Draft Industrial Training Levy (Construction Board) and (Engineering Construction Board) Order 2002

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Brian Cotter (Weston-super-Mare): I welcome the orders because they at least try to address the great need for training and expertise in the construction industry. One reason for renewing the orders is the highly mobile labour force in the construction industry.

The exemption for small businesses is welcome. Provided that there is majority support in an industry, the levy will continue, but that does not take account of certain specialities. Will the Minister clarify an answer that he gave to my hon. Friend the Member for Twickenham (Dr. Cable), who asked him how many representations had been made from companies that paid it about the forthcoming review of the CITB levy? In his reply on 20 July, the Minister said that representations had been received from 36 companies. Can he give more details of what those representations covered and what sort of companies were involved?

I want to speak about two industries, the first being the tool hire industry. Again in reply to my hon. Friend the Member for Twickenham, the Minister said that representations from the plant and tool hire sector numbered 21, which suggests a fair degree of concern within the industry that the scheme is not helpful or appropriate to it. I am sure that the Minister is aware that there has been at least one appeal--from Beaver Tool Hire Ltd., which detailed its different forms of business. I am not sure what lies behind this, but it said:

    ''26 per cent. of the appellants' turnover relates to the hiring out of electronic dog collars.''.

Obviously, that is an important business, otherwise the company would not be engaged in it, but I am not sure what it involves. Accordingly, 35 per cent. of the appellants' business is excluded from the category of training. Some 13 per cent. of its activity relates to sales activities and 12 per cent. of the appellants' turnover relates to rent received from letting out properties. In total, 60 per cent. of the appellants' turnover relates to non-construction industry activities.

That is just one example of why the plant and tool hire industry feels that the training schemes that the construction industry training board offers are not appropriate to it. The training that the board offers is pretty irrelevant to a large proportion of businesses. I hope that the Minister can answer that key point in detail.

The kitchen furniture industry is another that has recently come within the CITB's scope. One kitchen furniture company said:

    ''More than two years ago we decided to formalise the training we give to youngsters in our factory by offering formal apprenticeships'',

which, of course, is good and acceptable. It continued:

    ''We carried out research as to who might be able to provide the training and verification of skills and be authorised to award nationally recognised qualifications. . . . We were directed to the CITB. They promised they could supply a joinery course and qualification suitable for our requirements although this subsequently proved to be inaccurate.''

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That is of considerable concern. I know that that company is pursuing its concern, and looking to be released from the scheme. It says that it is part of the furniture industry, not the construction industry, which is a reasonable point.

    In papers that I have studied, it has been made clear that one reason for the setting up of the construction training board related to highly mobile labour forces in that industry. The matter is well in the public arena, so it is not unreasonable to ask the Minister to comment on those two industries and others and assure us that a reasonable appeal system is in place. If there is not, there should be one, so that industries that feel that irrelevant training is being offered do not have to pay a levy for something that is of no use to them. I emphasise that the kitchen furniture industry clearly feels aggrieved about that, and about being dragged into something on a promise of the right sort of training, which they say has not been provided. I welcome a further renewal of the scheme, but I hope that the Minister will address my points about specialities.

10.54 pm

John Healey: I shall do my best to answer the detailed and technical points that have been raised, and the requests for specific information. If when I reflect on the Committee's proceedings I find that I have not dealt adequately with the points raised, I shall write to hon. Members.

The hon. Member for Weston-super-Mare (Brian Cotter) posed questions about two sectors: furniture and kitchens fittings, and tool and plant hire. Several discussions have taken place with the bathrooms, kitchens and specialist fittings sector. A company in that sector challenged the scope and application of the levy in the High Court, but lost its case in 2000. The most common skills used in the sector are carpentry and joinery. Other skills include finishing, such as tiling, painting and decorating: all traditional construction skills. The levy will ensure that all users of construction skills contribute to the cost of training.

Last year, the Kitchens Specialists Association wrote to the former Secretary of State for Education, my right hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett), asking for the sector to be removed from the scope of the levy. Officials sent a reply, setting out the information that the Department would need to consider. We are still waiting for a response, but the CITB has been in regular contact with the Kitchen Specialists Association during recent years, and intensive discussions have created several areas of common ground. The association and the CITB expect more positive progress soon.

