the views of a sample of employers or approaching employers directly in combination with any of those methods. We want industrial training  boards to choose the consultation process that bests suits their industry. In all cases, they will need to satisfy the Secretary of State that the process that they followed was reasonable.

I appreciate that this is a probing amendment, but it would mean that organisations that represent sections of an industry must be consulted when ascertaining the level of support for levy proposals. That would constrain an ITB’s freedom of action in doing what I have just described—deciding the method by which to demonstrate support. That would not be helpful to the ITB, because it would constrain its responsiveness and flexibility in demonstrating that support. However, the hon. Gentleman made an important point in moving the amendment, which is the question whether it would undermine the commitment of employers to the levy if we were to go down that route.

I assure the hon. Gentleman that both the existing industry training boards—the Construction Industry Training Board and the Engineering Construction Industry Training Board—have always placed, and will continue to place, great strength on their relationships with industry federations that represent the various subsections of their industries. Those will include representatives from those federations, and it is clear from what the ITBs have told us that they have no desire to reduce the input of federations in any way.

We need to be more flexible, because it is 25 years since the Industrial Training Act 1982, and over that period industry structures have changed. An increasing proportion of employers have chosen not to join the employer federations, which means that although the ITBs have evidence that employers who are not federation members support the levy—they know that, because they have asked people—the legislation does not allow that evidence of support outside the federation to be taken into account when an ITB is justifying its levy.

In future, provided that the ITB can satisfy the Secretary of State that it has taken reasonable steps to ascertain the views of those persons whom the Secretary of State considers are likely to be liable to pay the levy in consequence of the proposals, the ITB can go on to demonstrate that it has industry support for its levy proposals in the manner best suited to the industry. That will, of course, include consulting representative organisations. We are keen to ensure that in situations where no such representative body might exist for future ITBs—proposals are coming forward from industry on that—they would not be prevented from demonstrating that they have the support of the industry, even though they have no federation. This is a mechanism allowing those industries to do so.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

The Under-Secretary is being reassuring about the purposes of this part of the Bill. In essence, it is a means of increasing flexibility, and by so doing, maintaining commitment. What kind of mechanisms might ITBs use to consult employers, if they are not using representative organisations as a conduit? When the 1982 Act was enacted, part of the reason for using representative organisations was that they provided a convenient vehicle for the type of consultation that we are describing.

Photo of Phil Hope Phil Hope Parliamentary Under-Secretary (Skills), Department for Education and Skills

We have published draft indicative regulations about how an organisation might go about  that. For example, it could take a sample of employers—not inside the federation but within the industry and subject to the levy—and do a sampling process of those employers. The regulations would give the hon. Gentleman the reassurances that he requires: there is a formal process that organisations have to go through in order to carry out surveys and sampling outside those bodies that are inside the federation of the ITB. That will be laid out in regulations, which I believe have already been circulated for members of the Committee to look at, so that he can be assured that those regulations are there. Essentially, the ITB will be able to demonstrate to the Secretary of State that there is industrial support, both from members of the federation and from those outside of it, through the sampling method. Those regulations include provisions about consulting representative organisations. With those assurances, I hope that the hon. Gentleman will withdraw his amendment.

I was tempted to take this opportunity to observe that levies can be used to fund apprenticeships, which would have given me a chance to comment on what the hon. Gentleman said earlier about apprenticeships. However, I guess that you would not allow me to stray so far from the clause, Mr. Atkinson.

I would not want to intimidate the hon. Gentleman by getting my violins out again and demonstrating that his accusations, which undermine the current apprenticeship system, are wholly unfounded and wrong. Rather, I invite him to celebrate success—both the expansion in the number of apprenticeships and the completion rates around the country. I shall be at the apprenticeship awards next week to give prizes to the employers and apprentices who are doing so much to raise skill levels.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I said at the outset of this Committee that your generosity and benevolence are legendary, Mr. Atkinson. The Minister has sought to prove me right by managing at the very end of his sensible comments on levies to launch into a series of remarks about apprenticeships, but I shall not follow him, because that would be wrong. I do not want to be seduced down an inappropriate path by the Minister. He has spoken sensibly about levies, on which we have similar views. This is not the time to explore the issue, but there might be capacity, as the film industry shows, for further voluntary levy systems, if an industry thinks that that is the right way to focus attention on the need for training and development. Both Opposition and Government would celebrate such a voluntary, industry-led approach to increasing commitment to training.

Photo of Phil Hope Phil Hope Parliamentary Under-Secretary (Skills), Department for Education and Skills

The hon. Gentleman mentioned the film industry. Earlier, he referred to the role of sector skills councils in that regard. The ITBs are separate from SSCs. Perhaps, however, future legislation will introduce systems that will allow SSCs to develop more generally. Those might be considered favourably by both sides of the House, and I look forward to working with him when the time comes.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

It is interesting that when the House is at its best in Committees such as this, an exchange of views can lead to the development of shared ideas. The Minister has drawn attention to an example—in this  case, the role of the SSCs—that could be used as a model in other industries, although I accept that the particular character of the film industry makes that approach more straightforward than it might be in other cases. I would welcome the opportunity to share further views on it.

We have received assurances about the amendment and about this part of the Bill. I understand the need to move on from 1982, given the changing nature of the relationship between employers and representative organisations. I am a little anxious about the effect that that might have on the representative organisations, because there is the slight risk of a self-fulfilling prophecy of the decline in their influence. However, I accept that one has to be practical, and on the basis of the Minister’s very sensible comments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 22 to 24 ordered to stand part of the Bill.