On the question of tool and plant hire, the hon. Gentleman mentioned that 21 companies had made representations about the recent review. That figure is out of date because 60 companies have contacted the Department in 170 separate letters, either directly or via MPs. Those 60 companies represent 3 per cent. of the 2,000 plant and tool hire companies registered with the CITB. The assumption that that is a majority protest against the levy is misplaced. If companies feel

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that they have grounds to contest the application of the levy, the CITB will examine in detail whether its application is appropriate.

Brian Cotter: The Minister said earlier that an appeal was lost in the High Court. Is it that the only way to appeal? There should be a simpler system if people feel that the levy is unjustified. I accept what the Minister said about the 3 per cent. figure, but that 3 per cent. of employers may be so detached from what is offered that they are correct in saying that the levy does not apply to them. I hope that genuine concerns are addressed.

John Healey: If the hon. Gentleman will bear with me, I shall explain how companies in that situation benefit considerably from the activity of the CITB. Employers who contest the CITB's decision on the application of the levy appeal to an employment tribunal, not the High Court. If they contest the employment tribunal's findings, the case can be referred to an employment appeals tribunal. Only in a few cases do employers refuse to accept the tribunal's judgment; an application through the courts system can then be pursued.

In terms of the application of the levy, the important issue, especially for the tool and plant hire sector, is whether the main business falls within the scope of the levy. If that is not the case, the company concerned will fall outside its scope. In relation to tool and plant hire, it is the nature of the plant rather than the activities of those hiring the tools or plant that counts for the purposes of the definition.

The hon. Member for Weston-super-Mare asked about benefits from the CITB's activities. In 2000, there were more than 300 apprentices working in tool and plant hire firms supported by CITB grants. Each year more than 30,000 individuals join or renew their membership of the CTA scheme, which is a certification scheme for plant operators managed by the CITB on behalf of the tool and plant hire industry. The plant hire sector receives 95p for every pound of levy paid in direct benefits such as grants, and there is a total benefit from the CITB of £1.41 for every pound paid in levy when one includes other services. I hope that that helps to put the hon. Gentleman's arguments in perspective in terms of the scale of the problem and the extent to which such companies can benefit from the CITB's activities and the application of the levy.

The hon. Member for Salisbury (Mr. Key) raised several points, and I welcome the concise way in which he ran through them. I welcome the continuing support that his party is offering for the continuation of the levy system. The key concept in relation to sub-contractors is that of the employer. If an employer working in the industry falls within the scope of the levy and is employing staff either directly or on labour-only contracts, he, not a major contractor to whom he is sub-contracting work, is liable to pay the levy to the CITB. Any relationship between a company and a major or minor sub-contractor and the passing on of elements of the levy is a contractual matter between those two parties, and not a matter for the CITB. The CITB does not, therefore, keep the precise data for

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which the hon. Gentleman is looking, but it has recently reviewed and renewed its guidance on sub-contracting chains, appropriate payment and passing on the levy.

Not all of the general training support to those working in the field or employing those working in the field is routed by the CITB. Some of it will be routed in that way, as will be reflected in the accounts, but employers draw much training support directly for provision from colleges and private sector providers. To give the hon. Gentleman a sense of the scale of the investment that the Government are putting into skills and learning for those who are post-16 and adults, this year's budget for the Learning and Skills Council, which takes responsibility for that field, with the exception of higher education, is more than £5 billion.

On the hon. Gentleman's question about the economy's performance, I am unsure where he got his idea that we are heading for a downturn. The performance of the UK economy in recent years has been more stable and strong than that of many of our competitors, and that has been especially true post-11 September. The Government's projections for economic growth for the past year were between 2.25 and 2.5 per cent., and the outturn was 2.4 per cent. The Chancellor expects similar levels of steady growth and stability this year and next year. That is reflected not in a prospective shortfall, about which the hon. Gentleman was concerned, but in projections that suggest an increase in the levy take despite the fact that the levies will remain the same as last year.

For the CITB, the proposals for the levy are expected to raise £90 million to £94 million in the coming financial year. The forecast outturn for last year was between £78 million and £82 million. That is principally a reflection of increased activity, increased employment and general growth in the construction sector, which is clearly one of those sectors that benefits directly from overall economic performance and growth.

On the question of how the Government follow the success of the CITB's policies and programmes, we regularly discuss and gather data with the industrial training boards about their activities. For instance, the ECITB recruits and manages the training of 150 to 170 modern apprenticeships each year and at the end of December last year a total of 524 apprentices were undergoing training. Some £5 million of the ECITB's income was spent on that activity last year. It also provides free training and grant support for training that leads to recognised qualifications both for new entrants and for existing workers in the field. It has been successful in securing other funding, too. In Scotland, an extra £1 million of European Union funding was secured to support traditional and additional apprentices.

In 2000, the CITB provided training support to the value of £88.5 million, against a total levy income of £81 million, in grants, training allowances and college fees. Firms with fewer than 50 employees received more than £54 million in grants during that year. The hon. Gentleman may be interested to learn that the 200,000th construction non-vocational qualification

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was awarded last year under the auspices of the CITB. Those are the sorts of figures that we track and the sorts of activities that we are keen to encourage. They demonstrate the industrial training boards' success to us, as well as to employers in the sector of work in which they are involved.

The hon. Gentleman asked about the number of cases taken to industrial tribunals, which relates to the question posed by the hon. Member for Weston-super-Mare. In 2001, the ECITB was involved in just two cases at industrial tribunals over the application of the levy. Neither has yet reached a hearing. In the same period, the CITB had 42 cases, 39 of which went in the board's favour. That is a minuscule total compared with the overall number of cases that are currently being dealt with by the employment tribunal system.

The hon. Member for Salisbury said that there is always a problem with thresholds and exemptions. I was interested to hear him repeat the argument that exemptions, including for small firms in this sector, should be removed. The ITBs are principally employer-led bodies. We use the views of employers in the sectors as touchstones for the decisions that we take, and the 1982 Act requires certain levels of support among employers for proposals for levies and their implementation. The hon. Gentleman put a, relatively, minority point of view that does not command the sort of widespread support that would justify moving in that direction.

As the hon. Gentleman said, the regulatory impact assessment says that the industry argues that

    ''without collectively funded training, paid for by a statutory levy on all employers and administered by the ITB, there is a serious risk that insufficient training will be carried out to meet the industry's skill needs.

    This could result in skill shortages, wage inflation and a less competitive construction industry.''

We accept that assessment, as do the majority of employers in those sectors, which is why we propose to renew the levy.

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On renewables, I am seeing the newly appointed chairman of the CITB, Sir Michael Latham, this week. He is a well-respected figure in the industry and is due to take over when Hugh Try steps down at the end of March. I shall certainly draw his attention to the points raised about that specialist part of the sector.

The proposals before the Committee relate to the construction and the engineering construction industries. It continues to be the collective view of employers in those two industries that training should be funded through a statutory levy to secure a sufficient pool of labour. The orders are compatible with the European convention on human rights, and article 1 of the first protocol to the convention provides that no one shall be deprived of his possessions except in the public interest. However, it goes on to provide that that provision shall not in any way impair the right of a state to enforce such laws as it considers necessary to secure, among other things, the payment of taxes or other contributions.

The European Court of Human Rights has always said that in interpreting the provision a fair balance must be reached between the demands of the general interest of the community and of the protection of the individual's fundamental rights. My view is that the levies achieve such a fair balance.

The boards' proposals for their 2002 levies have the express support of the employers. I believe that it is not in dispute that they should be approved and I commend the order to the Committee.

Question put and agreed to.


    That the Committee has considered the draft Industrial Training Levy (Construction Board) Order 2002.



    That the Committee has considered the draft Industrial Training Levy (Engineering Construction Board) Order 2002.--[John Healey.]

        Committee rose at thirteen minutes past Eleven o'clock.

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        Cran, Mr. James (


        Cotter, Brian

        Drown, Julia

        Foster, Mr. Michael

        Galloway, Mr.

        Gardiner, Mr.

        Gibb, Mr.

        Healey, John

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        Hendrick, Mr.

        Hendry, Mr.

        Heppell, Mr.

        Key, Mr.

        Luke, Mr.

        Martlew, Mr.

        Wright, David

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